Darden Restaurants serves up the American dream

Legend has it that Bill Darden, founder of Darden Restaurants, once spent a night under a malfunctioning dishwasher shortly after he opened the first Red Lobster. It was 1968, and Darden, dressed in a three-piece suit, didn’t hesitate to do the dirty work. Those were the early days, when starting a fresh-seafood restaurant in central Florida — which would become an empire of eight separate restaurant chains — seemed as improbable a path to the American dream as it sounds.

Today Darden — now the nation’s largest casual-dining company — is a path for many. The parent of Red Lobster, Olive Garden, LongHorn Steakhouse, Capital Grille, and others has 180,000 workers, making it the 27th-largest private employer in the U.S. and the second largest — behind FedEx — on Fortune’s Best Companies to Work For list. It’s the only restaurant chain that has ever made our list, a designation it earned in part by building a culture that dares its employees to dream big.

“We want our employees to recognize that everyone who walks in our doors can go all the way to the top,” says Clarence Otis, Darden’s CEO, who grew up in L.A.’s Watts neighborhood. After attending Stanford Law School, he was plucked from Wall Street to work at Darden in 1995.

Darden’s commitment to empowering its staff — which it does with career planning and robust talent development — helps it defy the restaurant industry norm for turnover. Rates are 20 points lower than competitors’, largely because jobs often become careers.

Consider Mike Stroud, who started at Red Lobster as a busboy in Georgia in 1973 when he was 16. Now he’s a senior vice president for the chain, overseeing 215 locations from Orlando.

Or Lisa Hoggs, who 11 years ago took a job waiting tables at LongHorn Steakhouse while sorting out her post-college plans. She’s now a managing partner, running a $3 million location in suburban Atlanta.

Off-shift, Darden offers tools for reaching other life goals, like a credit union that lets staffers take out low- or no-interest loans. (Though the company came under fire for a tip-sharing program in 2011, it says it was created to reduce inconsistencies in pay.)

It’s a recipe that has helped make employees not only successful but also a “competitive advantage.” It seems to have worked: Darden plans to open up to 500 new restaurants in the next five years — bringing some 50,000 new dreamers into the fold.

This story is from the May 20, 2013 issue of Fortune.