Salt the Pasta Water: Starboard Value's Suggestions for Olive Garden
Activist Fund Has 300 Slides of Advice for Darden As It Tries to Take Over the Kitchen

When cooking pasta, use salt. And go easy on the breadsticks.

Those are two of many steps Starboard Value LP said late Thursday it would take to boost the value of Darden Restaurants Inc., owner of Olive Garden, if the activist hedge fund was to win control of the entire board.

Among the other moves Starboard detailed in nearly 300-pages of slides: Improve Olive Garden's food quality and alcohol sales, introduce technology to reduce waiting times at restaurants and cut millions in costs. And Starboard is sticking with its suggestion, which Darden has rejected as value-destroying, of separating the company's brands apart and putting its real estate into a third public company.

Starboard is also asking Olive Garden to limit the breadsticks. Bloomberg

Starboard said those separations and improvements could put Darden shares between $67 and $86, up to 78% above Thursday's $48.29 close.

Darden said it would review Starboard's plan, but added after its initial review it believed many of the changes were already being made under management's ongoing turnaround, which it says is working.

"We remain open minded toward all ideas that support long-term value creation for our shareholders and improve the dining experience for our guests," Gene Lee, the company's chief operating officer, said in a statement.

Earlier this week, Darden said it was concerned about "ceding control to Starboard" saying the activist and its board nominees had a "mixed track record and notable experience gaps."

Starboard and Darden have been engaged in a fight since late last year, and are heading toward a shareholder vote that will determine which side will control the board. Starboard nominated 12 potential directors, looking to remove and replace the entire board.

Darden has sought a compromise and taken steps to shake itself up while maintaining some continuity with the previous board of directors. Darden's longtime chairman and chief executive, Clarence Otis, is retiring and the board has nominated four new directors and ceded four additional board seats to Starboard.

At issue remains Starboard's desire to hive off the real-estate portfolio and put Olive Garden and LongHorn Steakhouse into a separate company from Darden's smaller chains, such as the Capital Grille and Bahama Breeze.

Darden this week reiterated it thinks those moves would reduce the value of the company.

Starboard on Thursday provided details on how a Starboard-led board would operate the first 100 days if it won the proxy fight, scheduled for Oct. 10.

The firm outlined plans to cut costs by $114 million, including savings in corporate functions and food expenses. For instance, Starboard says there is $4 million to $5 million in wasted food that could be saved by being strict with an Olive Garden policy that gives each diner one breadstick, and only more if requested. Starboard was clear, however, that Olive Garden wouldn't get rid of the popular never-ending breadsticks offer, but instead wait to be asked, in an effort not to waste.

Starboard said the opportunity to sell more alcohol at Darden chains had the potential to create $56 million in earnings before interest, taxes, depreciation and amortization.

And it would work on improving Olive Garden and other chains' food quality, Starboard said, particularly focusing on being authentic Italian. The firm spent one slide noting that it had learned Olive Garden no longer put salt in the water for its pasta.

"If you Google 'How to cook pasta', the first step of Pasta 101 is to salt the water," Starboard wrote. "How does the largest Italian dining concept in the world not salt the water for pasta?"

Write to David Benoit at david.benoit@wsj.com