Financing

Darden to invest $20M from tax savings into workforce

Olive Garden’s owner says reform will lower its tax rate by 600 basis points.

Olive Garden owner Darden Restaurants on Monday said it would reinvest $20 million in tax savings this year back into its workforce.

The Orlando, Fla.-based casual-dining operator said that tax reform would lower its effective tax rate by 600 basis points in its current fiscal year, due to changes made under the Tax Cuts and Jobs Act passed in December.

That, plus the resolution of “other tax matters,” will result in an effective tax rate of 18% for the current fiscal year. The lower taxes led the company to increase its earnings expectations for the year to between $4.70 and $4.78 per share. That’s up from $4.45 to $4.53 under its previous guidance.

It’s unclear what investments Darden plans to make in its workforce, but the company said it would make investments in initiatives “directly benefiting its workforce” during the current fiscal year.

The owner of LongHorn Steakhouse, Cheddar’s Scratch Kitchen and other chains is the first restaurant company to pledge investments in employees following the act’s passage late last year.

Numerous companies, such as AT&T, Jet Blue, Comcast and others, pledged to give bonuses to their employees immediately following the act.

“One of the best investments we can make is in our people,” Darden CEO Gene Lee said in a statement. “This investment will strengthen one of our most important competitive advantages.”

Darden’s eight concepts, which also include Yard House, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V’s, operate more than 1,700 total restaurants.

The tax reform act lowered taxes for many corporations, and restaurant companies are expected to receive significant benefits as a result. Last week, Sonic said it expects its tax rate to decline by as much as 10 percentage points this year.

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Multimedia

Exclusive Content

Operations

Trend or fad? These restaurant currents could go either way

Reality Check: A number of ripples were evident in the business during the first half of the year. The question is, do they have staying power?

Financing

Starbucks' value offer is a bad idea

The Bottom Line: It’s not entirely clear that price is the reason Starbucks is losing traffic. If it isn’t, the company’s new value offer could backfire.

Financing

Struggling I Heart Mac and Cheese franchisees push back against their franchisor

Operators say most of them aren't making money and want a break on their royalties. But they also complain about receiving expired cheese from closed stores. "Don't send us moldy product."

Trending

More from our partners