Darden Restaurants Inc. confirmed in a corporate statement Thursday that it will not change the status of full-time employees, hourly or salaried, through at least 2014, following experiments with reduced hours to offset health care costs.
Orlando-based Darden currently employees about 45,000 full-time employees, from a total pool of 185,000 employees working or supporting more than 2,000 restaurants under the Red Lobster, Olive Garden, LongHorn Steakhouse and other brands.
In February, Darden began analyzing the financial impact of reduced hours for some full-time employees, moving their status to part-time, and therefore not meeting requirements for mandated health care offerings. Bob McAdam, senior vice president of government and community affairs at Darden, said that according to internal surveys, the tests diminished employee morale and negatively impacted customer satisfaction at the restaurant level.
“We were just looking at different options,” McAdam said in an interview with Nation’s Restaurant News. “[Now] we know enough information about how our restaurants will operate so that we can make these commitments.”
A big reason for the announcement was to remove any uncertainty full-time Darden employees may have had about their jobs and health care benefits, McAdam said. “Employee engagement was certainly impacted, but likely because they were uncertain for what the future might hold,” he said.
Darden chief executive Clarence Otis said in a statement: “Although our workforce historically has been heavily part-time, we have always had a significant number of full-time employees, and they are integral to our success. The data we have collected during our test around guest satisfaction and employee engagement has only reinforced this.”
Darden had undertaken these tests as rising health care costs loom because of the federal Patient Protection and Affordable Care Act, which mandates that full-time employees working more than 30 hours per week are offered health insurance from companies that employ more than 50 employees. Darden had looked at the impact of lowering some full-time employees to 29.5-hour work weeks.
Other restaurant chains have expressed concerns about the upcoming health care requirements, and some studies have linked negative corporate comments surrounding health care reform to declining consumer perceptions among the brands.
Darden’s decision to remain committed to its full-time employees comes just two days after it warned that its fourth-quarter performance was not meeting expectations. Darden said combined U.S. same-store sales at the company’s three largest brands, Red Lobster, Olive Garden and LongHorn Steakhouse, fell 2.7 percent for the quarter.
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