In hopes of reducing the impact of Obamacare, Olive Garden and Red Lobster are reducing hours and studying the impact.
Right now, this is just a small test, involving only four stores markets. However, if large chains are testing in that direction, no doubt other companies are doing the same. I also suspect smaller chains have already shifted to that model completely.
The owner of Olive Garden and Red Lobster restaurants is putting more workers on part-time status in a test aimed at limiting the impact of looming health coverage requirements.
Darden Restaurants declined to give details but said the test is only in restaurants in four markets across the country. The test entails increasing the number of workers on part-time status, meaning they work less than 30 hours a week. Under the new health care act, companies will be required to provide health care to full-time employees by 2014. That would significantly boost labor costs for businesses.
About 75 percent of Darden's employees are currently part-timers.
Given the challenging job market, Darden has been able to offer lower pay rates to new hires. Bonuses for general managers have been reduced as sales have stagnated. Servers at Red Lobster are handling four tables at a time, instead of three.
And last year, the company also put workers on a "tip sharing" program, meaning waiters and waitresses share their tips with other employees such as busboys and bartenders. That allows Darden to pay more workers a far lower "tip credit wage" of $2.13, rather than the federal minimum wage of $7.25 an hour.
Darden isn't the only restaurant chain looking at managing labor costs.
This summer, McDonald's Chief Financial Officer Peter Bensen noted in a conference call with investors that the fast food company was looking at the many factors that will impact health care costs, including the number of full-time employees.
Like One, Like All
There you have it, right at the end. McDonald's is looking at part-time work as well, hoping to avoid the impact of Obamacare.
Are any major restaurant chains not doing the same thing?
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