Friday, October 10, 2014

Opportunity costs at Olive Garden.

Olive Garden restaurants don't pay rent to the parent company, Darden.  This raises the question as to whether the true opportunity cost of the real estate that the restaurants sit on is being fulling realized.

The situation has has come to a head now that an activist investor has replaced the entire Board of Darden restaurants in order to effect a change.  

This is a great example of corporate governance and capital budgeting interacting.

Prediction:  Fewer Olive Garden restaurants.