Olive Garden to boost average tipped wage to keep staff

Anne Riley Moffat and Paige Smith

Olive Garden’s parent company is raising pay to hold onto its workers as bars and restaurants across the country embark on a hiring spree ahead of the pandemic’s final phase.

Starting next week, Darden Restaurants Inc. said every hourly worker at its restaurants will earn at least $10 per hour, which includes tips, increasing to $11 an hour in January 2022 and $12 an hour in January 2023. The Orlando, Florida-based company also announced on Thursday a one-time bonus payment for hourly workers, representing a $17 million outlay for Darden.

This June 27, 2016, file photo shows an Olive Garden restaurant in Methuen, Mass.

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Bars and restaurants across the country added almost 300,000 jobs last month, marking the first major increase in four months, according to Labor Department data. As Americans get vaccinated and economies reopen, restaurants want to be staffed well enough to meet that recovering demand.

“Continuing to attract and retain the best talent in the industry will be critical to our success, and this commitment further solidifies our position as the employer of choice in full-service dining,” Gene Lee, Darden’s chairman and chief executive officer, said in a statement as the company reported third-quarter earnings that beat estimates.

The federal tipped minimum wage has sat unbudged at $2.13 an hour since 1991 despite increases in the regular minimum wage. But employers such as Darden are lawfully required to pay the minimum wage in the states where they operate, and if tips aren’t enough to reach that minimum wage, they must pay the difference. A proposal that was left out of the latest pandemic relief bill would have phased out the tipped minimum wage entirely over time, while raising the federal minimum wage to $15.

The minimum wage varies vastly among states: More than half already have a higher minimum than the current federal minimum of $7.25 hourly, and some, like California and Nevada, have eliminated tipped minimum wages altogether.

Darden’s move guarantees that tipped workers make at least $10 an hour, including gratuities. The company, which owns chains including LongHorn Steakhouse and Capital Grille, said by email that 20% of its hourly workers will see an impact on their wages. On average, hourly staff earn more than $17, while tipped workers earn over $20 an hour, the company said.

Darden also announced Thursday a new $500 million share repurchase program and plans to 33 net new restaurants this year.