Former Darden Restaurants operations guru Dave George has been appointed to the board of Outback Steakhouse parent Bloomin’ Brands under an agreement between the Darden arch-rival and one of its disgruntled stockholders, Starboard Value.
The agreement also calls for a seat to be given to Starboard partner Jonathan Sagal and for Starboard CEO Jeff Smith to have access to “non-privileged” meetings of the Bloomin’ board and its committees during the next eight months.
In addition, the pact calls for the creation of an “Operating Committee” of directors, with George serving as chairman. The other members are Sagal, former Staples CFO John Mahoney and one-time Best Buy COO and current Bloomin’ board chairman Mike Mohan. The group’s charge is “identify and recommend opportunities for further improvement,” Bloomin’ said.
The board changes will temporarily expand Bloomin’s board from nine to 11 seats, with the tally dropping to 10 after the steakhouse operator’s 2024 shareholder’s meeting.
Bloomin’ said in a press release that the board changes “reflect the Company’s ongoing commitment to constructive shareholder engagement.” Starboard, which holds 9.7% of Bloomin’s stock, has expressed dissatisfaction with the company’s recent performance and market valuation. The investment firm noted last quarter that Bloomin’ is trading at roughly a 50% discount to Darden and Texas Roadhouse, another director competitor, on an enterprise-value-to-EBITDA basis, despite having better cash flow.
For George, the situation might feel like déjà vu. He was instrumental in improving the financial performance of Darden, and its Olive Garden chain in particular, after Starboard engineered a complete turnover of Darden’s 12-member board in 2014.
Jon Sagal, Dave George
Darden has since become one of casual dining’s star financial performers, a result of what the company characterizes as an operational back-to-basics drive.
Though George was a lynchpin of that drive, he opted to retire from Darden in late 2020 as part of an 11% reduction in the company’s workforce. He and 224 other employees accepted an early retirement package, though George was only 64 at the time. The company made a special concession and approved his eligibility for the exit settlement despite being under the threshold age of 65, in recognition of his contribution to the company.
He had worked for Darden or its predecessor companies for 23 years at that point.
George has been retired since then, though he was retained in the third quarter of 2023 by Starboard to advise the company on leveraging its investment in Bloomin’.
In their new roles, George and Sagal will be paid an annual retainer of $95,000 and $155,000 per year in restricted shares of Bloomin’ stock.
Outback competes head-to-head with Darden’s LongHorn Steakhouse, which George once served as president.
Bloomin’s other holdings include Carrabba’s Italian Grill, a direct competitor of Olive Garden; Bonefish Grill; the fast-casual upstart Aussie Grill by Outback; and Fleming’s Prime Steakhouse & Wine Bar, a rival of Darden’s The Capital Grille and Ruth’s Chris steakhouse chains.
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