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Reshuffling At Darden Boosts Diversity At Top
By Jerry W. Jackson | Sentinel Staff Writer
December 29, 2002
Copyright © 2002 Orlando Sentinel. All rights reserved.
THE DARDEN RAINBOW
Darden Restaurants Inc.'s diverse work force and management:
*36 percent of all employees are minorities, including:
*2.5 percent Asian.
*13.0 percent black.
*18.9 percent Hispanic.
*1.5 percent Native American.
*37 percent of new hires are minorities.
*7 of top 50 executives are minorities.
*5 of 13 board directors are minorities.
*17.7 percent of all officials and managers are minorities.
SOURCES: Fortune magazine; Darden Restaurants Inc.
*President: Red Lobster
*2002 sales: $2.34 billion, record high.
*President: Olive Garden
*2002 sales: $1.86 billion, record high.
*Acting president: Bahama Breeze
*2002 sales: Surpassed $125 million.
Smokey Bones BBQ
*President: Smokey Bones BBQ
*2002 sales: $42 million (estimate, with 19 operating at end of fiscal year in June).
Bradley Blum's surprise move to Burger King Corp. has cleared the way for a reshuffling of the executive ranks at Darden Restaurants Inc., giving the Orlando-based company perhaps the most diverse senior management team in the industry.
Not only was Richard Rivera, long one of the nation's top Hispanic restaurant executives, promoted to the No. 2 post at Darden and put in line for the top job, the appointment of Clarence Otis to run Smokey Bones BBQ puts an African-American atop one of the nation's fastest-growing restaurant chains.
Otis was the chief financial officer of the $4.4 billion parent company, but now he gets a chance to run Smokey Bones, a 3-year-old chain that Chairman Joe R. Lee has vowed will one day be a $1.5 billion-a-year operation.
Otis was succeeded as CFO by Linda Dimopoulos, formerly Darden's chief information officer, a promotion that adds another woman to the company's top ranks.
Earlier this year, the company promoted Edna Morris to lead Darden's flagship Red Lobster, making her the leader of the largest casual-dining seafood chain in North America.
Analysts said that Lee, who rose from humble beginnings as a short-order cook to prominence as one of the nation's savviest restaurant leaders, is delivering on previous pledges to make diversity one of Darden's hallmarks.
Lee not only has "talked the talk" but has "walked the walk" in terms of making diversity a reality, said Jeff Grayson, an Orlando restaurant operator and incoming chairman of the Florida Restaurant Association, the powerful trade group that represents the $20 billion-a-year industry statewide.
"Joe Lee has found people who are extremely qualified. So it's an easy decision for him, a natural opportunity for him," said Grayson, who owns a Pizzeria Uno franchise in Lake Buena Vista.
"I know Joe, and he's not just placing them in these positions to satisfy the masses that he's diversifying," Grayson said.
Rivera, 55, was hired by Darden in late 1997 to help turn around the then-struggling Red Lobster chain. He succeeded, revamping the menu and revitalizing the brand to attract more families and younger couples, shaking off the seafood restaurant's aging image.
Rivera, whose father was Puerto Rican, was born in New York. He grew up in Argentina, Venezuela and Peru, where his father was director of U.S.-based correspondence schools.
Rising through the ranks
Through the years, Rivera climbed the management ranks of many restaurant chains, beginning with Steak and Ale in 1971. He later held top management jobs at El Chico Corp., Applebee's, TGI Friday's and Rare Hospitality, parent of the Longhorn Steakhouse chain, before being tapped by Darden.
At Darden, Rivera embraced Lee's diversity goals, helping the company earn accolades from Fortune magazine when it ranked the company among the nation's best for minorities in 1999. At the time, blacks, Hispanics and Asians comprised 34 percent of the company's work force and 23 percent of its top officers.
Darden again was included among the 50 best by Fortune this year, with minorities comprising 36 percent of the work force, 37 percent of new hires, seven of the top 50 paid executives and five of 13 board directors.
When Lee hired Otis in 1995 to be vice president and treasurer, the 39-year-old Otis was Darden's first black senior manager.
Later promoted to chief financial officer, Otis had come to Darden after a meteoric rise as an investment banker in New York.
Morris, former president of Quincy's Family Steakhouse, joined Red Lobster in 1998 and earlier this year was promoted to president, becoming the first female to head one of Darden's four restaurant chains, which also include Olive Garden and Bahama Breeze. She succeeded Rivera when he was promoted to vice chairman of the parent company.
Competence comes 1st
Lee and Darden have pursued high-quality executives, given them a chance to gain experience in the company's culture, and then promoted them at the first opportunity, said William Fisher, a hospitality professor at the University of Central Florida and the holder of a chair in restaurant management endowed by Darden.
"They look for very competent people. The gender and ethnicity is not the first consideration," Fisher said. "But I think at this point they do have the image and reputation of building a diverse core."
While many companies "give it lip service," Fisher said, "they [Darden] have embraced diversity, and they live it. But it's not done for sociological reasons."
For example, while Otis does not have a restaurant management background, the company has "plenty of support" for him, Fisher said, and is easing him into management at the company's smallest, if fastest-growing, chain -- Smokey Bones. The chain has about two-dozen outlets in nine states, with plans to double its size within a year.
If the company had placed Otis at the head of Red Lobster, with more than 600 units nationwide, without any restaurant-management experience, it may have opened the company to questions about motivation.
Otis fills a spot vacated by Bob Mock, who resigned as president of Smokey Bones in August for personal reasons. Blum had been running Smokey Bones on an interim basis before leaving for Burger King.
Lynne Collier, an analyst who follows Darden and other restaurant chains for Stephens Inc., an investment banking company in Dallas, said few major restaurant companies boast the same degree of diversity as the Orlando company.
While the Denny's chain, for example, is the top-ranked restaurant on Fortune's 2002 list of the 50 best places for minorities to work, with 49.6 percent of its total work force minorities, it has fewer highly paid minorities -- five -- compared with Darden's seven, and fewer minorities on its board of directors.
"They've put quality people in place, among the tops in the industry," Collier said of Darden. For a publicly traded company such as Darden, Collier said, quality must come before other considerations.
"What analysts look for is quality, professional management. I don't look at diversity as much," she said.
While analysts may not focus on diversity, it is increasingly at the top of the agenda for others for a variety of reasons.
DiversityInc.Com, an online newsletter targeting senior managers, said that it is "critical" to measure work force diversity because "companies cannot understand their customers, their employees or their investors if they fail to understand much of America."
In a combination survey and analysis this year, DiversityInc.Com ranked Darden No. 11 among the best companies in the country for diversity.
Lee said diversity is more than just a strategic issue for Darden, though it does play a competitive role.
"It starts with it's the right thing to do," he said. "Diversity creates a far more powerful business model that strengthens the business by attracting the very best and brightest from so many different backgrounds. We clearly understand the competitive advantage it gives us."
Diversity alone does not translate into profitability, however. McDonald's Corp., for example, was the third restaurant company to make Fortune's 2002 list, with 55 percent of its total work force coming from minority ranks. But the fast-food giant has stumbled in recent years and in the final three months of this year will post the first quarterly loss in its 47-year history.
Darden's recent management shuffle was made possible largely by the recent departure of Blum, 48, who was hired as chief executive officer of Burger King now that the struggling, Miami-based chain is independently owned by a U.S. consortium.
Blum was credited with revitalizing Darden's Olive Garden after he arrived in Orlando in 1994 as president of the Italian-themed chain, which is now led by Drew Madsen. Slumping at the time, Olive Garden has since posted 33 quarters of same-store sales growth.
Blum had only recently been promoted to a vice chairman's job at Darden and had been considered a potential successor to Chairman and CEO Lee, who is now 62.
But with Blum's departure, Rivera is now the "clear heir apparent" to Lee, said Mark Kalinowski, an analyst who follows Darden for Salomon Smith Barney in New York.
People who have known Lee for a long time say he is setting in motion a leadership culture that could carry on for years, perhaps generations, a time frame that Lee has selected as the horizon to which the company's 122,000 workers should look.
Grayson, the incoming Florida Restaurant Association chairman, was president of the York Steak House chain in the 1980s when it was owned by General Mills Restaurant Group. Lee ran the restaurant group at the time, and Grayson said he saw firsthand Lee's commitment to both quality and diversity.
Restaurants nationwide are major employers of minorities, Grayson said, but few have diversified at the top as well as Darden has. He said he expects more companies will follow Darden's lead for practical reasons.
"The country is becoming more diverse, so it's going to benefit your business if you tap into that pool of talent," Grayson said.
Plus, he said, it helps morale at all levels of a company when women and minorities are given the opportunity to be successful, because others see that they, too, might crack the glass ceiling.
"The entire organization feels good about the people they are working for when they see diversity at the top," Grayson said.