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Olive Garden owner to hold off on worker changes

Darden Restaurants was stung by reaction to a plan to use more part-timers but isn’t ruling that out in the future.Alan Diaz/Associated Press/File 2012

NEW YORK — The owner of Olive Garden and Red Lobster won't bump any full-time workers down to part-time status, ­after its tests of way to limit health care costs caused a backlash that took a bite out of sales. Yet Darden Restaurants Inc. isn't ruling out relying more heavily on part-timers.

The Orlando company was set to announce on Thursday that none of its current full-time employees will have their status changed. Darden this week lowered its profit outlook for the year, citing failed promotions and negative publicity from its tests of using more part-time employees. The tests were aimed at keeping down costs tied to new rules that will require large companies to provide health insurance to full-time workers starting in 2014.


After Darden's tests were reported in October, the company got a flood of feedback through its website, on Facebook, and in restaurants, said Bob McAdam, who heads community relations for Darden. Additionally, he said, internal surveys showed employee and customer satisfaction declined where the tests were in place.

''What that taught us is that our restaurants perform better when we have full-time hourly employees involved,'' he said.

Beyond the first year of the new regulation, however, the company will still see how costs and other factors play out to determine what its workforce will look like in following years. For now, about 75 percent of 185,000 employees are part-timers. The mix in the future ''will depend on how the business goes,'' McAdam said.

Darden isn't alone in considering changes in its workforce. CKE Restaurants, which owns the Carl's Jr. and Hardee's fast-food chains, plans to employ more part-time workers. McDonald's Corp., the world's biggest burger chain, has also noted it was reviewing factors that affect its health care costs, including the number of full-time employees. This month, Papa John's chief executive John Schnatter wrote a column in the Louisville Courier-Journal after making comments that suggested business owners could find ''loopholes,'' such as cutting hours. Following negative feedback, Schnatter's column clarified that it was a move he believed franchise owners and other small businesses would make, rather than what Papa John's would do.


Darden's problems run deeper than the bad publicity, however. It has been working to boost sales, in part by putting a greater emphasis on value and updating menus. But on Tuesday, it noted its recent promotions again failed to resonate with customers.