The casual-dining operator won’t trim employee hours to curb health-care costs
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Darden Restaurants Inc., parent to the Olive Garden, Red Lobster and LongHorn Steakhouse chains, is expected to announce Thursday that it will not immediately expand a test that had limited the number of full-time employee positions to skirt upcoming federal health-care requirements.
Rich Jeffers, director of media relations for Orlando, Fla.-based Darden, said Wednesday that the company would be making an announcement in the morning. In October, Darden had confirmed it was testing limits on some employees to 29.5-hour workweeks in several markets.
The announcement comes on the heels of Darden’s sales report Tuesday, which said the company was posting lower-than-expected same-store sales results for the quarter ending Nov. 25. Darden partly cited negative publicity around its health-care moves for the poor performance, as well as missed marketing promotions. Darden said combined U.S. same-store sales at Red Lobster, Olive Garden and LongHorn Steakhouse fell 2.7 percent for the quarter while same-store sales for its specialty group, which includes Seasons 52 and The Capital Grille, rose 0.7 percent year over year.
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Bob McAdam, who heads government affairs and community relations for Darden, told the Associated Press Wednesday that internal surveys showed both employee and customer satisfaction declined at restaurants where part-time tests had taken place.
"What that taught us is that our restaurants perform better when we have full-time hourly employees involved," McAdam told the AP. He did not give specifics on the surveys.
About 75 percent of Darden’s 185,000 employees, who work at more than 2,000 restaurants, are part-time. The mix in the future "will depend on how the business goes," McAdam said. The health care law will require companies with 50 or more workers to provide basic coverage for full-time workers and their dependents or face fines.
Other restaurant chains have expressed concerns about the upcoming requirements of the federal Patient Protection and Affordable Care Act, and studies link those comments to consumer perceptions moving more negative.
A new report from consumer perception researcher YouGov BrandIndex indicated Papa John’s Pizza, Applebee’s Neighborhood Grill & Bar and Denny’s experienced a short-term decline in “buzz scores” for such health care related comments. The buzz score is used to measure positive or negative word-of-mouth for brands.
Brad Richmond, senior vice president and chief financial officer at Darden, said last month at a finance conference that “the headlines [about Darden moving to more part-time employees] have been sensationalized.”
He added that “we’re already a large part-time employer. Seventy-five percent of our employees are part-time already. [Any] policy change will affect employees that work 30 to 35 hours.”
Contact Ron Ruggless at [email protected].
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