Darden Restaurants: a brand new company with over 27 years of history - Company Profile

Joe R. Lee

A lot has changed since we opened our doors over 27 years ago.

Dear Reader:

What an exciting time for anyone associated with our new company, Darden Restaurants. We've just completed our separation from General Mills Inc., our parent company for the past 25 years. The spin-off has made us the world's largest, publicly-traded casual dining restaurant organization--a company with more than 1,200 restaurants, nearly 110,000 employees and more than $3 billion in annual sales.

But while our name is new, we have a proud and successful history in the restaurant business. Our millions of customers know us as Red Lobster, The Olive Garden and China Coast, our segment-leading restaurant concepts which make us the world's No. 1 choice for casual dining.

We're starting our company with a name that reflects the spirit and values our founder, the late Bill Darden, brought to this venture. He was a visionary, an entrepreneur with a commitment to provide every guest with quality, value and service. Bill also understood the crucial link between a company's success and the quality of its people: its employees, suppliers and owners who share the vision. Today as always it's those people who make the difference for our customers day after day.

We have a great restaurant team, and our new organization will make us even better. As a stand-alone company, we're now in a position to focus our management strengths on business objectives and opportunities. This enables us to react and execute more quickly, and focus on our customers more than ever.

Our focus is firmly on the future. We've already outlined an aggressive list of operating strategies. These include developing distinctive and complementary restaurants, continuing to evolve, consistently providing a high-quality dining experience, and with employees committed to outstanding service and business results.

There are many growth segments in casual dining that we could enter and we will be looking at all of them. We have a solid platform on which to base our growth: Unlike many competitors that are separated from their parent corporations, we have a strong balance sheet and we have tremendous resources to meet our mission and to do the things needed for growth, whether it's researching, testing, or developing. We have proven concepts, an experienced management team, motivated employees, an unrivaled purchasing network, national marketing power and an unflagging spirit of innovation. And since we have a policy to own and operate our restaurants, we're able to keep a close eye on consistency and quality control.

We are very excited about the future and convinced we have a tremendous opportunity to continue to grow the strongest company in our industry.

We will continue to meet or exceed the expectations of our customers, employees, investors and communities.

Continuing to turn the tables on the restaurant industry

When Bill Darden's team opened a seafood restaurant in the small community of Lakeland, Fla. more than 27 years ago, few could have predicted the enormous impact it would have on the dining-out habits of a nation. Darden had a hunch that there was a niche between the highly successful Howard Johnsons and McDonalds of the '60s but below the upscale restaurants--and he was right. His restaurant--red Lobster--immediately proved to be a huge success. More significantly, it also marked the beginning of a dining-out market that's been growing ever since.

We Helped Redefine Dining-Out...

Red Lobster succeeded for reasons that went far beyond great-tasting seafood. What Darden had done was to satisfy the public's hunger for a no-frills concept offering uncommon quality, service and affordable prices. This combination in a full-service restaurant proved such a hit, it soon became apparent that it had national appeal. Eventually, its popularity helped create a new segment for full-service restaurants: casual dining.

... And Continue Expanding The Market

While Red Lobster broke new ground, the second concept we expanded nationally, The Olive Garden, brought casual dining into another food arena. Now we're aiming to replicate those record-breaking performances with China Coast, and other concepts. Twenty-seven years in this business have taught us what it takes to succeed: Always remember the importance of value even in a boom economy--and the public's expectations for a "customer first," ever-fresh and exciting dining experience.

The Sweet Smell of Success

Today, we're the leader in casual dining, with a 10% share and sales over 3 billion dollars this fiscal year. Industry projections point to an even greater future for casual dining, and with our heightened focus, Darden Restaurants is poised to play an even bigger role in a growing marketplace.

We're customer driven

During the '70s, a Red Lobster commercial proclaimed "The way we do things brings people back." Our company's "Guest First" philosophy is more than a slogan. From restaurant design to menu upgrades, decisions are all customer driven.

We Use Extensive Consumer Research

The Olive Garden and China Coast, for example, were entirely consumer-driven restaurants. Extensive consumer research was used throughout the development process to help make decisions in such critical area's as food flavor profiles, menu content, decor and atmosphere.

In our view, this consumer-driven approach has helped make our guests' dining experience more rewarding and enjoyable--and created some major points of difference between us and many other competitors. For example, we listened when consumers told us they preferred larger than standard restaurant tables at The Olive Garden; we also made seating more comfortable by purchasing chairs with rollers, even though installing larger tables reduced the number of tables in the restaurant.

Anticipating Consumer Demand

In the early '80s, we were among the first to formalize customer satisfaction surveys that measure not only our performance, but also look at how we stack up against competitors. In addition to perceptual mapping, we've developed proprietary research techniques that help us anticipate where consumer demand will grow. Another important key to increasing guest satisfaction is tapping into the knowledge and talents of all employees. Over the years, employee suggestions have helped bring a number of improvements to both the back and front of the house in our restaurants.

Meeting Everyone's Needs

Because our focus is to make each customer's experience a special one, we pay attention to the needs of our guests with physical handicaps. For example, hearing-impaired customers at The Olive Garden now can call our customer relations department and reach a Telecommunications Device for the Deaf (TDD) if they want to comment on food or service; we were one of the first restaurant companies to offer such a service. Similarly, visually impaired guests who can't read Braille can now hear the menu on audio tape.

We Let Our Customers Be The Judge

While we always see room for improvement, our guests themselves are the best judge of how we perform. High customer loyalty rates at all our concepts are one indication we're on the right track, as are the consistently good marks we receive in consumer surveys. This year, Red Lobster was named Best Seafood Chain for the seventh consecutive year in a national consumer survey published by Restaurants Institutions magazine; consumers also voted The Olive Garden Best Dinner-house Chain for the sixth year in a row.

Red Lobster gave us our first taste of success

The opening of a Red Lobster still makes front page news, as happened recently in Prescott, Arizona. Not bad for a restaurant concept first introduced nearly three decades ago. After all those years, Red Lobster continues to fill a unique niche in the dinner-house market-and our guests know it.

Record Growth

When you've got that kind of equity in your brand, you can get off to an impressive start. In fact, Red Lobster has never stopped growing. The first Red Lobster was such an immediate success that it became necessary to enlarge it within the first month of operation. Two years later, Red Lobster's five restaurants attracted the attention of General Mills, which purchased the chain and provided the resources for rapid nationwide expansion. Today, Red Lobster is the largest full-service casual dining chain and the leading seafood restaurant company. In 1995,t our more than 700 Red Lobster restaurants are expected to serve 80 million pounds of seafood to more than 140 million guests.

`We Really Brought America Seafood'

Staying on top for 27 years requires many ground-breaking ideas, from Red Lobster's original concept of offering uncommon food quality at moderate prices in a casual setting, to expanding into parts of the country where seafood restaurants were uncommon. "We went into markets in this country where we became the standard for seafood," Jeff O'Hara, vice chairman of Darden Restaurants, says. "You'd be surprised how many people didn't know what scallops were--or rock lobster. We really brought America seafood."

Listening To Customers

Another reason for our continued success is commitment to keeping the concept fresh. "Over time, we have constantly evolved our menu, service, atmosphere and decor to keep pace with and hopefully be on the leading edge of guest trends," says Red Lobster president Kirk Spresser. For example, while the original Red Lobster menu once offered predominantly fried fish, today's menu now boasts a high percentage of grilled, steamed and broiled seafood. Decor upgrades and a renewed emphasis on outstanding value--such as a new 15 dinners under $10 menu--are a few of the reasons our leading share of the seafood dinner-house segment recently increased from 27 to 29%.

We're Setting The Standards For Quality

Attention to quality is another Red Lobster hallmark. Red Lobster's leading-edge quality assurance programs are legendary in the seafood and restaurant industries. For example, a recently-announced government inspection program designed to further ensure the safety of seafood is similar to the one Red Lobster has used since the early 1970s.

Plenty Of Room To Grow

Seafood consumption trends, the marketing clout we enjoy as an industry leader and our commitment to innovate speak well for continued Red Lobster growth. Per capita seafood consumption has increased more than 28% between 1970 and 1993 in the U.S. Besides planning to expand with traditional units, we've developed a new restaurant design that's tailored to smaller communities. This will help fill in our markets and make our national advertising programs more effective. And our brand new, 18,000 sq. ft. test kitchen should further enhance our menu development capabilities. "One of the advantages we have is a group of people who are not satisfied with yesterday's successes," says Spresser. "This is what pretty much drives 60,000 Red Lobster employees."

The Olive Garden set the standard for Italian Cuisine

They said it couldn't be done; matching a dinner-house concept against the independently-owned restaurants that were the mainstay of Italian dining. But our home-grown concept, The Olive Garden, proved the skeptics wrong with a fresh menu built around popular Northern and Southern Italian dishes, a relaxed setting, tremendous value and gracious service. The Olive Garden quickly became THE standard for Italian dining-out in many communities around the country. In the process, it helped broaden the appeal of Italian cuisine.

America's Leading Italian Dinnerhouse

We were the first major restaurant company to identify an opportunity for a chain restaurant within the Italian segment. Growing even faster than Red Lobster, The Olive Garden exceeded $500 million in sales only five years after the decision was made to expand. Just three years later, in 1994, sales had doubled to more than $1 billion. Today, The Olive Garden is the largest chain of casual, full-service Italian restaurants in the country, and while our success has spawned a host of imitators, we remain the only coast-to-coast Italian dinner-house chain. Segment leadership offers a key strategic advantage, as Joe Lee notes: "We have brand loyalty, trust, prices, distribution and advertising efficiencies."

The `Hospitaliano!' Experience

At the heart of The Olive Garden's success is its unique Hospitaliano! culture. Much more than a slogan, "Hospitaliano!" expresses The Olive Garden team's passion for 100% guest delight. "Hospitaliano!" means valuing everyone as family and friends, offering guests more than they expected, and being committed to "do it right the first time." "Hospitaliano!" finds its expression in countless ways, from employees opening the door for each customer to The Olive Garden's president helping cook or wash dishes.

Evolving To Meet (hanging Consumer Expectations

Like any maturing concept, The Olive Garden requires regular spruce-ups to stay fresh and appealing to old and new guests. A pause in the growth momentum signaled the need for a more aggressive stance. We've recently begun laying the groundwork for continued robust growth by revitalizing our menu with an expanded selection, an emphasis on seasonal fare and more intense flavors. We're also looking at ways to update decor and enhance the restaurants' ambience. No less important, The Olive Garden began marketing on network TV for the first time last year. Already these efforts have boosted guest counts and same-store sales--the best indicators of a restaurant concept's continued vitality. In addition, we may be able to augment sales with The Olive Garden Cafe, a concept we're testing that's designed to operate in food courts of regional shopping malls.

The Next Steps

What's most encouraging is that we're a leader in a booming market. Consumer polls show Italian is America's favorite ethnic food. With an average 15% annual growth rate, it's also the fastest growing restaurant sector by menu type. "Guests can dine at an Olive Garden every day of the week and not get tired of the food," says Brad Blum, President of The Olive Garden. "Italian food's diversity is a major opportunity for us and we intend to make the most of it."

China Coast is our newest test

Drawing more than 10,000 customers in the first week could well be a world's record for an Oriental restaurant. Our new China Coast dinner-house in Corpus Christi, Texas accomplished just that--once again suggesting that we may revolutionize the Oriental restaurant market the way The Olive Garden revolutionized the Italian segment.

A Strong Concept in Test

Simply put, we'd like to grow China Coast into America's favorite Oriental restaurant.

* China Coast is a dinner-house we carefully developed to capture what consumers love best about their favorite Oriental neighborhood restaurant, improve on what they like least, and exceed their expectations in food, service and decor.

* With its extensive menu of entrees--including many regional specialties--all made fresh to order, China Coast already is changing the way customers think about Chinese restaurants.

* China Coast offers great value, typified by the complimentary, refillable Jing Jing platter of appetizers featuring China Coast bread with almond spread, crispy Chinese noodles and marinated vegetables.

* Guests tell us China Coast's inviting, comfortable dining rooms--decorated with authentic Chinese artifacts--and personalized, knowledgeable service are a welcome change from traditional Chinese eateries.

Building A Foundation for The future

China Coast exemplifies our company's short and long-term strategy to grow new restaurant concepts. To ensure China Coast meets all future targets, we are simplifying operations, intensifying training and increasing supervisory staff. Another signal of Darden Restaurants' commitment to explore China Coast's full potential was the recent appointment of Ron Magruder as president. Magruder previously led The Olive Garden and is known industry wide for his expertise in rolling out new restaurants.

It's A Wide-Open Market

In our view, China Coast is well positioned to take advantage of key growth opportunities. Oriental food is one of America's favorite cuisines, and full-service Oriental restaurants are a $6.4 billion market. We're also the first major dinner-house chain in a highly fragmented market, where the vast majority of existing restaurants are independently owned and operated. "The Olive Garden proved that you can bring structure with a chain restaurant into that kind of market and gain share quickly," says Magruder. "We intend to do it again with China Coast."

Following Lee's lead

In an industry known for the revolving door at top management levels, the experience, continuity and depth of Darden Restaurants' management team constitutes one of our biggest strategic assets as we face the future as a new company.

We have worked together for many years, leading the company to become the dominant force in casual dining and building long-term relationships with employees, customers and suppliers. Darden Restaurants' top four executives, for example, have been with the company for a combined total of 93 years; seven other senior operating executives average 13 years with the company. Simply put, we may have the most experienced management team in the industry.

Darden Restaurant's chairman and CEO, Joe Lee, is one of the most seasoned and respected veterans in the restaurant business. Lee, 54, was a member of the founding team and manager of the first Red Lobster. He is known throughout the industry for his operation and management skills. First as president of Red Lobster and then as president of Generals Mills Restaurants in 1979, he led the company to phenomenal growth. Lee assembled his team of top operating executives from the ranks of company veterans and assigned them roles that best align their strengths with the new opportunities for growth.

JEFFREY O'HARA

Vice Chairman, Established Restaurant Operations joined Red Lobster in 1970

Jeff O'Hara, 47, is known for his strong skills in running mature companies and keeping them fresh and growing. O'Hara joined the company's restaurant operations in 1970 and, after serving as president of a former General Mills restaurant concept, became president of Red Lobster in 1986. He's now responsible for all Red Lobster and Olive Garden operations. "The dining-out public loved us because we offered quality food at superior value, with friendly, efficient service," O'Hara recalls about his first days with Red Lobster. "Those remain our goals today. We call it putting our guest first." He adds, "I think we understand what it takes to run restaurants successfully. First and foremost, we will be a growth company." He's also a member of the board of directors.

RONALD N. MAGRUDER

Vice Chairman, New Business Operations and President, China Coast Joined Red Lobster in 1972

Magruder, 47, is an expert in rolling out restaurant concepts. At China Coast, Magruder's objective will be to replicate his success of growing The Olive Garden from eight restaurants to 470 and a billion dollar business. Magruder is also known as a strong marketer and motivator of people--to The Olive Garden employees, he personified the Italian chain's people-oriented "Hospitaliano!" philosophy. His objective: making China Coast first choice for Chinese food."

Magruder joined General Mills in 1972 as part of the Red Lobster operating team, held key Red Lobster jobs from Atlanta to Tokyo, and was president of several former General Mills restaurant concepts before being named president of The Olive Garden in 1987. Magruder has responsibility for China Coast, other new concepts, and oversees real estate, design and construction activities. He's also a member of the board of directors.

BLAINE SWEATT, III

Executive Vice President and President, New Business Development Joined Red Lobster in 1976

Considered one of the best creative minds in the restaurant business today, Blaine Sweatt, 47, heads up the company's efforts to develop restaurant concepts for the 1990s and beyond. Sweatt started as a financial analyst with Red Lobster in 1975, became General Mills restaurants' director of new concept development in 1981 and led the team that developed The Olive Garden. Sweatt also created and developed China Coast and was named its president in 1991. He has been in his current position of president, new business development since January 1993. "We have the potential to add at least a half dozen more concepts just within the casual-dining segment," says Sweatt. "Our size will be a distinct advantage for new business development: We have more presence, we know more about the local markets, we have better supervision, and we know more about local codes and media ties." He's also a member of the board of directors.

Taking chances is part of our culture

Back in the '70s and early '80s, General Mills operated several restaurants that have since been sold or converted because the company saw better opportunities elsewhere. A willingness to take a chance is one of the cornerstones of Darden Restaurants' philosophy.

"We encourage risk taking," says Joe Lee about the ongoing search for growth vehicles. "We want a climate that fosters innovation, rewards creativity and encourages experimentation. It means learning from our mistakes and walking away from something that doesn't work--or works but doesn't meet our growth or return on investment standards. We always select the best."

Room for flexibility

While creativity is fostered, a company as big as Darden Restaurants needs structure in its operations to ensure consistency across its markets. That's why we maintain strict standards in such areas as menu, pricing, decor and sanitation. This still leaves plenty of room for local management flexibility. Community involvement, for example, remains a key to our restaurants' success. Because our store managers know best what's right for their market, we let them determine the optimal ways to involve their restaurants.

Moving employees into new roles

A flexible management style is also evident in the way employees get a chance to experience different aspects of the restaurant business. Many of our senior executives are "home grown" employees who have risen to the top in this manner. They include Valerie Collins, who is vice president and controller of The Olive Garden. Collins joined our company as a computer systems specialist and has since held seven positions in nine years. An important aspect of this company is that they're willing to take some risk with their people," she says. "They're willing to move people into new roles that allow them to grow."

Says Kirk Spresser, president of Red Lobster, "Always being ready for improvement is an essential part of our company culture, and with that comes an openness to change."

Fresh ideas keep us on the cutting edge

When customers visit a Red Lobster, The Olive Garden or China Coast restaurant, they know they can depend on the same high quality of food and service they've come to expect. Through the years, dependability has been a key factor in our company's growth.

This, however, doesn't mean we're resistant to change. We continuously update elements of our restaurants to keep our guests' dining experience innovative and fresh, and to stay on top of changing consumer tastes.

Our Menus Are Constantly Evolving

Many of our efforts for staying competitive are focused on the menu, the heart and soul of any restaurant concept. For example, just as Red Lobster's menu has evolved from mostly fried foods to today's lighter and more simply prepared fare, so too has The Olive Garden's menu seen some significant changes over the years. More varied than ever, our menu now includes a number of entrees for guests who are concerned with fat and calorie intake. Called "Garden Fare," these items now account for 25% of all dinner entrees. What's more, as competition continues to increase in the Italian dinner-house segment, we're determined to reinforce our image with a truly authentic and varied Italian cuisine. The Olive Garden's test kitchen in Orlando works closely with the purchasing department in seeking out and testing new recipe ideas. No details are spared to give our food and beverage service a new twist-right down to The Olive Garden's new, hand-painted cappuccino and espresso cups.

New `Wharfside' Look for Red Lobster

Our commitment to modernize not only keeps the menu current, but it also ensures that our restaurants' decor and atmosphere will be inviting. We're not the same restaurant company we were in '74, '84 or even '94. During the mid-80s, Red Lobster remodeled all but its newest restaurants, yet already we're in the midst of converting our restaurants to the very latest decor. With weathered wood on the walls and authentic nautical artifacts, the new "wharfside" look creates a warm and casual seaside atmosphere that is a marked contrast to the light wood and airy interiors that characterized Red Lobster in the 1980s. To date, 35% of the chain has been converted to the wharfside decor, and all new restaurants will have this updated look.

We're Also freshening Our Olive Garden

We're also moving ahead with plans to "reinvent" The Olive Garden to meet changing consumer expectations. Our aim is to create an atmosphere that reflects the classic simplicity, warmth and generous spirit of the Italian way of life. A new design now being tested also lets diners "choose their mood" by offering two different dining experiences--one lively, the other more relaxed--both under one roof. While we've yet to decide on all the details, we're committed to the remodeling of all existing Olive Gardens in the near future.

The philosophy that our employees are at the core of our success has been with us since day one. Plaques are located throughout our headquarters in Orlando bearing founder Bill Darden's sentiment: "I am convinced that the only edge we have on our competition is the quality of our employees as reflected each day by the job they do."

A Terrific Place To Work And G row

Our emphasis on people has gained us a reputation as a great place to work and a great place to grow. The team spirit that prevails throughout our company and our long-standing commitment to provide an equal opportunity for all helps explain why we enjoy one of the industry's lowest employee turnover rates--and arguably the most experienced restaurant staffs in the business. For example, 60% of Red Lobster's restaurant management teams have six or more years of experience; 30% have been on their jobs ten or more years. Nearly a quarter of The Olive Garden's management teams have been with the chain six or more years. And China Coast's multiunit supervisors average a full seven years with our company. In fact, a number of our employees have been with us 20 years or more. Perhaps most telling of our people-oriented culture are the numerous employees who have advanced from entry-level jobs to management and executive positions. "We have great systems and extensive training," says Ted Ruble, Senior Vice President of Personnel and himself a 26-year company veteran. "But what is perhaps most unique about us is the kind of tenure and experience level we have throughout our company."

"What has kept me here for 22 years and what has helped make me succeed is our `guest and employees first' attitude. That's the real soul of the organization: doing the right thing for the guests, doing the right thing for the employee--and not letting employees go out there feeling they don't have the tools to do the job right."

Linda Sampieri Sr. Vice President, Personnel, China Coast Joined Red Lobster in 1972 as part-time server

"We're always thinking about guests and employees at the same time. One of our main priorities here at our department is to make sure that employees are being treated fairly and equally in our restaurants. We have an open door policy--for example, employees can use a toll free number to call us with any question they may have on employee related issues. Everything is always done with an eye on improving the work conditions or our employees."

Tony Morales Employee Relations Representative, Red Lobster Joined Red Lobster in 1985 as server

"When I joined there was only one China Coast restaurant, so I saw a very good challenge and a great chance for myself to grow from that base. Four years later I'm supervising five restaurants. We're now making sure we're doing the right things for future growth, so I see even greater opportunities for advancement .. This company is just a world away from the environment of the family restaurant I used to work for before I came here."

David Tai Area Manger, China Coast Joined China Coast in 1991 as restaurant service manager

"It's been a fun company to work with from day one. You always felt this camaraderie--people having the same vision about what we're doing. And you're always getting new challenges, moving up with the company, never getting stagnant. Plus, there's the sense that you have ownership--that you actually have impact on the success of the company."

Robert Mock Executive Vice President, Operations, The Olive Garden Joined Red Lobster as dishwasher in 1969

"I came on board because this company has wonderful opportunities ahead ... We really have all the resources in terms of the people, the products and the locations to dominate our segments of the industry. What's also special about this company is that it's results that count and not tenure."

Leslie Christon Senior Vice President, Dallas Division, Red Lobster Joined Darden Restaurants in November 1994

"I'll never forget that I got an opportunity to go into management early on, no strings attached. This was at a time when advancement opportunities were pretty limited elsewhere, especially for African Americans. And over the years it's remained a great place to be because there seems to be a purpose to what you're doing, and that's the concept of `guests first' and a day's pay for a day's work."

Walt King Supervisor, Food Research & Development, Red Lobster Joined the Thunderbird Hotel, with a restaurant operated by Red Lobster founder Bill Darden, as fry cook in 1960

Pollock from Iceland, Chianti from Tuscany, rock lobster from Brazil, zucchini and squash from California, shrimp from Thailand ... Darden Restaurants' purchasing team travels hundreds of thousands of miles around the world in an effort to find the highest quality products for our guests.

Working directly with suppliers in nearly 50 countries and pumping over $1 billion into the world's economy through our purchases, our buyers bring home a staggering cornucopia of product: 41 million pounds of shrimp a year ... four million pounds of Parmesan cheese ... nearly 400,000 cases of wine.

A Vast Supply Network

Our vast supply network has its roots in the early days of Red Lobster, when we first set out to establish face-to-face relationships with seafood suppliers all over the globe. Our worldwide purchasing capability now extends to other food and supplies. The experience we've gained in finding product and the purchasing power we've established as the world's largest full-service restaurant company affords us a big strategic advantage. For example, when there's a problem with price or supply in one part of the world, we can use substitutes from another region. Another benefit of our world-wide network is our ability to offer guests a diversity of product few independent competitors can match. What's more, our global contacts provide us with an established supply source for any new restaurant concept we may choose to add to our current portfolio.

Playing A Role In A Global Economy

As one of the largest seafood purchasers in the world, we work with suppliers and processors in numerous countries to develop seafood resources for the future. In fact, because our supply needs are so vast, we've actually helped establish new local industries, such as improved lobster processing in Brazil. Additionally, our experts often work with suppliers to raise the quality and efficiency of their production facilities, thus assuring top quality products at a fair price. We've helped catapult a number of suppliers, both foreign and domestic, into major forces in their markets--from seafood suppliers to Red Lobster, to the vendor that makes the tiramisu we serve at The Olive Garden. In the process, we've gained reliable and loyal business partners for our company.

Standing on the deck of a trawler, a buyer examines the boat's catch of red snapper--pink under the gills, glistening skin--and nods approvingly. At a sparklingly-clean laboratory, a microbiologist peers into a microscope to examine a routine sample of cooked shrimp. In another lab, batches of blue cheese dressing fresh from a supplier are checked for weight, viscosity, purity and color. At a restaurant, an inspector who swooped in unannounced two hours earlier scrutinizes food storage, handling and general sanitation. These far-flung activities are all part of Darden Restaurants' multilayered food safety and quality control procedures--an elaborate quality assurance program that's been recognized as an industry leader. Ranging from strict purchasing standards and inspections at key points of the supply network, to continual lab testing of product and quality control training for restaurant staffs, it's a carefully crafted system of checks and balances that has produced an enviable quality and safety record.

Going Those Extra Steps

Suppliers often tell us we're more fussy about quality assurance than anyone else. For example, besides conducting our own food safety checks, we're one of the few companies that demands federal inspection of all the seafood we buy. Because there is no mandatory government inspection of all seafood, we helped develop a program that allows the U.S. Department of Commerce inspectors to monitor the way seafood is processed, stored and delivered. Such government checks on top of our own ongoing inspections provide a double safety net for the seafood that reaches our restaurants.

State-Of-Art Laboratories

Company-operated food laboratories are the underpinnings of our quality assurance program. They include our Microbiology Laboratory in Orlando, a state-certified facility opened in 1976 where microbiologists continually perform analysis on samples of seafood and commodity products. Company policy says we won't serve anything if we can't guarantee its safety or freshness--one of the reasons why we dropped raw oysters and clams from our menus years ago. The labs also randomly check non-seafood products against specifications to ensure suppliers are providing agreed-upon ingredients and portions.

Over the years, our labs have acted as consultants to other foodservice companies, helping them establish their own quality control labs and test kitchens. "We've historically been recognized as one of the leading proponents of quality control in our industry. No company has the dedication and commitment toward a total quality effort that we do," says C. Dee Clingman, who as vice president for quality control heads up a world-wide crew of assurance managers, quality control inspectors and microbiologists. While we take pride in the recognition we receive from peers, our quality assurance operations are geared toward winning the approval of a restaurant operator's ultimate critic-our customer.

Suppliers: partners in satisfying our guests

Darden Restaurants' suppliers are vendors who are committed to our high quality standards. We view them as partners in our efforts to satisfy our guests.

Meet four of our thousands of partners.

In 1982, Red Lobster executives knew there was plenty of potential in offering its customers fresh seafood from East Coast such as North American codfish or swordfish.

The only obstacle was how to obtain it and ship it to its nearly 400 restaurants.

"They needed to solve not only how to get it there, but to maintain the extremely high standards Red Lobster sets for itself," says Norm Stavis, president of North Coast Seafoods, a federally inspected, total-service seafood processor.

Red Lobster took the challenge to North Coast which, in addition to being a processor, is also one of the few fully integrated seafood suppliers with multiple shoreside off-loading facilities. This gives North Coast extraordinary control over its quality which is just what Red Lobster was seeking.

"We brainstormed and came up with the idea of launching the first overnight, next-day delivery for Red Lobster. We worked with Emery so we could off-load the boats, process the fish, and have it delivered the very next day to all 400 Red Lobster locations. It was a program Red Lobster could be proud of."

That was 13 years ago and Stavis says it is a perfect illustration of the strong ties between North Coast and Red Lobster. "We've built and improved upon this program over the years," he says. Red Lobster, in turn, has been able to market its fresh seafood, giving it a recognized competitive edge.

One of the world's largest producers of spices and flavorings, Maryland-based McCormick & Co. has been a supplier to Darden Restaurants for over 20 years. They have worked closely with our purchasing and menu development departments to design technologies and products that have helped make our kitchen more efficient--and our menus more tasty.

For example, The Olive Garden's popular marinara sauce once was prepared by applying fresh ground garlic -- a very labor intensive process. So Olive Garden food experts asked McCormick to develop a spoonable, fresh frozen soft garlic. By meeting the challenge, McCormick not only met The Olive Garden's needs, it also expanded its own business by being able to apply fresh-frozen technology to other product areas.

"They know what food processors can do in designing custom products. And once trust has been established, they're willing to work very openly and closely with us says Matt Dillon, a McCormick vice president. What's also different about them is that while like others they want us to be the low cost producer, they also literally work with the supplier to achieve this goal and reach a win-win situation for both."

Not too long ago, Sanderson Farms had a hunch that one of its items, a breaded chicken tender, would make an exciting addition to The Olive Garden's menu. The product did so well in tests last year, we decided to roll it out systemwide; now it's one of The Olive Garden's signature dishes.

A major supplier of poultry and seafood gumbo, Mississippi-based Sanderson Farms exemplifies the close collaboration that exists between vendors and our restaurant companies. We actively encourage suppliers to propose ideas that could generate new customer interest--and business--for our restaurants. Our "open door" policy has worked well for forward-looking, quality suppliers such as Sanderson Farms.

"We have been able to work directly with the decision makers of Darden Restaurants in all situations, and this has allowed us to develop a mutually beneficial business relationship," says Bill Sanderson, Sanderson Farms' marketing director.

"Sanderson Farms and Darden Restaurants have an excellent relationship, one that's based on honesty, trust, and customer satisfaction...We're extremely proud to be able to tell people that we do business with Darden Restaurants."

Setting The Standard For Quality

When North Atlantic pollock--a popular item on restaurant menus around the world--was in short supply recently, Red Lobster still received a good working supply from Iceland Seafood, a major U.S.-based seafood processor. This was due to the close working relationships Red Lobster has established with many of its supply sources over the years.

In fact, Red Lobster's association with Iceland Seafood goes back 25 years. "Our people in our plants in Iceland and even our fishermen have met many of the key people at Red Lobster over the years," says Hal Carper, Iceland Seafood's president and chief executive. "Now the producers see Red Lobster not just a large user of fish, but as the person that came to Iceland to meet them. They're a consistent customer, they're established personal relationships deep into our supply sources, and all that has served Red Lobster quite well... What really sets them apart from many of our other customers is that they are very focused on long-term supply of high quality seafood that meets their needs consistently."

A world wide catch

SEAFOOD FACTS

Over 41 million pounds of shrimp are imported from over 27 countries to our restaurants.

Over 25 million pounds of lobster are enjoyed by our customers each year.

We ship over 100,000 pounds per week of fresh fish by air freight or truck transport to all parts of the United States.

We purchase 20% of the world supply of Alaska Snow Crab.

Last year over 5% of all the shrimp consumed in the United States was served by Darden Restaurants.

We purchased over 12 million pounds of white fish last year.

Innovative thinking grows our business

Whether it's been pioneering a global seafood supply network or developing consumer-driven restaurant concepts, innovative thinking has helped make us a "different type of company." But the search for bright ideas never ends. As we continue to grow, we're constantly striving to improve our operations--and operating results--with new systems and approaches.

Integrated Systems

More than 20 years ago, long before the personal computer became the mainstay of everyday business, we were the first full-service restaurant operator in the country to install an integrated point-of-sale computer system that automatically transmitted daily operating data to central office. More recently, we've developed a proprietary back-office system that reduces administrative tasks and frees up managers' time so they can spend more time with our guests. Fully integrated with point-of-sales, it reduces paperwork and automates such tasks as labor scheduling, food production forecasting, ordering and invoicing. For the dining area, meanwhile, we're testing an electronic table management system that will enhance our guests' dining experience by making service more efficient.

Keeping Costs Down

For a company with diverse menu concepts, accurately forecasting inventory needs--especially relatively high-cost seafood--is critical to staying competitive. We use cutting-edge, proprietary electronic menu systems that continually track sales and anticipate demand to help keep inventories to a minimum. Among the menu systems' many features is a program that cuts food waste by comparing a restaurant's actual vs. theoretical food usage--that is, how much food was used on a given day vs. how much should have been used based on the recipes.

We're an integral part of the communities we serve

Every month or so somewhere around the country, groups of Red Lobster, The Olive Garden, China Coast and Darden Restaurants employees don special T-shirts, grab dozens of trash bags, and set off to pick up trash from a local beach, stream, park or other public area. in the four years since the first bag was filled, some 25,000 volunteers have carted away more than 850 tons of debris.

From helping to keep our environment clean to helping the less fortunate, our company and its employees have always maintained an active role in the communities we serve. As a business, we care about giving back the support we receive from guests. As citizens, we take a natural interest in the communities where we live and work, and where our children go to school. That's why we devote considerable resources to our neighbors and a multitude of worthy organizations.

Any corporation can write a check. That's why we've always been especially proud that so many of our employees volunteer for community help programs. Their involvement and compassion, we believe, reflects the people-oriented spirit that has always been characteristic of our company.

Reaching Out

When Hurricane Andrew hit Florida and Louisiana, Red Lobster and The Olive Garden restaurants gave away truckloads of ice to hurricane victims. During the 1993 Midwest flood, dozens of our restaurants in the region organized food and clothing drives. Every year, thousands of employee volunteers spread holiday cheer to needy children with gifts of toys, clothing and food. Our restaurants support the sick, homeless and disadvantaged by organizing fund-raisers and volunteering at local soup kitchens throughout the year.

Partners In Preservation

As the largest full-service casual dining operator in the country, we're truly part of America. Our size gives us the ability to reach communities across the nation through our hands-on volunteers. Our company-initiated "Partnership in Preservation" (PIP) program, for example, is a year-round program that has so far completed hundreds of public area cleanups. Since we started PIP in 1991, more than 500 Red Lobster restaurants have organized a Partners in Preservation program. As an added benefit, PIP and similar community-focused campaigns create a feeling of accomplishment and togetherness among our employees and neighbors.

Champions All The Way

As an employer of many "special people Special Olympics are another worthy cause that's long been close to our hearts. We're a major corporate sponsor of the athletic event, which brings together people with mental and physical disabilities--both young and old--from around the world. Our restaurants take an active part in raising funds and awareness for the Special Olympics on a local level. Earlier this year, for example, we invited law enforcement officers to serve as celebrity servers" in Red Lobster restaurants. The "Tip-A-Cop" event was a big hit with guests and raised large sums--and guest awareness--for the Special Olympics and the games' Law Enforcement Torch Run.

Scouting for Food

Over the past two years, volunteers from The Olive Garden restaurants in Florida have helped collect well over 2,260 tons of food for the homeless and needy by organizing a food drive in conjunction with the Boy Scouts and Girl Scouts of America. The program delivers donated food to designated food banks in our communities.

Focus on training builds foundation for growth

Bill Darden's philosophy that the only edge we have on competitors is the quality of our employees underpins our company's emphasis on training. Providing employees the foundation for excellence and growth in their jobs has been a commitment since our earliest days. Training, in fact, was the first department organized at Red Lobster.

Structured Environment

With 1,200 restaurants and more on the way, developing skilled restaurant managers is a priority. All candidates are put through a 10-14 week in-store training program that's tailored to the individual requirements of our restaurants. This "one size doesn't fit an" training philosophy differentiates us from many other restaurant operators. It's also the reason why virtually all training materials are developed in-house at our Orlando training center, which is staffed by 32 training professionals. Non-manager training is also rigorous. Hourly employees are required to undergo a training program that's followed by one-on-one supervision in the restaurant.

Our Goal: A Skilled and Confident Employee

While teaching essential operating skills, one key objective of our training is to give employees the confidence to do their jobs right. In our view, employees should always have an opportunity to try out what they've learned without being afraid of making a mistake. We use video programs to help employees practice in a safe environment. In fact, we were one of the casual dining pioneers of this approach to learning.

Training Never Stops

We don't stop training at the new manager level. We focus a lot of efforts to train more seasoned managers and help them acquire new business and leadership skills through seminars, video programs, and the classroom. Recently, for example, The Olive Garden general managers had the opportunity to spend a week at the Culinary Institute of America in Hyde Park, N.Y, to study Italian cooking techniques. "What we're doing is creating an environment in which people can be successful personally and professionally," says Eleanor Hill, who heads up the training department. "We're committed to giving people who invest their working lives with us the opportunity to succeed." One of the industry's lowest turnover rates is one indication our training programs are effective: People stay in environments where they are successful.

Preparing For The Future

Training is an evolving process and we're continually searching for and adapting new training methods to make learning more effective, efficient and enjoyable. One goal, for example, is developing "just in time" programs to transfer information via phone, computer or interactive video on demand. As we enter a new phase of growth as a new company, we're committed to focus even more sharply on the business of running the best restaurants.

Soaring the greater heights

An experienced management team ... dedicated employees ... well-positioned concepts ... cutting-edge operational systems ... leadership in a fast-growing market. Few "new" companies have started better prospects for success than Darden Restaurants. And consider: We are well known and our brands are already proven and accepted. And with assets spread fairly evenly across the U.S., we're more immune to regional economic downturns than most other competitors. Another measure of stability: In contrast to most other restaurant companies, we own most of our real estate. With more than $1 billion in equity, our balance sheet will provide the strength and flexibility to support new concepts, including acquisitions. In fact, complacency may well be our biggest threat, not competition. That's why we're determined to keep moving ahead--with the same commitment to quality, value, service and innovative thinking that put us on the road to success more than 27 years ago.

RELATED ARTICLE: NEW IDEAS FOR PERSONNEL

Bright ideas help us perform better throughout our organization. For example, we're developing an interactive video system for job applicants that's meant to act as a hiring tool for restaurant managers. Our aim: hiring the best person for the job. Recently, we set up a peer review process at Red Lobster that communicates to employees our commitment to resolve disputes equitably. We've always had an open-door policy; peer review--still a rarity in the restaurant industry--takes this commitment a step further.

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