Olive Garden Jumpstarts Its Sales With A Revamped Menu And Improved Breadsticks

Apr 11, 2016 07:45 AM EDT | By Mark Jason Alcala

Olive Garden
Olive Garden Restaurant
(Photo : JeepersMedia/Flickr CC)

It looks like Olive Garden finally got its recipe for success right. Latest figures show the Italian restaurant's sales is booming.

In fact, the chain just posted its best quarterly sales performance in a while, with same-store sales posting a 6.8 percent increase for the quarter ending in February, according to Business InsiderAfter years of declining sales, Olive Garden's management was determined to set things right.The chain decided to make changes to its operations emphasizing customer convenience and a faster service.

For instance, management decided to simplify the restaurant's menu to make ordering more convenient for customers. In addition, the restaurant added the convenience of technology into its ordering platform, providing each table with a tablet that can be used by customers to make their orders.

Even Olive Garden's take-out menu was not spared from the overhaul. The improved take-out menu shows a more convenient format allowing for a faster to-go ordering. And the tinkering worked, with to-go sales increasing by 40 percent in the past two years. Take-out orders now account for almost 11 percent of total sales.

Two men played a big role in the company's turnaround. One is Starboard CEO Jeffrey Smith and the other is Olive Garden President Dave George, The Wall Street Journal reported.

Starboard Value LP, the investment firm that Mr. Smith headed, noted that one of Olive Garden's problems was that its waitstaff gave out too many breadsticks. These left many of these appetizers cold and uneaten.

More than 18 months ago, Starboard had the rare opportunity to set things right when Starboard nominees managed to take control of the board of Darden, Olive's parent company. Finally, the group initiated changes in Olive Garden such as selling more alcohol, offering tastier breadsticks and streamlining operations, which contributed to the restaurant's spectacular turnaround.

Mr. George, who headed Olive Garden since 2013, took a more direct approach. Tasked with the gargantuan task of turning the company around, he and his senior management team flew to various Olive Garden locations across the U.S. asking busboys, dishwashers and cooks "What stands in the way of you delivering 'hospitality?'"

He got all the minor complaints of his workers, minor individually but had a big impact on the overall customer satisfaction. When the time came for him to implement the changes he wanted, it also coincided with Starboard's entry into the restaurant.

And breadsticks became part of a 294-page recipe to increase sales and cut costs which eventually saw a 47 percent increase in company share price.

 

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