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Olive Garden's parent company raises pay as sales rebound

Darden Restaurants says it will reward hourly employees with $17 million in bonuses while raising its pay scale to $12 an hour.
Photo courtesy of Darden Restaurants

With sales shooting past 2019 levels at Olive Garden and LongHorn Steakhouse restaurants, parent Darden Restaurants is sharing the benefits with employees.

The casual-dining giant announced Thursday morning that it will split $17 million among its hourly employees as a one-time bonus while changing its wage structure to ensure every restaurant-level employee earns at least $12 an hour starting in 2023.

The climb to that pay level will start Monday when every hourly team member making less than $10 an hour is raised to that level. The corporate minimum will rise by $1 an hour in January of the next two years.

“Continuing to attract and retain the best talent in the industry will be critical to our success, and this commitment further solidifies our position as the employer of choice in full-service dining,” Darden CEO Gene Lee said in a statement accompanying newly released financial results for the third quarter ended Feb. 28 and the first three weeks of March.

The numbers for this month show sales for Olive Garden, Darden’s largest operation, topping the per-unit levels of 2019 by 5.7% for the week ended March 21. Sales per branch of LongHorn, Darden’s next biggest chain, soared in that seven-day stretch by 23.2% on a two-year basis, the company said.

Darden said it used 2019 in its comparable-sales calculations to negate the extraordinary effects of the pandemic, which began a year ago.

Comps rose by 5.4% across the company’s portfolio, which also includes Cheddar’s Scratch Kitchen, The Capital Grille and Yard House.

The company said that 99% of its 1,822 full-service restaurants currently have at least some portion of their dining rooms in operation.

Darden’s fiscal Q3 encompassed the stretch where many states re-shut dining rooms and even suspended outdoor service to counter a surge in new COVID-19 cases right after the 2020 year-end holidays. During that time, comps fell 25.8% at Olive Garden, 12.6% at Longhorn and 45.2% at the company’s fine-dining restaurants, which include Eddie V’s and The Capital Grille. Those figures were computed using figures from the same period of a year ago, or right before the pandemic began.

At the start of the pandemic, Darden pledged to do right by its employees even as it was furloughing employees and millions in the industry were put out of work by the pandemic’s downturn.

“To our furloughed team members: hang in there. We will get through this,” Lee reassured the company’s workforce 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 the company cut its headquarters staff by 11% through layoffs and offers of early retirement last summer. About 250 employees were invited to take the early retirement, and about 225 of them accepted, according to securities filings.

The company's announcement about elevating its pay scale drew immediate fire from One Fair Wage, the union-backed advocacy group that wants to eliminate the tip credit. Darden said that its new hourly minimums for servers and other tipped employees would include their gratuities.

“If Darden were serious about making sure their employees were paid enough money to live on, they would raise the minimum wage to $15 per hour, and give the employees their tips on top of that pay, One Fair Wage President Saru Jayaraman said in a statement.

Darden said that the average wage for nontipped employees is currently $17 an hour, and that tipped employees average $20 an hour. 



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