For Darden, the No. 1 priority is to develop a plan to keep employees on the payroll, Lee said. The company employs about 190,000 workers. Lee said talks have centered on being able to use government money to pay these people and avoid layoffs.
“What we do into the future will really depend on what kind of relief we may get from the administration to help pay our people,” said Lee, who added he was readying to have conversations with leaders in Washington Thursday.
Darden’s restaurant expenses, on a monthly basis, run about $20 million to $40 million. Rent is roughly $8 million per week, with manager salaries somewhere around $10 million.
So the government’s response is going to be a critical lever for Darden’s near-term decision making.
Lee hinted at a possible furlough program where employees still have access to benefits and don’t lose tenure.
“We're really, really trying to work through keeping our people engaged, so when it's time to ramp back up, that we can ramp back up quickly,” he said. “But we have to continue to work in concert with the government. And if they're going to compensate the American public directly, then that has to be a part of our calculation as we think about our people.”
It’s taken, on average, six to 10 employees to run to-go only restaurants, he added. But it’s changing dramatically by the hour. Off-premises is growing about 20 percent year-over-year, and picking up as people change their behaviors in light of COVID-19 concerns.
Also shifting from a previous stance, understandably, Lee said, “everything is on the table,” with third-party delivery. “However, what we're focused on right now is ramping up and using our team members to be able to keep them on our payroll and develop our own delivery capabilities, which our teams are ramping very, very quickly,” he said.
Darden is currently doing its own fulfilled delivery in markets, too. The company brought down the threshold where it now has available people to make deliveries (it used to be $75 and above). Basically, at least within the next few days, Darden will pretty much deliver Olive Garden wherever people want it to be delivered to, Lee said.
One of the main measures the company is taking is to stop construction on all new restaurants. Darden’s Q3 sales lift was helped along by the addition of 40 net new restaurants. That’s going to halt for the foreseeable future.
Lee said the company is negotiating with landlords to push off commencement of rent as well.
All of Darden’s advertising moving forward—which has been significantly reduced—will focus on to-go, especially for Olive Garden and LongHorn.
Lee said social distancing with employees has been a challenge. “People are washing their hands, we're sanitizing every table after every visit. And we've instructed our people to really keep their face back and be able to reach with their hands, and be able to serve the guests the best they can in that environment,” he said.
Thus far, Darden has had no confirmed coronavirus cases among its 190,000 employees. “There are other places that are open and operating that are nowhere near as safe as our dining rooms,” Lee said.
In terms of what’s next, he said, the industry will survive COVID-19’s crippling impact to date.
“I think that the full-service casual dining business is an important piece of the overall economic engine of the United States. You look at just the six top chains, we employ over 0.5 billion people, and these are great jobs,” Lee said. “And people love working for us and consumers love us. And I think that we're all innovative and we're creative. I think that we're going to fight as hard as we can to get our share of the off-premise business in the time. And I believe that we'll all come out of it, the bigger ones, in a strong position.”
Cardenas added Darden hopes to emerge in an even stronger position than before, but it all depends on what happens to the consumer and the length and depth of this crisis economically. “As long as people continue to get paid, we think there's a better chance that the bounce back is a quicker bounce back,” he said. “If unemployment gets to some pretty high levels and people aren't getting paid, that's a different story. But that said, if those things happen, and the inflation that we have been seeing for the last couple of years probably goes the other way, too."