Darden's Olive Garden, Red Lobster Take Obamacare Staff Cuts Off Menu

Thursday, 06 Dec 2012 12:10 PM

By Michael Mullins

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Darden Restaurants — the parent company of chains including Olive Garden, Red Lobster and LongHorn Steakhouse — says it’s backing off its Obamacare-related transition of full-time employees to part-time status.

Darden was aiming to limit the costs of health care payouts to employees following the enactment of Obamacare, which requires large companies to provide staff with health coverage by 2014. Darden went through a series of tests where it staffed a greater number of part-time workers to skirt full-time costs, but is now overturning that decision.

The backpedaling comes two days after the company reduced its 2013 profit outlook on the October announcement of its low test performance.

"What that taught us is that our restaurants perform better when we have full-time hourly employees involved," Bob McAdam, the head of community affairs for the corporation, told the Associated Press.

A handful of popular restaurant chains have said in recent days they will cover increased spending costs of President Barack Obama’s healthcare plan by cutting employee hours and increasing prices for consumers.

Chains such as Papa John’s Pizza, Denny’s, Applebees and Carl’s Jr., among others, suggested it was the best way to handle the new policy because companies with 50 or more employees could get hit with fines if they fail to provide basic health care.

Public opinion among these brands, particularly Papa John's, has fallen since making such announcements, according to surveys like ones conducted at BrandIndex.

Darden was no different, but intends change course after receiving a huge amount of negative feedback on its Facebook page and in restaurants, showing a decline in both employee and customer satisfaction following the testing period. The experiment began in February, in four markets, though Darden did not comment on how many restaurants were involved.

"In the midst of all the uncertainty, we thought it was important to say something declarative," McAdam said.

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