1. Policy Presentation
Zach Bach, A.J. Buono,
Jacob Kopinetz, Samantha Picciott,
Nicole Taylor, Robert Zappaterrini
DARDEN
RESTAURANTS,
INC.
Zach Bach, AJ Buono,
Jake Kopinetz, Samantha Picciott,
Nicole Taylor, Robert Zappaterrini
STRATEGIC MENU

2. 2

3. 3
Brands:

4. “Be financially successful through
great people consistently delivering
outstanding food, drinks and service
in an inviting atmosphere, making
every guest loyal!”
Mission:
4

5. Overview:
Sales by Segment
Olive Garden
LongHorn Steakhouse
Yard House
The Capital Grille
Bahama Breeze
Season’s 52
Eddie V’s
56.03%
22.84%
6.95%
5.96%
3.09%
1.43%
3.53%
5

6. Overview:
Sales by Segment
6

7. 7

8. Strengths Weaknesses
-Poor Waste
Management
-Lack of Focus on
Smaller Brands
-Bahama Breeze
-Diversified
Restaurant Mix
-Large Operational
Network
-Dietary Approved
Menu
8

9. Opportunities Threats
-More Efficient
Technology Available
-Favorable Growth
Trends
-Intense
Competition
-Economic Trends In
Consumer
Spending
9

10. SITUATION ANALYSIS:
KEY FINANCIALS
10

11. 11

12. First Course:
Overview
Bahama Breeze
Divestiture
Stagnant Historical and Future
Projected Growth for Bahama Breeze
Bahama Breeze Sales Growth
12

13. First Course:
Objective
Sell Bahama Breeze:
$335.5 million
Focus on
Long-Term Stability
Focus on Darden’s current
growing brands
Pay off long term debt
Note 8: 2035 $150 Million
Prevent future negative sales of
the brandSell Bahama Breeze:
$283.5 million
13

14. First Course:
Financials
Bahama Breeze Divestiture:
Purchase Value: $283.5 Million
Sales Value: $209 Million
PP&E Value: $74.5 Million
Selling Price Net of Tax: $208 Million
14

15. First Course:
Pro Forma
15

16. Second Course:
Overview
CREATING AN
EXPERIENCE BASED ON:
“GRAB YOUR FRIENDS,
WE’LL HAVE THE
BEER”
Yard House
Advertising
16

17. Second Course:
Objective
Increase Yard House
Marketing Expense:
$9.76 Million
31% Increase in Advertising Spend
Focusing on the Specific Market Segment
of Millennial Males
Increase Brand Loyalty and Brand Recall
17

18. Second Course:
Implementation
18

19. Second Course:
Implementation
19

20. Second Course:
Implementation
20

21. FISCAL
YEAR
SALES
INCREASE
2016 12%
2017 10%
2018 8%
2019 6%
2020 6%
An increase in spending on advertising
will drive an increase in revenue for
Yard House Restaurants
Second Course:
Financials
21

22. Second Course:
Pro Forma
22

23. COURSE TWO:
Overview
Third Course:
Overview
Inventory
Optimization
28 ½ Blue Whales
10 MILLION POUNDS OF
AVOIDABLE FOOD WASTE
ANNUALLY
125 Tractor Trailers 22 Statues of Liberty
23

24. Third Course:
Objective
5.5 million implementation cost
$$$ Annual subscription cost
Integrate additional POS
system:
Syrus
Decrease Cost of Goods Sold
Increase Bottom Line
Third Course:
Objective
$5.5 Million Initial Investment
Decrease Food Cost
Increase Darden’s Bottom Line
Implementation of Additional
POS Software
Forecast Inventory
Minimizes Over Purchasing
Supply Chain Management
24

25. Third Course:
Financials
Initial Cost: $5,487,200
Year 2: $2,797,200
Year 3: $2,833,200
Year 4: $2,869,200
Year 5: $2,905,200
*Initial Cost accounts for one-time
training, implementation, and consulting
fees
25

26. Third Course:
Pro Forma
26

27. 27

28. Dessert:
BOTTOM LINE BY 2020:
With Strategies:
$720.9 Million
Without Strategies:
$530.8 Million
Difference:
$190.1 Million
Percent Change:
35.81%
TOP LINE BY 2020:
With Strategies:
$9,696.8 Million
Without Strategies:
$9,563.3 Million
Difference:
$133.5 Million
Percent Change:
1.4%
LONG TERM OBJECTIVES:
Continue to lower Long-Term
Debt Obligations
Focus our remaining
brands to continue strong
growth
28

29. Dessert:
Combined Projected Pro Forma
29

30. Policy Presentation
Zach Bach, A.J. Buono,
Jacob Kopinetz, Samantha Picciott,
Nicole Taylor, Robert Zappaterrini
DARDEN
RESTAURANTS,
INC.
BILL
QUESTIONS?
Thank You! Please Come Again.
30
Situation Analysis $20
Divestiture of Bahama Breeze $20
Yard House Advertising Plan $10
Inventory Optimization System $30
TIP
TOTAL PROJECT

31. Appendix
31
International Expansion Same Brand Sales Growth Advertising Plan Inventory Optimization
Brand Restructuring Disposable Personal Income Olive Garden Rebrand Inventory Optimization NPV
Free Cash Flows Bahama Breeze Key Assumptions Yard House Persona Common Size - Combined
Additional Four Locations Bahama Breeze Divestiture Yard House Maps Common Size - Divest
Distribution Centers Bahama Breeze Divestiture (Excel) Yard House Key Assumptions Common Size – YH
Entrée/Ticket Price Red Lobster Yard House Advertising Plan Common Size – Inv Op
Stores in United States Yard House Effect on Net Earnings Yard House Media Schedule Common Size - Base
Sales Key Figures Yard House Marketing and Media Yard House Social Media

32. International Expansion
Darden has not had consistent success with
international operations
32

33. Brand Restructuring
BAHAMA BREEZE: 8000
YARD HOUSE: 12,652
REJECTED: On basis of not having
enough square footage for Yard House
33

34. Free Cash Flows
35

35. Avoid Additional Four Locations
Initial Investment -$37,158,960
CF1 $2,452,378
CF2 $4,091,729
CF3 $6,491,641
CF4 $7,207,842
CF5 $7,941,618
WACC 3.08%
NPV -$11,793,858
35

36. Distribution Center
Conkillin, New York
Anover Park, Illinois
Westborough, Massachusetts
Farmingdale, New York
Oakwood, Ohio
Savage, Maryland
Arlington, Tennessee
Worcester, Massachussets
Orlando, Florida
Terrell, Texas
36

37. Entrée/ Ticket Price by Restaurant
Olive
Garden
LongHorn
Steakhouse
The Capital
Grille
Bahama
Breeze
Yard
House
Eddie
V’s
Seasons
52
Lunch $7-15 $7-15 $12-39 $7-21 $7-32 N/A $8-31
Dinner $10-20 $12-25 $16-59 $9-30 $7-32 $18-61 $11-31
Average $17 $20 $75 $45 $31 $90 $26
37

38. Stores in the United States
Olive
Garden
LongHorn
Steakhouse
The Capital
Grille
Bahama
Breeze
Yard
House
Eddie
V’s
Seasons
52
Stores 846 480 54 36 59 16 43
Franchised 20 13 1 0 0 0 0
2015 2014 2013
Olive Garden 846 837 828
LongHorn Steakhouse 480 464 430
Yard House 59 52 44
The Capital Grille 54 54 49
Bahama Breeze 36 37 33
Seasons 52 43 38 31
Eddie V’s 16 15 12
38

39. Sale Key Figures
2015 2014 2013
Sales
(Millions)
$6,764.0 $6,285.6 $5,921.0
2015 2014 2013
Olive Garden 56.03% 57.96% 62.23%
LongHorn
Steakhouse
22.84% 22.02% 20.79%
Yard House 6.95% 6.66% 4.36%
The Capital
Grille
5.96% 5.78% 5.60%
Bahama
Breeze
3.09% 3.21% 2.93%
Seasons 52 3.53% 3.12% 2.67%
Eddie V’s 1.43% 1.25% 1.10%
39

40. Same Brand Sales Growth
2016 2017 2018 2019 2020
Olive Garden 2% 2% 2% 2% 2%
LongHorn Steakhouse 12% 12% 12% 12% 12%
Yard House 18% 16% 14% 12% 10%
The Capital Grille 10% 10% 10% 10% 10%
Bahama Breeze 4% 4% 4% 4% 4%
Seasons 52 20% 20% 20% 20% 20%
Eddie V’s 22% 22% 22% 22% 22%
40

41. Disposable Personal Income Calculation
Credibility Weighted Forecast
Disposable Personal Income Yearly
Increases
2016 - .24%
2017 - .22%
2018 - .21%
2019 - .21%
2020 - .21%
41

42. Disposable Personal Income Calculation (contd.)
42

43. BAHAMA BREEZE
BACKUP SLIDES
43

44. Bahama Breeze Key Assumptions
BB Sales $209 million Followed treatment for Red Lobster Disposal
BB PP&E Valuation $54.6 million BB’s Portion of Darden’s PP&E
BB Land-Only Leases 16 Portion of Total Restaurants
Ground and Building Leases 2 Portion of Total Restaurants
Space/In-Line/Other Leases 5 Portion of Total Restaurants
Owned Sites 13 Portion of Total Restaurants
BB Food/Beverage Expense $69.5 million Portion of Total Sales
BB Restaurant Labor Expense $69.9 million Portion of Total Sales
BB Restaurant Expenses $37 million Portion of Total Sales
BB Marketing Expenses $0.4 million Darden Marketing Plan - Red Books
BB Depreciation Expense $52 million Straight-line depreciation
Interest Expense from Note 8 $18.6 million $150 million note at 6% interest due in 2035
Red Lobster % of Sales 85.77% Darden 10-K (2014)
44

45. Bahama Breeze Divestiture
Bahama Breeze Divestiture (Sales)
BB Sales $209,000,000
Tax Rate 26.63%
BB Sales, net of Tax $153,340,000
$208 million
(after tax)Bahama Breeze Divestiture (PP&E)
BB PP&E, net depreciation $74,450,000
Tax Rate 26.63%
BB PP&E, net of Tax $54,620,000
45

46. Red Lobster
Red Lobster Divestiture (Sales)
Restaurant Sales $2.46 billion
RL Sale Price $2.11 billion
% of Sales 85.77%
Red Lobster Sales Info
2013 $2.62 billion
2012 $2.67 billion
2011 $2.52 billion
2010 $2.49 billion
2009 $2.62 billion
46

47. PROPERTY, PLANT, EQUIPMENT, AND SALES VALUATION OF BAHAMA BREEZE
47

48. YARD HOUSE BACKUP
SLIDES
48

49. YH Advertising Effect on Net Earnings
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
20162017201820192020
Net Income
(millions)
Net Income (millions)
2016 2017 2018 2019 2020
YH Plan $610.87 $769.70 $939.03 $1108.05 $1285.34
YH Org. Growth 554.48 643.20 733.25 821.24 903.36
Difference 56.39 126.50 205.78 286.82 381.98
Addn’l F/B 17.60 39.83 65.26 91.48 122.37
Addn’l Labor 17.69 39.30 63.20 86.95 114.15
Addn’l Rest. Exp 9.37 21.02 34.12 47.38 62.79
Net Earnings $11.72 $26.35 $43.20 $61.01 $82.67
51

50. Yard House Marketing and Media
Craft Beer Buzz Words:
50

51. Advertising Plan
FISCAL
YEAR
SALES INCREASE
2016 12%
2017 10%
2018 8%
2019 6%
2020 6%
51

52. Yard House: Target Persona
52

53. Olive Garden Rebrand (2014)
2015 2014 2013
Olive Garden $3,789.60 $3,643.10 $3,684.80
Darden spent an additional $11 million on marketing
exclusively for Olive Garden which increased sales by
5.5%.
53

54. Yard House Map of Locations/Stadiums
54

55. Yard House – Additional Locations
55

56. Yard House Marketing Plan Key Assumptions
Yard House Sales Base Business Pro Forma
Marketing Sales Increase in sales of 12% (2016), 10% (2017),
8% (2018), 6% (2019), and 6% (2020)
YH Food/Beverage Expense (2016) $14.6 million Portion to YH Sales
YH Labor Expense (2016) $14.8 million Portion to YH Sales
YH Restaurant Expense (2016) $7.8 million Portion to YH Sales
YH Increase in Sales Followed treatment for Olive Garden re-brand
Olive Garden Rebrand Sales Increase 5.5% Darden 10-K (2014)
Social Media Reach % Increase 20% Followed treatment for Olive Garden re-brand
56

57. Advertising Plan
57

58. Media Schedule
58

59. Social Media Plan
59

60. INVENTORY
OPTIMIZATION BACKUP
SLIDES
60

61. Percentage Allocation: Food 87.49% Darden 10-K; Proportion of Breakdown of Beverages
Percentage Allocation: Beverage 12.51% Darden 10-K; Cost Breakdown of Beverages
Syrus Consulting Cost $500,000 Syrus Industry Professional
# of Employees to Train 140,000 Darden 10-K
Minimum Wage $7.95 Average of 50 States
Hours of Training 2 Consultation with Syrus Industry Professional
Annual Software Cost Per Store $1,800 Consultation with Syrus Industry Professional
Annual Store Increase 20 Darden 10-K; Historic Growth Trends
Food Cost Decrease 2%-4% Consultation with Syrus Industry Professional
61
Key Assumptions

62. Initial Investment $5,487,200
CF1 $39,390,000
CF2 $52,270,000
CF3 $66,250,000
CF4 $81,290,000
CF5 $97,250,000
WACC 3.08%
NPV $297,970,804
62
NPV Analysis

63. Capital Grille
63

64. Eddie V’s
64

65. Seasons 52
65

66. Darden Restaurants
66

67. Overview:
Presence of Darden Restaurants per State
67

68. Common Size – Base Projections
68

69. Common Size – Combined Strategies
69

70. Common Size - Divestiture
70

71. Common Size – Marketing Plan
71

72. Common Size – Inventory Optimization
72
Common Size – Inventory Optimization