Darden Takes Strategic Action to Cut Costs
Darden Restaurants, Inc. announced several leadership changes and strategic actions in order to increase the focus on restaurant operations and improve the guest experience.
The company reports these changes will better position Darden to win the battle for market share across all of its concepts.
These actions include the following:
- Streamlining its support functions to further facilitate guest-focused work that benefits the restaurants and reduces general and administrative spending.
- Eliminating a layer of operations field management at Olive Garden and LongHorn to provide greater visibility and accountability for restaurant leadership.
- Closing Darden's aviation operations.
"Winning market share, improving same-restaurant-sales ,and achieving best-in-class profitability are our key operational objectives going forward, so we need to fine-tune our approach to the business to make sure we are laser-focused on these initiatives," says Darden interim CEO Gene Lee. "The actions announced today are critically important steps in becoming more efficient in how we support the restaurants. This includes limiting the number of distractions that divert our attention from what matters most [and] continually working to improve the food and service we offer our guests."
In addition to improving focus and providing better support for the company's restaurants, today's announcement will lead to approximately $20 million in annualized cost savings through a reduction in general and administrative expenses. The company expects savings of approximately $10 million this fiscal year, which will mitigate anticipated near-term cost increases in dairy, beef, and other commodities.
Senior Leadership Changes
Brad Richmond, chief financial officer for the past eight years, announced his intention to retire after 32 years with the company. His retirement will be effective at the end of March 2015 or sooner if a successor is appointed. Internal and external candidates will be considered as the company identifies his replacement.
Daisy Ng, chief human resources officer, will transition out of her role after more than nine years with Darden. Danielle Kirgan, currently senior vice president, human resources, specialty restaurant group and total rewards, will assume Ng's position effective Jan. 5, 2015.
Bob McAdam, SVP government and community affairs for the past eight years, will depart the company at the end of the calendar year. He will assist the company through the end of the calendar year to transition his responsibilities to other functions within the company.
"We are grateful for the contributions that each of these leaders has made to Darden, and we wish them well as they look to their future," Lee says.
In addition to the leadership changes, the company announced it is streamlining its support staff structure in an effort to create a more efficient and nimble organization. This restructuring will have a direct impact on approximately 60 employees and the company will also eliminate 25 open positions.
The new structure is designed to eliminate inefficiencies and ensure the support functions are focused on guest-facing initiatives. The changes occurred at all levels across the marketing, development, aviation, external affairs, and field operations management functions.
"While these changes will significantly improve how we operate, it is always difficult to take actions that have an impact on the dedicated individuals who have made significant contributions to our company," Lee says. "Departing employees will receive severance and other benefits appropriate to their position and tenure that are consistent with our values. We thank them for their contributions to Darden."
Restructuring Olive Garden and LongHorn Field Leadership
The company will eliminate one layer of field operations supervision to provide greater line of sight for restaurant leadership teams. This streamlining is expected to result in improvements in both visibility and accountability as the brand leaders at Olive Garden and LongHorn continue to work on improving the guest experience.
Concurrent with the support restructuring, the Company has made the decision to close down its aviation department. The Company will cease flight operations immediately and expects to sell its aircraft in due course.