Thursday, December 20, 2012

Darden Restaurants Profit Plunges 37 Percent After Bad Publicity Over Attempt To Skirt Obamacare

When President Obama uttered the infamous words, albeit inartfully phrased, “If you’ve got a business — you didn’t build that. Somebody else made that happen,” he was explaining that business success -- in addition to ingenuity, drive and determination -- requires a great deal of community/government support. 

As stated:

... it’s clear from the context what the president was talking about. He spoke of government — including government-funded education, infrastructure and research — assisting businesses to make what he called “this unbelievable American system that we have.”
In summary, he said: “The point is … that when we succeed, we succeed because of our individual initiative, but also because we do things together.”
The bigwig honchos at Darden Restaurants -- owners of Red Lobsters and Olive Garden -- seemed to forget the wisdom of this adage by declaring war on their employees over Obamacare:
Darden Restaurants has stopped offering full-time schedules to many hourly workers in a few of its Olive Garden, Red Lobster and LongHorn Steakhouse eateries. 
Darden is reportedly taking the action to avoid the Affordable Care Act, which is scheduled to go into effect in 2014.
In a monumental lapse of judgement, Darden failed to understand that the success of their company is rooted in a customer base that strongly supports the Affordable Care Act. And offending these folks is bad for business: many of these folks will voice their dissent with their wallets -- speaking the language corporate America understands. 
In cutting its forecast for the year earlier on Dec. 4, Darden also said that it was hit by a publicity backlash from tests intended to gauge how it could limit costs for workers' health care. Starting in 2014, big employers such as Darden will be required to provide health insurance to full-time workers. The company had tested hiring more part-time workers and replacing full-time workers who left with part-time workers in select markets to gauge how it could mitigate those costs.
Darden CEO Clarence Otis said the media coverage was a "secondary issue" that hurt the quarterly results. He said the coverage "misinterpreted our actions as a stand against health care reform." The company has since said it will not move any full-time workers to part-time status as a result of the regulations. source

And their are others learning this same lesson the hard way:

The brand perceptions of Papa John'sApplebee's and Denny's took beatings after high-ranking representatives of the companies said Obamacare would force them to stop building restaurants, cut worker hours and raise prices.

Getty Images
Papa Johns
After the comments, on a scale from 100 (totally positive) to -100 (totally negative), Papa John's score fell from 32 to 4, Applebee's score fell from 35 to 5, and Denny's went from 10 to zero, then back to 6, according to a new survey. source

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