Restaurant Company Faces Backlash Over Changing Employee Status to Save Money on Healthcare

Liquor LicenseRestaurant Company faces backlash over changing employee status

Darden Restaurants Inc. (Red Lobster, The Capital Grille, Olive Garden, Longhorn Steakhouse, Yard House) has decided not to change any of its full time employees to part time status at this time to save money on healthcare benefits reports The Associated Press.   The company earlier in 2012 tested the practice at several of its restaurants as it prepared for new healthcare regulations to come into effect in 2014.  The results were not good for Darden, whose workforce of 185,000 is about 75% part-time.

After Darden’s tests were reported in October, the company received a flood of feedback from customers through its website, on Facebook and in restaurants, said Bob McAdam, who heads government affairs and community relations for Darden. Additionally, he said that internal surveys showed both employee and customer satisfaction declined at restaurants where the tests were in place.

Darden did not rule out changes in the future year the article states.   It also turns out that Darden has also changed its employees’ tip structure.

Beyond health care costs, Darden has made cutting labor costs a priority in recent years. Last year, for example, the company put workers on a “tip sharing” program, meaning waiters and waitresses share their tips with busboys, bartenders and other employees. This allows Darden to pay more workers a far lower “tip credit wage,” rather than the federal minimum wage of $7.25 an hour. Servers at Red Lobster also now handle four tables at a time, instead of three.

Darden is taking bold steps here to contain its costs but will the employee and customer backlash continue?  Does your restaurant/hospitality company face similar issues?

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