Decision for Darden: Bad Working Conditions are Unsustainable

Can a restaurant claim to value sustainability while maintaining unsustainable conditions for its workers?

Today the Restaurant Opportunities Centers (ROC) United answered a resounding, ‘No.’

In a groundbreaking new report, Darden’s Decision: Which Future for Olive Garden, Red Lobster, & Capital Grille,ROC lays out how the restaurant giant’s current employment practices have created liabilities for the company with regard to workers, consumers, and investors. At the same time, the report, released in Orlando directly following Darden’s annual shareholder meeting, offers an alternative path to profitability.

Groups involved in the report with ROC included Family Values @ Work, the Food Chain Workers Alliance, Central Florida Jobs with Justice and South Florida Jobs with Justice.

Darden Restaurants, Inc., (Darden) is the world’s largest full service restaurant company, and home to some of the nation’s most popular restaurant brands including Olive Garden, Red Lobster and Capital Grille, with over 2000 locations across the globe.

Employees and consumers have charged the company with wage theft, discrimination, paying unsustainable wages as low as $2.13 an hour, and denying employees the ability to earn paid sick days.  These practices not only threaten the public health, but also threaten to damage the reputation of Darden’s strongest brands, impacting shareholders both large and small.

Consider what happed at a Fayetteville, NC Olive Garden. The lack of paid sick days resulted in a worker coming in while suffering from Hepatitis A in 2011. The result? The Cumberland County Health Department had to immunize thousands of diners to prevent a dangerous Hepatitis A outbreak.

Ultimately more than 3000 residents filed a class action lawsuit.

Sustainability Report at Odds with Reality

“Darden’s Decision” is being released on the heels of both Darden’s own recently-released Sustainability Report, and a report released last month on Darden by Governance Metrics Analysis (GMI), the largest and most respected independent evaluator of corporate governance practices. GMI gave Darden a letter grade of “D” for overall governance, and particularly highlighted the fact that Darden CEO’s exorbitant pay and severance package create both tax liability and conflict of interest for the corporation.

“Darden’s sustainability report indicates laudable goals with regard to its practices,” says Saru Jayaraman, Co-Director of the Restaurant Opportunities Centers United. “If it lived up to these goals, the company could improve standards industry-wide. Unfortunately, the company not only does not live up to these goals but also actively lobbies to keep industry standards low.”

How’s this for priorities:  During the last several years of national economic crisis, Darden dramatically expanded its lobbying expenditures, spending almost $1 million annually to advocate against laws that would require disclosure of management compensation and to prevent any improvements in employment standards.

Most recently, Darden lobbied hard against including the earned sick time initiative on the Orange County, Florida ballot.

Darden has also lobbied to keep minimum wages stagnant. At the same time, Darden’s executive compensation of the CEO has risen 23% per year on average since 2005 to its current level of $8.5 million in 2011.

That’s a cool 539 times the pay of the average restaurant worker.

Some Darden workers lose pay because of wage theft – having to work ‘off the clock’ without pay, or not getting paid overtime — or discriminatory treatment based on race or gender. In January of this year, ROC assisted approximately 50 workers in filing federal litigation against the company for wage theft and discrimination.

The Path to Sustainability

 ‘Darden’s Decision’ offers the company an alternative path to profitability, highlighting how other responsible restaurateurs have offered employees livable wages and benefits such as paid sick days. Treat workers well and they’ll stay on the job, resulting in reduced turnover and all the costs that go along.

Treat workers well and customers will not get sick, reducing legal liability.

Sustainable working conditions, in short, are an essential part of a successful sustainability plan.

Which road will Darden choose?