From the start of the pandemic, Darden Restaurants has stressed its commitment to helping employees weather the crisis. “To our furloughed team members: hang in there. We will get through this,” Gene Lee, CEO of the Olive Garden and LongHorn Steakhouse parent, reassured them in a statement issued in early April. “And when our dining rooms reopen, we will be together as a family once again, ready to deliver exceptional experiences to our loyal guests.”
But new information shows there was an asterisk to the promise. The casual-dining giant has quietly reduced its headquarters and field staff by 11% through dismissals and offers of early retirement to 250 employees, according to executives and securities filings. The eliminated personnel include the 225 individuals to date who have accepted Darden’s early retirement package.
Darden stands to save $25 to $30 million annually from the staff reductions, CFO Rick Cardenas said Thursday morning.
During the restructuring, Darden revealed that COO and EVP Dave George, a figure who by all accounts had been crucial to the company’s success, had decided to retire at age 64 after 23 years with Darden’s brands. Lee effusively thanked George during an analysts’ conference call for his contributions and friendship and lamented that he’d miss seeing George sitting by him during future calls.
But a securities filing describes George’s departure as an “involuntary separation,” the result of George’s position being eliminated.
As an executive, George did not quality for Darden’s early retirement package. Nor, since he was not yet 65 years old, did he qualify for the usual terms of retirement from the company. But Darden agreed to waive the rule on executives’ eligibility and provide George with what he would have received under the standard buyout package for individuals in leadership positions.
The provisions include 78 weeks of severance pay--$1.2 million in George’s instance—plus what the individual would have made under annual incentive plans, another $1.2 million in George’s case. All told, his exit package is valued by the company at about $2.5 million.
Darden estimates that the headquarters and field restructuring will cost the company a one-time outlay of $35 million.
The layoffs had been described in a Securities and Exchange Commission filing dated Aug. 31. The document is an addendum to Darden’s proxy materials for the annual meeting that was held on Wednesday.
The restructuring came up in the first question that was posed to Lee: “Why has the press in the Orlando area not received details of your layoffs and early retirement packages, given the number of employees at your RSC affected?”
Lee quickly cited the availability of the Aug. 31 filing, without providing any details, and moved on to the next question, according to a transcript provided by Sentieo.
Early in the pandemic, Darden provided employees with several forms of aid for persevering through the COVID-19 crisis. Those measures included the adoption of a permanent paid sick leave policy, a three-week emergency pay plan and a small additional payment to unit-level workers who remained on the payroll, to help them cover such expenses as transportation and child care. It also provided frontline workers with personal protective equipment such as masks.
"We invested over $100 million in that short period of time into our team members," Lee told financial analysts during a conference call on Thursday morning.
In addition to Olive Garden and LongHorn, Darden is the owner and operator of The Capital Grille, Yard House, Cheddar's Scratch Kitchen, Seasons 52 and Bahama Breeze.
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