Darden CEO Gene Lee firmly believes his employees are the heart and soul of the brand.
That belief is woven into the fabric of Darden’s culture. That’s why the company is investing roughly $17 million to give one-time bonuses that will impact nearly 90,000 hourly workers at company-run restaurants. And starting Monday, tipped and non-tipped employees will earn at least $10 per hour, including tipped income. The wage will rise to $11 per hour in January 2022 and $12 per hour in January 2023. The company didn’t disclose how much the measure will cost.
On average, hourly workers earn more than $17 per hour, including servers and bartenders, who earn more than $20 per hour. Lee said as Darden continues to grow business and welcome guests back, attracting best-in-class talent will be critical to success.
“I think our greatest challenge right now is staffing,” Lee said during Darden’s Q3 earnings call. “It’s staffing, trying to attract people to come to work, that’s why we’re strengthening our employment proposition, which is already strong. We’ve got to staff it, we’ve got to train people. We train people now in a very high-volume environment. As I think about what we’re focused on, it’s really back-to-basics restaurant operations. And one of those things that we focus on is hiring great people and having great certified trainers that are able to train those people to bring our brands to life.”
Darden has invested $200 million in programs benefiting employees since March 2020. That began with the implementation of paid sick leave, which allows workers to gain one hour of paid sick leave for every 30 hours worked. The company later invested nearly $75 million in a three-week emergency pay program for hourly employees who couldn’t work.
Then in January, before it became a broad trend, Darden announced it would provide workers at company-run stores four hours of paid time off to get both doses of the vaccine.
In terms of wage rates increasing nationally, Lee said there’s momentum for a bipartisan group to reach a solution. He noted Darden’s focus is more on protecting the tipped wage, which he referred to as “extremely important” for not only the restaurant business, but also the relationship between servers and customers. At the ICR conference in January, Lee mentioned it’s difficult to communicate this because it’s not a good “bumper sticker” compared to saying “$2.13 is not a fair wage.”
Lee said if the tipped wage was eliminated, the compensation model for servers would have to change. It’s his belief that over time, those workers would be paid less, not more.
“Our focus in working with the powers to be is explaining how this relationship works and the importance of this relationship. I would point to the fact that our average server, our average tipped employee, earns greater than $20 per hour. And that’s an average, so you think about as each of these servers develop their skill set and their capabilities and become very competent, they have an opportunity to earn well above $20 per hour once they become proficient at what they’re doing.”
With that said, the CEO is confident Darden is well-positioned to manage through any changes in wages, noting that the company has done so for years.
“We do that through improved productivity, we do that through pricing,” Lee said. “We’ve been able to manage that effectively, and I believe we’re well-positioned to manage whatever changes come out of Washington or individual states as we move forward.”