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  "documentTitle": "Darden Restaurants, Inc. (DRI)",
  "authorId": "03_Starboard_Value",
  "authorName": "Starboard Value",
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  "presentationDate": "2014-09-11 00:00:00",
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  "notes": "Uses a bar chart to compare EBITDA margins on a fully-leased basis, highlighting Darden (DRI) as an outlier.",
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      "kind": "callout",
      "text": "Despite high AUV and ~4.5x the scale of peers on average, Darden’s operating performance is significantly worse than peers",
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      "text": "We believe fully-leased EBITDA is the best metric by which to judge Darden’s operating performance, as opposed to the earnings generated through site selection and capital investment in real estate.\nTo calculate fully-leased EBITDA, we adjusted Darden and each of its peers’ EBITDA assuming that they pay full market rent on every location that is owned or Ground Leased.",
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      "text": "Since Darden owns substantially more real estate than peers, Darden’s reported operating expenses are meaningfully understated compared to peers, and Darden’s margins are therefore overstated.\nExcluding the rent “subsidy” that Darden currently gets from owning its properties, Darden’s operating performance is substantially below peers.",
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      "text": "EBITDA margin: 7.3%",
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      "text": "Management seemingly gets a perceived benefit from owning real estate.",
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      "text": "Source: Company filings, Capital IQ, company presentations and Green Street Advisors. Note: Assumes $27.10/rent per square foot for owned properties and $10.65/rent per square foot for ground leased properties. If adjusted for franchised stores, assuming a 40% margin on franchised revenue, the median EBITDA margin equals 10.3% and the average equals 9.9%. * Denotes at leased 20% franchised properties. (1) BWLD leases the land and building for all sites or utilizes ground leases, but does not specify the number of ground leases: no adjustment has been made. (2) Assumes $65.00/rent per sq. ft. for single owned property.",
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      "kind": "title",
      "text": "It appears that management is addicted to the “subsidy” of free rent?",
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      "text": "Management’s incentives with regard to the real estate appear to conflict with those of shareholders",
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