This time last year, Neil took a look at the strong results from Darden Restaurants, the parent company of such middle-class standbys as Olive Garden, Red Lobster and the slightly more aspirational Capital Grille. The healthy financials hid a sad truth about the economy: Darden had been able to reduce labor costs because workers, desperate for jobs, didn't have the leverage to ask for better pay.The linked posting wonders whether it was the economy or bad food that is causing Darden's decline. Well, we think there's more: businesses that treat employees shabbily are engendering an atmosphere that reflects that shabby treatment, in employees that customers don't want to be around. Putting ourselves in the shoes of a low-wage Darden worker, whose company is telling them that the only thing about their health that concerns them is the cost of insurance -- and, by the way, we might be making you a part-timer to avoid coverage under Obamacare -- doesn't give one the strongest motivation to do the best one can, now does it? And if the company is willing to cut those corners, where else is it cutting corners?
Well, the next year didn't go so well. Darden's stock took a dive, and is still looking a little anemic. Despite in-store remodels, in yesterday's quarterly earnings report the company disclosed that Red Lobster, Olive Garden and LongHorn Steakhouse sales were down 3.3 percent, and the chief operating officer was leaving (always a suspicious sign). (our emphasis)
Unfortunately, it will be those low-wage, uninsured Darden workers that will suffer the most if the restaurants fail. Let's hope their next employment is with a more enlightened company. (h/t Balloon-Juice)
