Olive Garden defends unlimited breadstick policy after Starboard Value blasts management

Hedge funds claims restaurant chain is wasting food, staff lacking discipline and often fails to add salt to boiling water before adding pasta

An Olive Garden restaurant in Danvers, Massachusetts (Anthony92931/Wikimedia Creative Commons )

American restaurant chain Olive Garden has defended its free breadstick policy, insisting that it is a symbol of Italian hospitality, after a US hedge fund accused the company of "wasting food" and "lacking discipline".

In a 300-page document, Starboard Value blasted Olive Garden's management and signalled a number of issues that it claims are hurting the company's performance; including its unlimited distribution of breadsticks and using too much dressing on salads.

Starboard claims Olive Garden staff lack "training" and "discipline" and the restaurant serves too many breadsticks, which ultimately go cold. This is causing unnecessary food waste and driving costs up. Instead, the hedge fund argues the Italian restaurant should rein back on the breadsticks and exercise more control on how they're distributed.

On Monday, Florida-based Darden Restaurants, which owns Olive Garden and recently sold-off Red Lobster as part of a business overhaul as it struggles to keep up with rivals, defended its business model insisting that breadsticks are an essential part of the brand.

Darden also said it has introduced new menu items to underscore value and recently launched a successful unlimited pasta promotion, which sold out in less than two hours. However, the restaurant chain is set to face some tough questions from Starboard, which is lobbying to gain control of Darden's board of directors at its AGM next month.

Darden reported a net loss of $19.3 million for the quarter ended 24 August 24 compared with a profit $42.2 million a year earlier.

Additional reporting PA