Yard House Parent Faces Pressures from Activist Shareholder

An activist shareholder is calling for restaurant operator Darden Restaurants Inc.—the parent of Irvine-based Yard House USA Inc.—to be split.

Orlando, Florida-based Darden owns multiple restaurant chains, including Red Lobster and Olive Garden.

It's been facing pressure from activist shareholder Barington Capital Group LP, a New York investment firm, which said it is leading a group of shareholders that have a more than 2% combined stake in the company.

Barington said Thursday it hired investment banking firm Houlihan Lokey and proxy services specialist MacKenzie Partners to conduct a review of its proposal for Darden.

Barington is calling for Darden to spin off Red Lobster and Olive Garden into a separate company, leaving Yard House, Capital Grille, Seasons 52 and other chains it sees as having strong growth prospects as part of another entity.

Red Lobster saw U.S. same-store sales fall 5.2% in the August quarter, while Olive Garden’s comparable sales fell 4%.

Darden reported a 37.6% decline in overall earnings during the August quarter to $70.3 million. Sales rose 6.1% to $2.03 billion, with the growth partially attributed to the addition of Yard House.

Darden paid $585 million for Yard House in July 2012.

Yard House now counts more than 40 restaurants in 17 states.

Darden shares closed up about 1% on Thursday to a market value of $7 billion.