Darden Restaurants Backtracks On Slashing Full-Timers, Following Negative Backlash And Drop In Sales

Following strong criticism, customer boycott and a resultant loss in sales, Darden Restaurants the owner of such eateries as Olive Garden and Red Lobster has retracted on its wish to push its full time employees down to part-time category. Darden had said that, once the Obamacare reforms come into effect, in order to save on healthcare costs, it was seeking a reduction in its full-time employees.

The new healthcare rule would make it mandatory on part of large companies like Darden to offer basic health coverage to its full time workers or face severe financial penalties. The industry, especially the food industry, had opposed this very vocally, saying that with their thin profit margins, it could have a destructive effect on the industry and severely impact their bottom lines.

Earlier this year, Darden had tried a four-market test, where it hired more part-time employers to evaluate, if the resultant saving in cash, would mean having to compromise on services that its valued customers had come to expect from them.

However, Darden Chief Executive Clarence Otis clarified that the tests revealed that full-time employees were “integral to success and guest satisfaction and employee engagement.”

When news of the company’s tests became known, its customers responded in huge numbers on social media sites and on its website and in its restaurants. Bob McAdam, in charge of community relations at Darden acknowledged that the tests met with neither employee nor customer approval and led to considerable dissatisfaction on both fronts. “What that taught us is that our restaurants perform better when we have full-time hourly employees involved,” he said.

Darden has reassured its full-time employees that, even after the healthcare law comes into effect all its 45,000 full-time workers would keep their status and that all of them, whether hourly or salaried, would have access to the same insurance coverage.

McAdam said that for the time being its employer demographics would not see much change, but the company was likely to reassess how expenses and other issues pan out to determine whether the workforce will remain the same or it will have a new face.

As of now, of the company’s 185,000 employees, almost three quarters are part timers. The firm says that it has a turnover rate of 50 percent for its workers, so it will have lots to choose from, without severely impacting the full-timers.

Darden is not the only food company that is apprehensive of what the new healthcare rules will entail for the company. CKE Restaurants and Hardee’s fast-food chains have aired misgivings and echoed similar desires of increasing the part-time workforce at the expense of full-timers. McDonald’s Corp., the world’s leading hamburger chain, said that it was assessing the impact the new rules would have on their business and how much extra healthcare costs would encumber them.

Darden says that its profits and revenue projections for the year-end quarter presented a lower outlook and said whilst it was hard to quantify how much they stood to lose, the prime reason for it was the negative publicity it received from their worker experiment.

A spokesman for the company said that they hoped that the firm  assurance that its current full-time employees would not have their status changed, even after the new health rules come into effect, and that the mandated health coverage would be provided would assuage customers’ apprehensions and ire.

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Posted by HRCrossing on December 7, 2012. Filed under Employee Management,Home,Industry News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry