At this point the nature of the investment is vague, but Darden is a leader in the industry when it comes to employee benefits. Let's hope it pushes the envelope even further.
— Jason Clampet
Darden Restaurants Inc., the owner of Olive Garden and LongHorn Steakhouse, expects the federal corporate tax cut to fatten profits, and it promised to pass along some of the money to employees.
The company is now planning for an effective tax rate of 18 percent this year, down from 25 percent earlier. That will bring a windfall of about $70 million, or 56 cents a share.
The legislation known as the Tax Cuts and Jobs Act, which was passed last month, is poised to lower the restaurant chain’s rate, though it also expects other changes to help as well. With its financial outlook brightening, the company pledged to spend about $20 million on employees.
The move should improve customer service, said Chief Executive Officer Gene Lee. But he wasn’t specific about what form the benefits would take.
“One of the best investments we can make is in our people,” he said in a statement.
©2018 Bloomberg L.P.