Darden Restaurants Inc.
DRI,
+8.19%
will raise wages starting Monday so that each hourly worker will earn at least $10 per hour, including tip income.
In January 2022, that rate will go up to $11, and in January 2023, up to $12.
Right now, the company’s average hourly restaurant worker is making $17 per hour, including servers and bartenders, who earn more than $20 per hour, according to Gene Lee, chief executive of Darden.
“As we continue to grow our business and welcome guests back into our restaurants, continuing to attract and retain the best talent in the industry will be critical to our success,” he said, according to a FactSet transcript.
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The announcement came alongside the company’s fiscal third-quarter earnings, which exceeded expectations.
In addition to the wage increase, Darden also announced a one-time bonus for hourly team members, a $17 million investment.
In total, Darden has invested about $200 million in worker bonuses since March 2020.
The wage increase announcement comes as Darden’s weekly same-restaurant sales have increased into positive territory at its largest chains, Olive Garden and Longhorn Steakhouse.
For the week ending March 21, same-restaurant sales at Olive Garden were up 5.7%, following weeks of negative results.
At Longhorn Steakhouse, the same-restaurant sales increase was 23.2% for the week ending March 21.
Overall, Darden’s same-restaurant sales were up 5.4% for the week. Other chains in the Darden portfolio include The Capital Grille, Bahama Breeze and Cheddar’s Scratch Kitchen.
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For the quarter, Darden’s same-restaurant sales were down 26.7%.
Darden stock soared 8.1% in Thursday trading, and has skyrocketed 147.6% over the past year. The benchmark S&P 500 index
SPX,
+0.52%
has gained 58% over the past 12 months.
Nearly all of the company’s restaurants, 99%, have opened for at least limited dining-room service. Lee said the company is “somewhere between 50% and 60%, 65% capacity inside the dining room, depending on the individual floor plan.”
Darden has invested in digital measures, like online checkout, in order to enhance the company’s takeaway business during COVID-19. Darden is looking forward to a higher volume of guests in its dining rooms as more people get vaccinated.
Read: ‘Plexiglass will stay up for a while’: Shoppers remain anxious about COVID but head back to stores
“I do believe that as we get to offer more capacity, and we see this in individual restaurants, that the off-premise will start to fall off,” Lee said.
According to Deloitte data released on March 22, three out of four consumers polled plan to spend more on apparel and restaurants over the coming weeks.
“The stress of the pandemic is shifting from personal safety to financial security as we turn the corner and vaccinations become more readily available,” said Anthony Waelter, U.S. consumer industry leader at Deloitte LLP, in a statement.
“Yet, despite a rise in financial stress-related anxiety, consumer intent to maintain or increase discretionary spending is also on the rise, demonstrating more confidence in the recovery.”
