Red Lobster 2014 Annual Report Download - page 5

2014 Annual Report 3
Core menu innovation at Olive Garden
is aimed at reinforcing value leadership,
choice, variety and convenience.
LongHorn’s performance
continues to affirm its potential
as a national restaurant brand.
The Capital Grille’s fine dining
experience drove a solid
increase in same-restaurant
sales for 2014.
Bahama Breeze delights guests
with an island escape and a
Caribbean-inspired menu.
Increasing Return of Capital to Shareholders
Darden’s strong cash flows have supported a level of return of capital
to shareholders that has outpaced the industry. With these cash
flows and the proceeds from the Red Lobster sale, our shareholders
will continue to benefit from an active share repurchase program,
including up to $700 million in fiscal 2015, and a strong quarterly
dividend, which equates to $2.20 per share annually.
Fortifying the Leadership Team
In September of last year, we appointed Gene Lee, who previously
served as the President of SRG, President and Chief Operating
Officer. As COO, Gene has been instrumental in leading operations
and marketing across our portfolio of brands, and has demonstrated
his extraordinary knowledge of our full range of guests, as well as
consumers’ changing needs and desires. His expertise continues
to be crucial to Darden as we continue our work to drive sustainable
growth across the Company.
Refining Compensation and Incentive Programs
To reinforce the Company’s new strategic direction, beginning in
fiscal 2015, Darden’s Board of Directors refined compensation
and incentive programs for senior management to more directly
emphasize same-restaurant sales growth and free cash flow. This
change is consistent with our long-standing “pay for performance”
philosophy and our commitment to programs that ensure the
interests of Darden’s senior management are aligned with those
of our shareholders.
Looking Ahead: Priorities for Driving Sustainable
Growth and Value Creation
Notwithstanding the progress that has been made, we realize that
more must be done to return Darden to the record of growth and
value creation that both our leadership and our stakeholders expect.
We are executing a number of initiatives across the Company that
we believe will enable us to do just that.
Executing the Olive Garden Brand Renaissance
Over the past year, we have been implementing far-reaching
improvements for all elements of the Olive Garden business to
reignite traffic growth and support margin expansion. The sale of
Red Lobster enables us to increase our focus on the Olive Garden
brand renaissance, including:
• Enhancing culinary operations and service by simplifying operations,
improving quality and intensifying focus on our guests. The
introduction of tabletop tablets is one example of the initiatives
underway that we expect will improve service and sales with
minimal capital investment;
• Introducing a core menu innovation aimed at reinforcing value
leadership, expanding choice and variety, and capitalizing on
the current convenience trend by rolling out online To-Go sales;
• Pursuing a new approach to advertising and promotions that
includes a more targeted, integrated communication platform
that emphasizes brand-building rather than price points; and
• Launching a reimaging program that includes a new logo and
a plan to remodel 75 restaurants in fiscal 2015.
The Olive Garden brand renaissance is beginning to deliver
positive results.
• Guest experience and satisfaction scores are improving across
the system, and we expect these to translate into higher traffic
trends over time.
• Online ordering, including a redesigned Web experience and
the national launch of an online To-Go platform, is underway
and strengthening the take-out business. Currently, To-Go
sales are 8 percent of total revenue, but are growing at a rate of
10 percent annually. Notably, check averages from online orders
are significantly higher than those placed on the phone, which
represents a margin growth driver should these trends continue.