Darden Restaurants to stick with full-time employment

posted at 10:31 am on December 6, 2012 by Ed Morrissey

Two months ago, I wrote about a pilot program launched by the parent company of the Red Lobster and Olive Garden chains to test whether the firm could avoid incurring the costs of ObamaCare by switching their staffs to part-time employment.  This statement and others from food-service firms created an uproar among ObamaCare supporters and a public-relations backlash against Darden and Papa John’s, among others.  Darden’s public-relations firm contacted me this morning with this announcement:

Darden Restaurants, Inc. (NYSE: DRI) today provided an update on its full-time staffing plans for 2014 following thorough testing of potential changes in the composition of its workforce in connection with healthcare reform.  The company has determined that:

  1. None of Darden’s current full-time employees, hourly or salaried, will have their full-time status changed as a result of healthcare reform.
  2. Each of Darden’s new and existing restaurants will have full-time hourly employees because that is what it takes to fully deliver the experiences guests expect.
  3. In 2014, all of Darden’s full-time employees, including hourly, salaried and executive employees, will have access to the same insurance plan coverage.

Darden’s current full-time population includes approximately 45,000 employees.

Darden Chairman and CEO Clarence Otis commented: “Although our workforce historically has been heavily part-time, we have always had a significant number of full-time employees and they are integral to our success. The data we have collected during our test around guest satisfaction and employee engagement has only reinforced this.  As we think about healthcare reform, while many of the Patient Protection and Affordable Care Act’s rules and regulations have yet to be finalized, we are pleased we know enough at this point to make firm and hopefully reassuring commitments to our full-time employees.”

As I wrote in October, attempting to staff with entirely part-time workers has costs of its own.  It requires more work from management to make sure enough staff are on hand at any given time, and it costs more to go through the hiring process for each position, just in terms of advertising, interviewing, and training.  The average length of employment for a part-time employee, especially in the food-service industry, means that some of that investment will end up being lost, and part-time employment generates much less loyalty on both sides of the relationship.  Even though there are cost savings in theory by using part-time employees, in practice it ends up being a big, costly headache.

That doesn’t mean that the issues of ObamaCare’s costs in the retail market are going to disappear, though.  Firms like Darden and others who operate on thin margins (as is the case in the restaurant industry) will have to find other ways to absorb those costs.  That means either hiking prices or cutting overhead in other ways.  A Denny’s franchisee wanted to put a surcharge on his menu for ObamaCare, which the home office nixed, but the costs will have to get paid somewhere.  That will either come out of the customers’ pockets or the employees.  In general, there isn’t enough margin in the super-competitive restaurant industry to simply shrug at the significant costs that will come into play.

Darden’s decision to keep working with full-time employees is a smart and long-view decision.  But there may end up being fewer of them than would have been the case without ObamaCare in the long run.


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DeMint just resigned from the senate to go to Heritage :(

It’s good… but bad

dforston on December 6, 2012 at 10:33 AM

Someone woke up with a shotgun round sitting on their nightstand.

Bishop on December 6, 2012 at 10:35 AM

Turnover at restaurants may keep them from having to cut hours on full-timers. But when the current full-timers leave…

Sekhmet on December 6, 2012 at 10:35 AM

We know how this will end. Prices will go up. Chick Fil A just jacked up their prices recently and that was after raising them already in the last couple years.

Doughboy on December 6, 2012 at 10:36 AM

DeMint just resigned from the senate to go to Heritage :(

It’s good… but bad

dforston on December 6, 2012 at 10:33 AM

I don’t even have the respect for Heritage that I used to. Not since having to hear over and over again about how they endorsed Romneycare.

gryphon202 on December 6, 2012 at 10:36 AM

They will quietly reduce full time employees through attrition and raise prices – like everyone else.

Liked those 2 for $20 deals? If so, shouldn’t have voted for Obama.

forest on December 6, 2012 at 10:36 AM

DeMint just resigned from the senate to go to Heritage :(

It’s good… but bad

dforston on December 6, 2012 at 10:33 AM

The fact that DeMint is leaving is a very bad sign, as well as being bad for conservatives in general. He was oen of the very few reliable, remaining conservatives.

Doomberg on December 6, 2012 at 10:37 AM

My wife and I love Olive Garden. Unfortunately, it’s become too expensive over the last couple years for us to make it a regular thing. And now it looks like it’ll become even more expensive. Which means we’ll be spending less money there.

Thanks, democrats.

Mohonri on December 6, 2012 at 10:37 AM

The fact that DeMint is leaving is a very bad sign, as well as being bad for conservatives in general. He was oen of the very few reliable, remaining conservatives.

Doomberg on December 6, 2012 at 10:37 AM

DeMint’s flight from the senate isn’t a problem. It’s a symptom of a deeper problem.

It bears repeating ad nauseum: The next rising star of conservatism will not come from the GOP.

gryphon202 on December 6, 2012 at 10:39 AM

to fully deliver the experiences guests expect.

That would be indifferent service and tasteless overpriced food served in soul-less ex-Denny premises on highways?

Good to hear they are maintaining standards.

CorporatePiggy on December 6, 2012 at 10:42 AM

Cheaper, lower quality food and higher prices!

Cheaper, lower quality food and higher prices means less people eating out!

Cheaper, lower quality food and higher prices means less people eating out means eventual fewer employees!

Win win for gigantic socialist government!

darwin on December 6, 2012 at 10:45 AM

My wife and I love Olive Garden. Unfortunately, it’s become too expensive over the last couple years for us to make it a regular thing. And now it looks like it’ll become even more expensive. Which means we’ll be spending less money there.

Thanks, democrats.

Mohonri on December 6, 2012 at 10:37 AM

Yeah, the wife and I pretty much always dine out or pick something up on Fridays and Saturdays. That’s gonna likely end if we go over the cliff in January. Too many restaurants’ prices are getting out of hand, particularly mom-and-pop establishments.

Doughboy on December 6, 2012 at 10:45 AM

That would be indifferent service and tasteless overpriced food served in soul-less ex-Denny premises on highways?

Good to hear they are maintaining standards.

CorporatePiggy on December 6, 2012 at 10:42 AM

ROFL

Don’t forget the soggy breadsticks or noodles floating in grease.

I wouldn’t eat at OG if you held a gun to my head.

Bishop on December 6, 2012 at 10:46 AM

Actually, Heritage did not endorse Romneycare. IIRC, one economist there did, and the left seized upon that and made it all of Heritage that supported it.

Hard Right on December 6, 2012 at 10:46 AM

To parse the three statements:

1. We will be relying on turnover to reduce the number of current full-time employees to what had been planned prior to this announcement.

2. Each restaurant will have some full-time employees, but this will be much reduced from what we have today — like about one-half to one-third.

3. The survivors will continue with our current health insurance to the extent permitted under the Unaffordable Healthcare Act

No Truce With Kings on December 6, 2012 at 10:47 AM

Olive Garden gave me food poisoning last Valentines day. Nothing says I love you like projectile vomitting.

Hard Right on December 6, 2012 at 10:49 AM

Cheaper, lower quality food and higher prices!

What’s that sound you hear in the distance? The chomp-chomp-chomp of inflation, my fellow Americans.

Jeffster on December 6, 2012 at 10:49 AM

It’s clear that DeMint does not want to be a part of any tax hike deal, and who can blame him? Obama is doing exactly what he intended in ripping us apart.

Boehner needs to be replaced STAT. The fact that we’re even talking about tax hikes, which will cover about 4 days of Obama spending, is precisely the problem with the Speaker. Obama specializes in distraction and passing blame. If we cannot distill the problem in a way that the troglodytes who reelected Obama can understand, we will continue to get blamed and continue to lose good fighters.

The Count on December 6, 2012 at 10:51 AM

Boehner needs to be replaced STAT.

The Count on December 6, 2012 at 10:51 AM

Mark Levin might be a little prone to byperbole but Boehner actually is the enemy within.

CorporatePiggy on December 6, 2012 at 10:53 AM

Too many restaurants’ prices are getting out of hand, particularly mom-and-pop establishments.

Doughboy on December 6, 2012 at 10:45 AM

Price freeze! Where’s Carter when we need him.

Oh,…..

BacaDog on December 6, 2012 at 10:56 AM

Price freeze! Where’s Carter when we need him.

Oh,…..

BacaDog on December 6, 2012 at 10:56 AM

I’m a free market dude. I understand the high prices. But no offense to the mom-and-pops, but I’ll have to stick with the chain restaurants going forward on those increasingly rare occasions where I do dine out.

Doughboy on December 6, 2012 at 11:03 AM

Olive Garden gave me food poisoning last Valentines day. Nothing says I love you like projectile vomitting.

Hard Right on December 6, 2012 at 10:49 AM

Also suffered food poisoning after Olive Garden visit.

Only mainstream restaurant where that’s happened to me–although my former workplace cafeteria did it to me three times in two years.

ElectricPhase on December 6, 2012 at 11:04 AM

Well, its all well again for the folks at Darden restaurants.

But, by this time next year, that wonderful unlimited pasta bowl at Olive Garden? Gonna cost ya about $20 bucks…and bread sticks are extra, amybe $1 a pop. And the Lobster Feast? Coming in cheap at $50 a head. Longhorn? Better have a Texas-size wallet if you want to take the kids along.

But…we are going to see this all across the country.

WE will be paying for Obaamcare, whether we like it or not.

coldwarrior on December 6, 2012 at 11:04 AM

My daughter put herself through engineering school waiting tables. She worked at a very busy Olive Garden for a year. Worst job she ever had as far as money goes. She loved the manager, other employees, job, etc. But people do NOT tip at an Olive Garden. Evidently most people assume that the other tables are tipping well at such a busy restaurant and no one does. There would be nights when she would run her legs off and make 20 bucks in tips. And since she has worked at several restaurants as a server, she knows it wasn’t just her. All the servers had the same problem. And since it is a very busy restaurant it probably just isn’t because the food, service, etc. is bad, otherwise why would so many people go there? Afterall, it’s not like you don’t know what you are getting at Olive Garden. I love them, Dear Hubby won’t eat there even when he had his darling daughter to wait on him. Applebee’s is about the same, or so she hears from her friends who have worked at one.

Lily on December 6, 2012 at 11:09 AM

In the end, the restaurant chain is going to do what it has to do to survive. This is great news for Obamacare supporters now, but Darden will eventually do what’s necessary to survive. This just takes the heat off of them now. Customer expectations? BS. They are going to try to raise prices to cover the gap in revenue to foot the bill for Obamacare.

What they may or may not understand is that once the taxes and Obamacare costs kick in, nobody, whether they could afford it or not, is going to eat out much. The Psychology of fear and uncertainty is going to hit even the Olive Gardens.

Things are not going to be the same moving forward. That’s for sure.

kens on December 6, 2012 at 11:11 AM

Lily on December 6, 2012 at 11:09 AM

Oh, and to finish what I was going to say….the servers are already almost all part-time as it is, and live off tips. So, if prices rise any more, I predict that they will make even less in tips than they do now. Whenever people feel like the prices are too high they take it out on the servers who make $2.13 an hour.

But hey, their healthcare will be free!

Lily on December 6, 2012 at 11:14 AM

The fact that DeMint is leaving is a very bad sign, as well as being bad for conservatives in general. He was oen of the very few reliable, remaining conservatives.

Doomberg on December 6, 2012 at 10:37 AM

Demint sees the writing on the wall ….

we may need him to help build from the ashes when it all burns down …
it really saddens me …. but it is gonna get ugly ….

conservative tarheel on December 6, 2012 at 11:17 AM

This is all moot. With the regulation happy Obama administration there will not be enough people working to support the restaurant industry. Less jobs and higher prices will lead to no jobs and still higher prices. The liberals have been digging this hole for years and the apathetic electorate continues so supply the shovels.

savage24 on December 6, 2012 at 11:17 AM

I will not eat at OG – 5 years ago (last time I ate there )
I asked that the pasta be al-dente …. they didn’t know what that was …

conservative tarheel on December 6, 2012 at 11:18 AM

Lily on December 6, 2012 at 11:09 AM

when we go out we tip 20 percent …. 15 if the service isn’t really good …
and if service is BAD .. I am talking to the manager …
I do not punish the server if the kitchen messes up ….
but going out … red lobster & Buffalo WW are about the only Franchise places we go …. others are local restaurants that we go to ….

conservative tarheel on December 6, 2012 at 11:22 AM

They will lay off many full time employees and hire them back as part time…

mnjg on December 6, 2012 at 11:22 AM

The fact that DeMint is leaving is a very bad sign, as well as being bad for conservatives in general. He was oen of the very few reliable, remaining conservatives.

Doomberg on December 6, 2012 at 10:37 AM

DeMint doesn’t want to get caught in the crossfire (metaphorical or otherwise) when the actual burning starts.

Washington Nearsider on December 6, 2012 at 11:22 AM

CAVE.

What the gop and it’s business owners do best.

Congrats, protesters. You win.

This restaurant chain will NOT survive.

PappyD61 on December 6, 2012 at 11:24 AM

So, instead of letting go of 10% of the full timers now, when the next 10% of their FT’ers quit, they are not replaced…

Victory in a Libtard head…

hillsoftx on December 6, 2012 at 11:24 AM

Papa John’s affair was a fabrication by conservative media. He came out and said openly that Obamacare actually levels the playing field. He’s provided coverage for all full time employees for decades, and part-timers weren’t affected anyway.

Again: Obamacare was good for Papa John’s.

Reading what has been written about statements I made on the effect of the Affordable Care Act on our franchisees reminds me of a quote from Lewis H. Lapham, former editor of Harper’s magazine: “People may expect too much of journalism. Not only do they expect it to be entertaining, they expect it to be true….

“And this way I get to provide health insurance and I’m not at a competitive disadvantage … our competitors are going to have to do the same thing.”

Link to full editorial: http://www.huffingtonpost.com/john-h-schnatter/papa-johns-obamacare_b_2166209.html

lester on December 6, 2012 at 11:26 AM

lester on December 6, 2012 at 11:26 AM

This just in: Businesses are happy when the government imposes costs on their competitors…

sadarj on December 6, 2012 at 11:29 AM

He came out and said openly that Obamacare actually levels the playing field.

Which was the intent of the Founders when they created our form of government, to make sure that everyone is equal in every way.

Now back to your regularly scheduled medication.

Bishop on December 6, 2012 at 11:33 AM

Just means costs will continue to go up.

Notice how loaves of bread are coming out smaller now – 16 oz instead of 20 oz? Largely the same price, of course.

But hey, “Now with 20% fewer carbs and 20% fewer calories than our previous loaves!” /

Midas on December 6, 2012 at 11:33 AM

Which was the intent of the Founders when they created our form of government, to make sure that everyone is equal in every way.

Bishop on December 6, 2012 at 11:33 AM

I am a man, and thus can’t get an abortion. Where’s my reparations?!

Washington Nearsider on December 6, 2012 at 11:34 AM

You can bet that management, cooks, and waiters will be full time. Bussers, dishwashers, greeters, etc will be part timers.

Any restaurant has a set of important roles requiring a bit of skill, and a bunch of others which can be staffed by a person pulled off the street.

The wording of the statement certainly leaves a lot open.

unclesmrgol on December 6, 2012 at 11:38 AM

I am a man, and thus can’t get an abortion. Where’s my reparations?!

Washington Nearsider on December 6, 2012 at 11:34 AM

The libs feel your pain, as does Preznit Bark.

So, under BarkyCare you will be given a sex change complete with uterus, inseminated and impregnated by a volunteer, and finally you can have your abortion.

See how simple it is, you dumb bigot.

Bishop on December 6, 2012 at 11:38 AM

Bishop on December 6, 2012 at 11:38 AM

Wow…

I didn’t even realize how bigoted I was. Thanks, Bishop!

Washington Nearsider on December 6, 2012 at 11:43 AM

Yup, big government adding regulation helps big business and hurts smaller competitors and decimates start-ups.

Great job, lester.

blink on December 6, 2012 at 11:40 AM

Lester is an idiot communist, he will never understands basic business and economics…

mnjg on December 6, 2012 at 11:49 AM

Or just go to small mom and pop restaurants, with no such costs.

MNHawk on December 6, 2012 at 11:55 AM

The key phrase here is ‘current full-time employees.’

The turnover rate in the food industry is quite high, comparatively, and such people industries adapt to changing HR requirements with each new wave of new hires: temp-hire; on-call; float; P/T – take it or leave it.

And it’ll all be done with discretion over the long haul to avoid any further PR disasters.

Business will find a way – much to the disdain of our nanny overlords.

locomotivebreath1901 on December 6, 2012 at 12:00 PM

I don’t know about other firms, but at least with one Pizza Hut franchise, the only people who are “allowed” to work full time are the assistant managers and above. Shift managers and other employees are always scheduled at less than 40 hours and I wouldn’t doubt that they’ll be trying to hire more people so as to make sure none of them will come near to working full time if it means that they’ll have to provide insurance or pay a fine… Though they may find the fine more economically feasible. I know many franchises prefer to keep most staff at part time anyhow, and that’s been the case long before Obamacare was even a clintonian idea.

Logus on December 6, 2012 at 12:01 PM

three times in two years.

ElectricPhase on December 6, 2012 at 11:04 AM

Sounds like a weak constitution……. ;)

GWB on December 6, 2012 at 12:02 PM

Boehner needs to be replaced STAT.

The Count on December 6, 2012 at 10:51 AM
Mark Levin might be a little prone to byperbole but Boehner actually is the enemy within.

CorporatePiggy on December 6, 2012 at 10:53 AM

GOP cannibalism is not helpful. Look at Rasmussen Reports congressional preference polling shows Dems up +11. They are getting the ones who do not want taxes raised because of the “cliff” debate, they are getting the ones who do not want spending cut because the Dems ruled out entitlement reform, they are getting the deficit reducers who want tax hikes and spending cuts because of the “balanced approach” baloney their own plan belies and of course they are getting the envy the rich Occupy Wallstreet crowd. We cannot just go over the cliff (which is what the Dems want) and get hated by everyone or you won’t have enough support to get anything done next Sept. when we should only pass funding at about 80% of what nondefense discretionary spending is currently getting. You will lose hardly anyone with that impasse which will follow because Reid and the big government crowd will not accept spending at that level.

If we pass a budget that is a balanced appoach with the debt ceiling increase attached you may get something out of the Dems come March or April but right now there is fear of a recession and it will be blamed on the GOP if we do either the cliff or hold up the debt ceiling. By this Spring if recession hits, we may not want big up front taxes or cuts. If the economy is growing safely, then we can try to get something for the future fiscal responsibility out of a debt ceiling increase. But right now the Dems are creating a recession and setting the GOP to take the fall for it Blasting Boehner for not trying to commit suicide by both going over the cliff and holding up the debt ceiling will not help the conservative cause at all.

KW64 on December 6, 2012 at 12:03 PM

And you thought Red Lobster was expensive before

KBird on December 6, 2012 at 12:03 PM

Demint sees the writing on the wall ….

we may need him to help build from the ashes when it all burns down …
it really saddens me …. but it is gonna get ugly ….

conservative tarheel on December 6, 2012 at 11:17 AM

I’ve been of the opinion that we’re where the Republican party was during the 60′s after the purge of Barry Goldwater. As conservatives we have to take the long view and talk about the roots of our philosphy and prepare to make the long slog upwards. I remember listening to a speaker from the Heritage Foundation and he said that no victories are permanent, no defeats are permanent, but the struggle is.

I wish Demint would stay in the Senate, but he’s not. The people of South Carolina however still need a representative that aligns with their philosophy. Hopefully that person will come forward.

itsspideyman on December 6, 2012 at 12:05 PM

Demint sees the writing on the wall ….

we may need him to help build from the ashes when it all burns down …
it really saddens me …. but it is gonna get ugly ….

conservative tarheel on December 6, 2012 at 11:17 AM

I’ve been of the opinion that we’re where the Republican party was during the 60′s after the purge of Barry Goldwater. As conservatives we have to take the long view and talk about the roots of our philosphy and prepare to make the long slog upwards. I remember listening to a speaker from the Heritage Foundation and he said that no victories are permanent, no defeats are permanent, but the struggle is.

I wish Demint would stay in the Senate, but he’s not. The people of South Carolina however still need a representative that aligns with their philosophy. Hopefully that person will come forward.

Sorry for my last post……. :P

itsspideyman on December 6, 2012 at 12:05 PM

..we are pleased we know enough at this point to make firm and hopefully reassuring commitments to our full-time employees.”

And those will become a rare species in the future. Count on it.

GarandFan on December 6, 2012 at 12:08 PM

Darden’s decision to keep working with full-time employees is a smart and long-view decision.

No, it isn’t.

ThePrimordialOrderedPair on December 6, 2012 at 12:19 PM

They are still taking cost cutting measures for all the libs that want to stick their head firmly in the sand and pretend that OCare has no or net positive impact.

earlgrey133 on December 6, 2012 at 12:19 PM

Price freeze! Where’s Carter when we need him.

Oh,…..

BacaDog on December 6, 2012 at 10:56 AM

Nixon was the one who imposed a wage and price freeze back in August 1971.

SC.Charlie on December 6, 2012 at 12:24 PM

Hello, my name is Mary Ellen Walton, and I will be your server.

SarahW on December 6, 2012 at 12:26 PM

Bishop on December 6, 2012 at 11:38 AM

Wow…

I didn’t even realize how bigoted I was. Thanks, Bishop!

Washington Nearsider on December 6, 2012 at 11:43 AM

That’s the wonderful thing about Hot Air…

People helping people.

We’re all happy now…and totally equal.

Solaratov on December 6, 2012 at 12:41 PM

Hello, my name is Mary Ellen Walton, and I will be your server. – SarahW on December 6, 2012 at 12:26 PM

I would welcome any waitress with a smile like that serving me. I’ve been attempting to get away from 24/7 news and have been watching The Waltons between 8pm and 10pm on DirecTV. It is a refreshing break from the current selection of what infests all of TV today.

SC.Charlie on December 6, 2012 at 12:47 PM

It bears repeating ad nauseum: The next rising star of conservatism will not come from the GOP.

gryphon202 on December 6, 2012 at 10:39 AM

Ted Cruz.

riddick on December 6, 2012 at 1:19 PM

I am a man, and thus can’t get an abortion. Where’s my reparations?! – Washington Nearsider on December 6, 2012 at 11:34 AM

Your wife can have an abortion whenever “she” wants to have one, without asking you. And, you can have a vasectomy, without asking her. And, what is this nonsense about reparations about not being able to have an abortion.

SC.Charlie on December 6, 2012 at 1:26 PM

So, under BarkyCare you will be given a sex change complete with uterus, inseminated and impregnated by a volunteer, and finally you can have your abortion.

Bishop on December 6, 2012 at 11:38 AM

No doubt farmed out to Tahrir Square crowds to save the money.

riddick on December 6, 2012 at 1:27 PM

My wife and I love Olive Garden.

How anyone enjoys that food baffles me.

Capitalist Hog on December 6, 2012 at 1:28 PM

It bears repeating ad nauseum: The next rising star of conservatism will not come from the GOP. – gryphon202 on December 6, 2012 at 10:39 AM

You believe in unicorns, don’t you.

SC.Charlie on December 6, 2012 at 1:30 PM

I love OG, never had a problem with them…eating there shortly.

raccoonradio on December 6, 2012 at 3:11 PM

1) That press release is pure BS.

2) This was the whole point of ObamaCare: break the system. Make enough people poverty-stricken and they’ll beg for socialism. Thanks Roberts.

WhatSlushfund on December 6, 2012 at 5:32 PM

lester on December 6, 2012

…mental lesterdation!…(new form of mental sickness)

KOOLAID2 on December 6, 2012 at 7:20 PM

The same insurance plan = send them to exchanges. Turnover is high in that industry, so if full-timers who leave are not replaced or replaced by part-timers, then eventually paying the fines for not providing coverage will be reduced. But the prices will remain high.

Philly on December 6, 2012 at 7:46 PM

Actually, Heritage did not endorse Romneycare. IIRC, one economist there did, and the left seized upon that and made it all of Heritage that supported it.

Hard Right on December 6, 2012 at 10:46 AM

It wasn’t just “the left.” It was every slack-jawed pseudoconservative Romneyphile that wanted me to jump on the rombot bandwagon, e.g. Ann Coulter. Even she of the sharp tongue and the acerbic wit made hay of the fact that “it was conservative enough for Heritage.”

gryphon202 on December 6, 2012 at 8:53 PM

It bears repeating ad nauseum: The next rising star of conservatism will not come from the GOP. – gryphon202 on December 6, 2012 at 10:39 AM

You believe in unicorns, don’t you.

SC.Charlie on December 6, 2012 at 1:30 PM

Really? You are contradicting my assertion that the GOP has willingly and finally abandoned any meaningful semblance of conservatism, and I’m the one who believes in unicorns?

/PBBBBBBBT

gryphon202 on December 6, 2012 at 8:55 PM