Red Lobster 2012 Annual Report Download - page 8

among, and visits from, Hispanic and Latino consumers.
We are excited about these efforts and about other aspects
of the longer-term growth agenda that are now under
development for deployment in fiscal 2014 and beyond.
INCREASINGLY COST-EFFECTIVE SUPPORT
The total sales growth we envision will increase the
cost-effectiveness of our support platform by leveraging
the meaningful fixed and semi-fixed costs in our business.
However, sales growth alone is not sufficient. We anticipate
persistent upward pressure on our food costs, for example,
driven by a sustained rise in global wealth, especially in
emerging nations with large populations. We also expect
persistent upward pressure on regulatory and compliance
costs as increasing global transparency translates into
rising expectations from the public and from non-public
policymakers regarding how we conduct our business.
As we noted in our letter to you last year, in response to these
and other dynamics we have been supplementing our
conventional incremental year-to-year cost-management
efforts with an ongoing focus on identifying and aggressively
pursuing transformational multi-year cost-reduction opportu-
nities that involve running and supporting the business in
fundamentally different and more cost-effective ways. In fiscal
2013, we will continue to implement the four transformational
initiatives that were our focus last year – further automating
our supply chain; significantly reducing the use of energy,
water and cleaning supplies in our restaurants; centralizing
management of our restaurant facilities; and optimizing
labor costs within our restaurants. In addition, this year we
intend to identify at least one additional transformational
opportunity that can drive further cost-effectiveness in
fiscal 2014 and beyond.
A WINNING CULTURE
Ours is a people business, and the success we envision going
forward – just like the success we have enjoyed to this point –
is possible only if we have a strong culture that a wide range
of people embrace and of which they want to be a part. We
have long had that kind of culture, and it is grounded in
three things. We have a shared purpose, which is to make
a positive difference in the lives of everyone with whom we
come into contact. We have a shared identity, which is to
be the best at what we do, and demonstrate that by winning
in the marketplace, while also being a place where people
can achieve their dreams. And we have a strong set of shared
values that speak to how we treat one another and how we
treat people outside our organization.
An important validation of the strength of our culture is the
recognition we earned from FORTUNE magazine in 2011 and
again in 2012 as one of the “100 Best Companies to Work
For.” We are particularly proud because selection relies on an
independently administered survey of employees – which,
in our case, are largely hourly restaurant employees –
and Darden is the first restaurant company to receive
such recognition.
A key driver of the high level of engagement behind the
FORTUNE recognition is our diversity and inclusiveness, which
is best reflected in restaurant operations. It is our largest
function and perhaps the most important since our operators
most directly interact with our guests. Three of our four
most senior Operations leaders are people of color, as are
22 percent of our restaurant General Managers and Managing
Partners and 29 percent of our other restaurant Managers.
Looking forward, we believe the growth and expansion
we envision will help us maintain a winning culture. Over
90 percent of our restaurant General Managers and Managing
Partners are promoted from our restaurant Manager ranks.
With the new-restaurant growth we anticipate, this means
that over the next five years more than 1,300 people will be
promoted to the General Manager and Managing Partner
levels internally. Similarly, approximately half of our restau-
rant Managers are promoted from our hourly employee ranks,
which means that over the next five years approximately
4,000 hourly employees will earn such promotions. As so
many people continue to see Darden as a diverse and
inclusive engine of opportunity, we are confident we can
elicit from our workforce the kind of passionate commitment
and discretionary effort that, ultimately, makes our brands
and brand support platform as powerful as they are.
CONCLUSION
While we recognize and are responding with urgency to today’s
challenges, we are also excited about the future. That’s
because, again, we are convinced we have what it takes to
create compelling value for you, our shareholders, and for
the people who work at your Company. We have strong
brands, considerable collective experience and expertise,
an increasingly cost-effective operating platform and a
winning culture. As a result, over the next five years we expect
to accelerate momentum toward our ultimate goal – which is
to build a great company, now and for generations to come.
Thank you for being a shareholder and placing your trust
in us.
Clarence Otis, Jr.
Chairman and Chief Executive Officer
Andrew Madsen
President and Chief Operating Officer
4 Darden Restaurants, Inc. 2012 Annual Report