BIG G SPINS OFF RESTAURANT UNIT

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General Mills last week whittled away the last of its non-package-goods businesses, announcing plans to spin off its $3.1 billion restaurant division.

Analysts believe the move will strengthen the Orlando-based restaurant unit, which has spent the last year shoring up sales at the Olive Garden and Red Lobster chains. The unit is the nation's seventh-largest restaurant operator.

The company's management said in a statement its future cash flow is better served being redeployed into its core businesses, such as cereals.

Analysts agreed. "Our view is that it makes more sense to have the restaurant business operate with its own management," said Jeffrey Omohundro, an analyst with Hilliard Lyons, Louisville, Ky. "The restaurant division will perform better as a separate entity ... it will not play second fiddle to the core General Mills businesses."

Grey Advertising, New York, handles all ads for General Mills' three restaurant chains, including 40-unit China Coast. The division is not currently planning an agency review, said a spokeswoman.

Agencies for General Mills' package-goods brands include Saatchi & Saatchi Advertising, New York; DDB Needham Worldwide, Chicago; and Campbell Mithun Esty, Minneapolis.

The as-yet unnamed restaurant company will be headed by Joe Lee, 53, a General Mills vice chairman. When the spin-off is complete, likely by June, Chairman-CEO Bruce Atwater said he will retire and leave General Mills' cereal, Yoplait and Betty Crocker businesses in the hands of Steven Sanger, 48, a longtime food marketing executive and company president, who will become chairman-CEO.

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