- Separate the company's Red Lobster business: Although no final decision has been made on the form of the separation, the Company expects to execute a tax-free spin-off of Red Lobster to its shareholders, but may also consider a sale of the Red Lobster business.
- Reduce unit growth, lower capital expenditures and forgo acquisitions: The reduction in new unit expansion will come primarily from suspending new unit growth at Olive Garden and more limited new unit growth at LongHorn Steakhouse, with new unit growth at the Specialty Restaurant Group continuing at a pace modestly below this year's level. The reduced unit growth will lower capital spending by at least $100 million annually. In addition, given the strength of the Company's brand portfolio post separation, the Company has determined to forgo acquisitions of additional brands for the foreseeable future.
- Increase cost savings: Through aggressive operating support cost management, the Company now expects the cost reduction efforts announced in September to result in savings of at least $60 million annually beginning in its fiscal year 2015, which starts May 26, 2014. This represents a $10 million increase over the $50 million previously projected. The Company will continue to focus on enhanced cost efficiencies as it moves through the separation process.
- Increase return of capital to shareholders: The increased cash flow from reductions in capital spending and operating support expenses will be redirected to support dividends, share repurchase and strengthening of the Company's credit profile. Consistent with its long-standing commitment to return capital to shareholders, Darden has returned over $1.3 billion to shareholders through share repurchases and dividends over the past three years. The Company expects to announce additional details on its share repurchase program as the separation plans are finalized. It is the Company's intention that, on a combined basis, Darden and Red Lobster will maintain Darden's current quarterly dividend of $0.55 per share following the separation.
- Refine compensation and incentive programs: To ensure strong alignment behind the Company's strategic direction, the Company's Board of Directors intends to refine compensation and incentive programs for senior management to more directly emphasize same-restaurant sales growth and free cash flow.
Darden Announces Comprehensive Plan To Enhance Shareholder Value
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