Starboard has a roughly 9% stake in Darden Restaurants, Olive Garden's parent company, and has been critical of the way it serves the sticks. Not that Smith doesn't love them. In fact he professed his love for them at a fairly contentious annual meeting once.
"I say 'hi, I'm Jeff Smith I'm from Starboard Value and I love unlimited breadsticks.' We're going to use that great brand equity and we're about to come out with breadstick sandwiches.... Chicken parm on breadsticks?"
Could be solid.
Starboard took an activist stake in Darden back in the fall of 2014. It then delivered a 300 slide deck about improvements it wanted to make to Darden's properties, including Olive Garden. Changes ranged beyond breadsticks to things like how Olive Garden could change take-out packaging to be less wasteful and cook better pasta. Starboard ultimately changed the company's board and put in a new CEO.
"It wasn't about getting rid of the breadsticks," Smith said to Wall Street Week hosts Gary Kaminsky and Anthony Scaramucci. "It was about reinstating discipline."
Olive Garden had simply gotten away from its previous rule of serving breadsticks equal to the number of people at the table plus one, he said.
No matter, what Starboard found was that America is kind of obsessed with the bread sticks. And the fund's presentation went from merely reaching the staid world of financial media to getting "lampooned" on late-night talk shows.
Sales at Olive Garden were up 3% in the first quarter of 2015, and Darden crushed earnings estimates. The stock is up 9% year to date as well.
You can watch the full episode of Wall Street Week here.