Senior management at LongHorn Steakhouse has found a creative way to shore up earnings in a sluggish economy. In an effort to hold down labor costs, the restaurant chain has increased the percentage of tips that waiters and waitresses must share with their fellow employees. Until recently, LongHorn requited wait-staff workers to "tip out" 1 percent of their total sales each shift to hosts and bartenders. Hoping to offset the effects of higher food costs and an anticipated minimum wage increase, LongHorn now makes servers give back 2.25 percent of total sales.

LongHorn's parent company, Darden Restaurants Inc., credited the new policy for helping reduce the company's labor expenses by 0.6 percent last quarter. Most state laws allow restaurants to pay tipped employees less than minimum wage as long as their combined earnings and tips total at least minimum wage. LongHorn is forcing servers to contribute a larger share of their tips to hosts and bartenders so the company can decrease its portion. Darden, which also owns the Olive Garden and Red Lobster chains, is considering similar changes in all its restaurants.

Compare LongHorn's actions to those of Boston's Mercantile Bank. The three-branch community bank has increased its labor costs in order to help employees deal with rising gasoline prices. Depending on the length of their daily commute, workers receive as much as $50 each week to defray escalating fuel costs.

Things, as the saying goes, are tough all over. When the economic correction ends and the recovery begins, employees will remember how their leaders responded.

Labels: employees, leadership

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