This is painful for me to write. It goes against my inherited professional DNA to even hint at this, much less put it into print for the industry to read. It’s kind of like pulling adhesive tape off from sensitive skin; let me just say it quickly and get it over with. Darden is the best run company in the casual dining industry.

Wow…that wasn’t as bad as I thought it would be. Deep down, I must have suspected it for a while.

After spending two decades in two Norman Brinker organizations, Steak and Ale and Brinker International, it is only natural that I come to this conclusion slowly, carefully, even reluctantly. Except for one head-to-head matchup, Olive Garden vs. Romano’s Macaroni Grill, I have never felt that we were true competitors. At Steak and Ale, and then at Brinker, we did our thing, and Darden did their thing.

Two large restaurant portfolio companies that went their own way, based on their views of the casual dining industry. It is kind of like Florida and California. You have two different states, trying to attract businesses and tourists, who do it in completely different ways.

Thirty years in the industry puts you in the same room with people from a lot of different restaurant companies. Participating in industry coalitions, public affairs, strategic initiatives, and countless industry conferences over the years results in meeting a lot of leaders. I have always been impressed with the leaders from Darden. They remind me of the differences in two types of pilots.

In flying a plane you have two options: VFR and IFR. Visual Flight Rules (VFR) lets you take off and fly where you want, when you want, and how you want, within certain limitations,. You are free to fly based on instinct and desire. It is a lot of fun, and doesn’t require as much training.

Instrument Flight Rules (IFR) requires a flight plan to be filed that lays out your intentions. You have to say when you will fly, where you will fly, and you are told by air traffic controllers how you will fly. To qualify for IFR requires a license that takes a lot of training and practice to obtain. You must learn how to trust the flight instruments of the plane, not your own instincts. It is, however, safer for all involved.

It is an oversimplification of the casual dining industry, but I believe that most restaurant companies fly VFR, while Darden flies IFR. The decisions made at Darden are based upon constant research of their customers and the industry. Their leaders don’t guess that they are doing a better job, or worse job, with their concepts. They know.
  
         

All restaurant companies conduct some level of customer research. What separates Darden from the rest of the casual dining industry are two things. The first is that their research is a religion within the company. Their brand leaders consult it frequently, and use it to answer questions that are on the fringes of their knowledge. Too often, other companies use research to confirm what their instincts are telling them.

The second is that their leaders have the discipline of packaged good marketers, but the souls of restaurateurs. Package good marketers take a brand and develop and evolve it. Restaurateurs don’t think of their restaurants as a “brand”. A restaurant feeds people through the efforts of people. I don’t know if the current CEO, Clarence Otis, follows the practice established under the former CEO, Joe Lee, but there used to be a $1 fine in any meeting where you referred to a restaurant as a “unit” or a “store”. A simple way to remind people of the business they are in.

Darden held their 1^st quarter F’09 earnings conference call last month. I read the transcripts of the conference calls of a lot of different restaurant companies. It is one of the best educations that you will receive in learning how different organizations think, plan, react, and operate. I invite you to read how the leaders at Darden think, and how they are responding to the current environment. If you don’t have time to read the whole conference call, at least read the prepared remarks by Drew Madsen, president of Darden. These guys are really on top of their business.

For me, one of the most noticeable qualities of the company is that they compare their comp sales to that of the casual dining segment. Most companies quote their comps only in comparison to how they did the year before, not how they are performing against their competitors. This is an internal benchmark that is so ingrained in the way that they judge themselves that it is quoted to the investment community in the company’s public disclosures.

Like professional athletes, the Darden concept leaders have tough performance goals that are wide-ranging.  The goals are not just financial in nature; they include important consumer ratings that are managed for annual improvement. It’s tough to compete against a concept that has set quantifiable improvement as an annual goal.

Sometimes, when times are tough and you aren’t sure what to do, the best thing that you can do is to follow the leader. They got there for a reason.