Restaurant advisor and investor, Brad Blum
Starboard Value L.P., a New York-based investor that owns 5.5 percent of outstanding shares in Darden Restaurants Inc., has hired Brad Blum as an advisor in its ongoing efforts to effect major changes at Darden.
In a filing with the Securities and Exchange Commission Thursday, Starboard said it had retained Blum for a $50,000 fee “in view of Mr. Blum’s unique skill set, broad restaurant industry experience and extensive restaurant industry knowledge.”
Blum, who for the past few years has been more of an advisor and investor than an everyday restaurant executive, from 1994 to 2002 served as president of Olive Garden, which has struggled to grow traffic and sales for Darden recently, as has sibling chain Red Lobster. In his career, Blum also has led Burger King and Romano’s Macaroni Grill, winning a MenuMasters Innovator award from Nation’s Restaurant News in 2010 as chief executive of the latter.
At press time, Blum declined to comment through a representative, and Starboard could not be reached for comment. It is unclear whether Blum would seek an appointment for himself to Darden’s board of directors.
Earlier this month, Starboard issued a letter to Darden’s board criticizing the company’s decision to seek a spinoff or sale of Red Lobster as not going far enough to unlock shareholder value. Since December, Starboard has joined another activist investor, Barington Capital Group L.P., in calling for, among other moves, the breakup of Darden’s two flagship chains from its LongHorn Steakhouse brand and the Specialty Restaurant Group of high-growth concepts.
Like Barington, Starboard also has called for Darden to split the chief executive and board chairman roles that Clarence Otis has held at Orlando, Fla.-based Darden since 2005. The two investors also are in lockstep in calling for a massive sale-leaseback transaction involving the 2,100-unit casual-dining conglomerate’s owned real estate.
In its Feb. 10 letter to Darden’s board, Starboard threatened to nominate a majority slate of new directors at the casual-dining company’s annual shareholder meeting in May, when all 12 directors are elected to their seats.
Blum entered into a similar consulting agreement with Deerfield, Ill.-based Così Inc. two years ago, after unsuccessfully campaigning to become chief executive of the fast-casual chain. At the time of the agreement, his Florida-based investment firm, Blum Growth Fund, held about 6.8 percent of Così’s outstanding stock.
More recently, Blum remained active as an investor in upstart restaurant brands with a healthful focus through a separate investment firm called Five to Seven. He founded that venture last May with British restaurateur John Vincent to raise $50 million to spread “the five principles of good food to seven continents.”
In the second quarter of fiscal 2014, ended Nov. 24, 2013, Darden reported a 41.1-percent decline in profit, to $19.6 million, or 15 cents per share, as well as same-store sales declines of 0.6 percent and 4.5 percent for Olive Garden and Red Lobster, respectively.