Darden CEO Gene Lee said employees are the company’s greatest competitive advantage.
But the sentiment is more than just a platitude. In other words, Darden has put its money where its mouth is.
The company invested nearly $75 million in a three-week emergency pay program for hourly employees who couldn’t work. When that period ended, the brand covered insurance payments and benefit deductions for furloughed hourly workers. As more employees were rehired, Darden implemented another payment to cover unexpected costs like transportation and child care. In addition, managers were paid their target bonus for Q4.
As the company heads into July, 91 percent of dining rooms have reopened at a limited capacity. Those reopenings have coincided with the return of 60,000 furloughed workers. At least another 40,000 are expected to return as business improves. Lee said depending on the brand, Darden is anywhere between 50 and 70 percent of the initial workforce coming back, which corresponds with the percentage of regular sales the chain has recouped.
Shortly after the pandemic hit, Darden also accelerated the roll out of paid sick leave for its employees. As part of the new policy, employees gain one hour of paid sick leave for every 30 hours worked. The pay rate is based on the employee’s 13-week average.
“I think we’re being paid back for that, not just today, but I believe we’ll be paid back for that in two, three, four, five years,” said Lee, referring to the $75 million investment during the brand’s Q4 and annual earnings call. “Our restaurant managers are incredibly loyal. We treated them very, very well during this process.”
“ … Not only were these investments the right thing to do to take care of our team members, they’ve also created a deeper loyalty and strengthened engagement,” he added later on the call.
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Lee said the key has been frequent and transparent communication between leadership and employees. Since the beginning of the pandemic, the CEO has provided business updates to workers and has been honest about how the virus has impacted them and the restaurants. Staying connected, along with retaining a majority of its managers, allowed Darden to rehire employees swiftly and reopen dining rooms safely without any delays.
As brands continue to bring back employees, operators across the industry have voiced concern over competing with the extra $600 per week in unemployment benefits under the CARES Act. In some cases, employees are making more money on unemployment than they did at their job. The enhanced benefits are set to expire July 31. At the federal level, Republicans and Democrats are debating whether to extend the benefits or create an incentive to return to work. The Congressional Budget Office reported that if the additional unemployment funds were extended by six months, five out of six workers would make more money on unemployment.
However, this doesn’t appear to be a major issue for Darden. Lee said that employees are excited about returning and that they missed their work family.
“Our people are just so excited to get back to work,” Lee said. “… I would even say, even when we were in were off-premise only, the amount of people that were coming back to work and doing different types of jobs and just looking to contribute in any way was incredible.”
The CEO said there is a lot of confidence in restaurants fostering safe environments for employees. This point is becoming more crucial as COVID cases continue to rise across the country.
As a result, exposure will only increase in the industry. For example, a judge in Illinois recently ruled that even though McDonald’s put several measures in place, the chain wasn’t doing enough to enforce mask and social distancing guidelines.
Lee said Darden has remained focused on maintaining the health and safety of its employees via health checks, PPE, enhanced sanitation processes, social distancing, and frequent hand-washing.
But he noted the company had already developed basic hygiene processes, so team members are familiar with the environment. The biggest adjustment has been wearing masks and social distancing.
“But they’re great already at washing their hands,” Lee said. “The restaurants are already cleaned. They got great food handling procedures.”
As of June 21, 729 Olive Gardens and 426 LongHorn Steakhouses had reopened their dining rooms. At those units specifically, same-store sales are down 21.4 percent for Olive Garden and 13.8 percent for LongHorn.
Those restaurants employ thousands of workers that Lee couldn’t be more impressed with as they continue to take care of guests and each other. The CEO said having a strong culture has always been a part of the company’s DNA.
“I’m incredibly proud that our culture has actually strengthened during this most difficult period in our company’s history,” Lee said. “This, above all else, is what gives me confidence in Darden’s future.”
