Red Lobster Throws Hissy Fit Over Obamacare, Sees Sales Plummet

News & Politics

Darden Restaurants, the parent company that owns Red Lobster and the Olive Garden, was one of several corporations whose leaders publicly opposed Obamacare. And at least as far as Darden is concerned, that opposition is translating to a decrease in sales.


After Obama won reelection this fall, a Darden spokesperson said the company “can’t afford” to offer health care to all its employees under the Affordable Care Act. According to MSNBC’s Ned Resnikoff, “[T]he company overall could come to rely more on part-time workers. Those new employees would likely not enjoy the same health benefits that all employees currently do.”

Turns out that insincere hissy fit did not sit well with customers of Darden’s restaurants.

The AP reports that Darden has acknowledged being “hit by a publicity backlash from tests intended to gauge how it could limit costs for workers' health care,” which was one factor (though a “secondary” one, the company’s CEO argues) in the company’s 37 percent drop in net income in the last quarter.

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.

With the topic set to remain an issue the coming year, he said it could continue to be a factor on the company's results.

We’ll never know exactly how much of an impact the company’s Obamacare stance had on its income drop, but the fact that Otis felt pressured to acknowledge the PR disaster at all suggests it played a significant role. Also significant: Darden being forced to roll back its plan to possibly make more of its workers part-time to avoid having to give them employee-sponsored health insurance. Consumers recognized what a bad deal that was, and they voted with their dollars: No.

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