Go Mobile | RSS | SLS Website Fall  2014, Issue #91
Stanford Lawyer
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In Focus

Clarence Otis: Leading a Casual Dining 
Empire

Photo by John Loomis

Clarence OtisAs the chairman and CEO of Darden Restaurants, Inc., Clarence Otis Jr. likes to know what’s cooking. So at least twice a week—whether he’s on the road or at home in Florida—the genial 56-year-old executive sits down for a business lunch, or dinner with his wife, at one of his company’s ubiquitous chain restaurants: Red Lobster, Olive Garden, LongHorn Steakhouse, 
Bahama Breeze, Seasons 52, The Capital Grille, Eddie V’s, or Yard House.

Late-night comics and foodies may joke about the mass-market cuisine, but that hardly matters to Otis, JD ’80. His stockholders are laughing all the way to the bank. Despite a chilly economic climate, share prices have roughly doubled since Otis took over Darden’s helm in 2004. With 185,000 employees at 2,000 outlets and annual sales of $8 billion, the 
Orlando-based corporation today ranks as the largest full-service 
restaurant operating company in the world.

Otis never imagined he would be marketing endless shrimp platters, let alone be one of six 
African-Americans currently chairing or directing a Fortune 500 company. Just climbing out of his South Central Los Angeles neighborhood was an achievement. Born in Vicksburg, Mississippi, Otis moved to Watts as a youngster and has vivid memories of the riots that tore the city apart in 1965, when he was 9 years old. “Our landlord, Mr. Perez, had his store burned just down the street,” he recalls in a phone 
interview from his glass-fronted headquarters. “I remember the 
National Guard, the military presence.”

Fortunately for Otis and his three siblings, the riots had a silver lining. After the smoke cleared, federal funding poured into his neighborhood, along with a small army of community volunteers and educators determined to make a difference. His home life was anchored by a homemaker mother and a no-nonsense father who was employed as a custodian for the City of Los Angeles. Both had seen hard times growing up in the segregated South, but nevertheless had done well in school up to the eighth grade. They expected their children to go further, regardless of conditions on the street.

Growing up, Otis was particularly fond of books, and by ninth grade the gifted youngster had read almost every novel and biography in the Watts public library. He continued to excel academically while playing football at Jordan High School; then he won a scholarship to Williams College in Massachusetts, where he majored in 
economics and political science and eventually graduated magna cum laude with a prize in political science writing.

After Williams’ preppy atmosphere, Stanford Law School was a warm change of scenery. “Williams was pretty diverse ethnically,” Otis recalls, “but at Stanford, kids came from state universities, big states, small states, rural areas.” Among his best friends on the Farm was Ken Shropshire (BA ’77) also from Los Angeles. “Clarence really is the smartest guy I have met in person,” says 
Shropshire, now a professor of legal 
studies and business ethics at Wharton. “I remember once I casually asked him about something in a microeconomics textbook and he immediately began rattling off insights about it.” At the same time, Shropshire recalls, “He had the most infectious laugh. … It was very easy to talk with him and hang out.”

At Stanford, Otis started out thinking he might be a constitutional lawyer, but before long he switched to the corporate side, noting that “the resources you could influence there were much more significant.” He worked for four years as a securities lawyer in New York, then moved on to investment banking at Kidder, Peabody & Co. He became a vice president at First Boston Corporation when he was barely 30. Then in 1991 he went to Chemical Bank, where he played a key role in turning around its struggling public finance division.

When Otis was recruited by Darden for the post of treasurer in 1995, he saw it as an opportunity to advance in senior management at an interesting time, while the organization was spinning off from its parent company, General Mills. He correctly predicted that its “casual dining” market niche—high-volume sit-down restaurants a cut above fast-food joints—would be growing rapidly in the years ahead, and he wanted a bite of the action.

Over the next decade, Otis and his team acquired building sites and 
financed new restaurants all over the country, preferring to own rather than franchise. He became CFO in 1999, took over one of the company’s newest units, Smokey Bones, three years later and was named CEO in 2004, 
succeeding a longtime Darden chief who was also a member of the Red Lobster founding team, Joe R. Lee.

Otis particularly prides himself on Darden’s reputation as an employer. In 2013, Darden was named to Fortune magazine’s “100 Best Companies to Work For” list for the third year in a row. Keeping the balance sheet profitable has been more of a struggle. “Clearly when you’ve got a group of brands that serve the mass market the way we do, the fact that so many people are financially stressed is a challenge,” he says. “You’ve got to modify the business to make it accessible to guests who don’t have the kind of purchasing power that they had. We try to innovate on the menu side, to develop promotional offers that are compelling and exciting while being lower priced.”

As for the frequent Olive Garden jokes by Jay Leno and Conan O’Brien, Otis says, “That simply tells me how out of touch they are with the overwhelming majority of Americans.” He points out that 30 percent of the guests at his mass-market brands, Red Lobster and Olive Garden, have household incomes above $100,000—hardly a lowbrow crowd. And he maintains that Darden’s higher-end restaurants—Eddie V’s and The Capital Grille—would be worthy of anyone’s special occasion.

When he’s not traveling on business, about half the year, Otis spends time with his wife of 30 years, Jacqueline Bradley, and their three grown children. His daughter Allison is a junior at 
Stanford, majoring in communication. The nearest Olive Garden, Dad will be happy to know, is on El Camino Real, just two miles away. SL

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