Darden currently pays 20% of its 150,000 employees the federal tipped minimum wage of $2.13 an hour. Darden: At The Drop of A Dime comes as more than 7,000 people, including more than 5,600 Darden employees, have signed on to the petition, “Darden: We Want A Seat at the Table,” requesting that the leadership of Darden and Starboard Value listen to their concerns for the restaurant’s future.
Starboard, a major shareholder in Darden Restaurants Inc., recently proposed proposed several labor cost cuts to Olive Garden, including laying off up to 1,600 employees, increasing part-time scheduling, and passing more work onto subminimum wage employees.
If Darden passed the entire cost of the wage increase to customers, the menu price increase would be negligible. For example, the cost of Olive Garden’s Tortellini al Forno would increase by 10 cents, Longhorn Steakhouse’s Spicy Chicken Bites would increase by 10 cents. In fact, the average check at Olive Garden would increase from its current $16.75 to $17.10.
Darden Restaurants Inc., parent company to Olive Garden, Longhorn Steakhouse, The Capital Grille, Yard House, Bahama Breeze, Seasons 52, and Eddie V’s, is the largest full-service restaurant company in the world. It has faced increasing negative media attention as Starboard Value, an activist hedge fund and shareholder, is angling to take complete control over Darden’s board. Starboard recently proposed several labor cost cuts to flagship brand, Olive Garden, including laying off up to 1,600 employees, increasing part-time scheduling, and passing more work onto subminimum-wage employees.
Due to pressure from Starboard and shareholders, Darden’s CEO, Clarence Otis, and two top executive staff are set to resign with a severance package worth an estimated $65 million. Otis alone will receive more than $23,000 in cash severance alone every week for two years after his departure from the company. Meaning that Otis, after no longer being employed by Darden, will still get paid more every week than the typical line-cook, dishwasher, or server makes in an entire year.
UPDATE: As of last week, Starboard Value emailed current Olive Garden employee and a “Dignity at Darden” leader, Steve Gazzo, offering to set up a meeting between Gazzo, a small number of “Dignity at Darden” leaders and Starboard’s leadership.
In his response to the Starboard representative last Friday, Gazzo, a ROC member who started the Darden: We Want a Seat at the Table petition (which currently has more than 7,000 signatures) said he and fellow “Dignity At Darden” leaders are interested in meeting.
Darden workers are currently awaiting a response from Starboard Value. No such offer to meet and hear employees’ concerns has been proffered by Darden Restaurants Inc. management. Find the full press release here.
With 15 years in the restaurant industry, including six at Darden’s Olive Garden, Steve Gazzo, started a petition demanding that he and fellow workers have a say in the Darden’s future.
Darden is the parent company to some of today’s most recognizable full-service restaurant chains, including Olive Garden, Capital Grille, Longhorn Steakhouse and up until last month ago, Red Lobster. It is considered the largest full service restaurant chain in the world, with more than 1,500 restaurants and 150,000 employees.
Darden is a notorious opponent of worker friendly legislation, and with lobbying expenditures second only to McDonald’s, they have been incredibly successful. Among the employee-friendly policies on its hit list are increases to the minimum wage especially the shamefully low tipped minimum wage, paid sick days (it most recently killed paid sick days in California and Florida), predictable schedules and full-time hours.
The company is undergoing major changes, largely due to pressure from “activist” hedge funds.
On July 28th, Darden announced it successfully sold Red Lobster to a private equity group. On the same day, the company announced that Clarence Otis, their CEO, would officially step down by the end of this year.
The pressure from activist hedge funds continues, as Starboard Value is angling to replace the entire Darden Board with its own candidates and launch a franchising strategy at Darden.
The activist investor strategy being pushed on Darden leadership follows the same asset-stripping playbook that has sunk other vulnerable restaurant chains.
There’s plenty up in the air for Darden’s future, but as Steve said, “these restaurants are not just assets to be sold off, but are how 130,000 workers feed and care for their families.” It’s clear that a vital voice is missing from the process — the voices of front-line employees. They already have some important questions:
- Why can the company afford a $500 million pay off to investors but insists on paying the minimum wages? (At least 20% of Darden’s workforce makes the federal subminimum wage of $2.13 an hour).
- Why hasn’t Darden’s corporate leadership explained this crisis to workers and asked for their input on the company’s new direction?
- What does the hedge fund fight mean for Darden’s workers and the communities they serve?
In Nation’s Restaurant News’ first annual Power List, ROC United’s co-founder & co-director, Saru Jayaraman, is listed as one of the top 50 most influential people in the restaurant industry. The list includes a wide-variety of well-known names — from CEOs to activists — including Michael Pollan (of Food Inc.), Clarence Otis Jr. (CEO of Darden Restaurants Inc, the world’s largest full-service restaurant brand), and executives from Starbucks, McDonalds, and YUM! Brands.
From Nation’s Restaurant News:
Saru Jayaraman would like the public to be just as concerned about the welfare of restaurant employees as it is about animal welfare and sustainable food practices.
Jayaraman is the co-founder and co-director of the Restaurant Opportunities Centers United, an organization originally founded to support the Windows on the World restaurant workers displaced after the 9/11 attacks on the World Trade Center in New York. ROC now has about 10,000 members in 19 cities, including Los Angeles, Houston, Chicago and Miami.
The organization has assisted employees in filing lawsuits against restaurants over issues of pay, discrimination and working conditions, including lawsuits against high-end celebrity chefs such as Daniel Boulud in New York. It also has sponsored protests and demonstrations for restaurant employees seeking minimum wage increases, better pay in the quick-service segment and health care coverage.
In addition, ROC helped restaurant workers establish Colors, a cooperative restaurant with units in New York and Detroit that provides free training to help workers develop skills to pursue restaurant careers.
A daughter of immigrants from southern India, Jayaraman is a graduate of Yale Law School and the John F. Kennedy School of Government at Harvard University. She grew up in a Mexican-American neighborhood in southeast Los Angeles. Fluent in Spanish, she has long been an advocate for immigrants and the underprivileged.
Her latest book, “Behind the Kitchen Door,” explores the political, economic and moral implications of dining out. In it, Jayaraman examines poor working conditions and discriminatory labor practices by chronicling the lives of restaurant employees in major urban cities.