Brain Freeze: Restaurants, Patrons Burned by Health Care Law
With their mix of full- and part-time employees, restaurants in particular are finding it difficult to cope with new costs and regulations as the Patient Protection and Affordable Care Act -- aka Obamacare -- continues to be implemented.
Here are some examples of how some of the biggest names in the restaurant industry are being forced to radically alter their workforce and raise prices.
As reported by Politico, on a shareholder call in 2012, CEO and founder John Schnatter said, “Our best estimate is that the Obamacare will cost 11 to 14 cents per pizza…. If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers.”
In 2011, Brian Vaughn, owner of four franchises in Georgia, told Congress, “Prior to the law’s enactment, my goal had always been to hire fewer people for more hours. Now, because of what Washington has mandated, it seems to make more practical business sense for me to hire more people for fewer hours.”
"Let me state this bluntly," said Scott Womack, owner and president of Womack Restaurants, a 12-unit IHOP franchise in Indiana and Ohio, "This law will cost my company more money than we make.”
Red Lobster and Olive Garden
In response to Obamacare's forthcoming employer mandate, the Darden Group, owner of Olive Garden and Red Lobster, tried “increasing the number of workers on part-time status, meaning they work less than 30 hours a week.” They ended the test after a customer and shareholder backlash.
Earlier this month, Mike Ruffer, franchisee in North Carolina, declared that the employer mandate is so expensive that it will eat up the profits from one of his eight stores. Ruffer said he’ll have to pass this to his patrons.