Obamacare: Fast Food Chains See Less Costs Than Predicted

where'sthebeef_nickwarzyFollowing the Supreme Court’s decision to uphold the Affordable Care Act last year the “conventional wisdom” from restaurants and many other businesses was that they could not afford Obamacare.

The National Restaurant Association said paying for employee health care would be a burden, because the ACA would “impact restaurant operators’ ability to grow and create jobs.” That, of course, is a knee-jerk talking point directly from the Republican play book. Obamacare is “unworkable” because of the high labor costs and low profit margins of the industry, they howled.

Was all this weeping, wailing and rending of aprons really necessary? Not really, according to the latest reporting from ThinkProgress’s Rebecca Leber.

Fast food chains, among the biggest critics of Obamacare, have reassessed.

Darden Restaurants, owner of the Red Lobster, Olive Garden, Longhorn and other restaurant chains, utilizes part timers for 75 percent of their staff. They considered replacing full-time positions with part timers as one strategy to manage healthcare costs, but found, according to Rich Jeffers, Director of Communications, that “full-time positions are critical to delivering the guest experience in our restaurants.” Therefore, they’ll be keeping full time positions in all restaurants, and all full time employees will have access to the same insurance plan coverage as the executive staff.

New estimates from several chains — including Wendy’s, Popeye’s, Jack in the Box, and Chipotle — indicate that “Obamacare will actually cost about 80 percent less than they originally warned,” she writes.

The group includes companies whose franchises have already taken preemptive action to avoid providing their employees with health coverage, including one Nebraska Wendy’s chain, she continues.

According to a Wall Street Journal report, Wendy’s Co. initially estimated the health care law would increase the cost of operating each of its 5,800 U.S. restaurants by $25,000 a year. But Chief Financial Officer Steve Hare told an investment conference on March 14 that executives have cut the estimate by 80 percent, to $5,000 a year, primarily because they expect many employees to decline the insurance offering.

“It is still going to be an additional cost that both the company and our franchisees will have to absorb, but we think it is going to be manageable,” Hare said in the article. The CEO of Dunkin’ Brands Group also softened criticism of the law earlier this month, when he explained to shareholders that Obamacare’s costs “are not as high as some people have said” and “we can mitigate those costs very easily.”

The ideological hyperbole and misinformation surrounding the ACA has served no useful purpose, except for those looking to kowtow to businesses and politicians on the right, while scaring those most likely to benefit from health care reform.

As ThinkProgress says, the fast food industry could have easily reviewed analyses showing that Obamacare would impose a negligible cost on large businesses, while actually helping small businesses. But no.

[Image: Where’s the beef? by NickWarzy via Flickr cc]

writer, editor, reader and general good (ok mostly good, well sometimes good) guy trying to get by

2 responses

  1. Curious to see the response of Papa John’s (horrible, horrible pizza by the way). Their founder couldn’t stop whining about the 25 cents he claimed he’d have to add to the price of pizza to cover healthcare costs. It’s shameful to think people would whine about something like that!

  2. OBAMACARE vs. BUSINESS PROCESS OUTSOURCING in 2014? The U.S. healthcare reform (“Obama Care” or the “Patient Protection and Affordable Care Act”) is intended to pressure large and small employers through force and taxation. Enacted in July 2010, the end result will show North American companies deciding to send customer support, sales, lead generation and appointment setting jobs offshore to stay competitive or risk going out of business. Many business owners will hire a dedicated bilingual employee nearshore who is 100% qualified for their project. Financially speaking, ESL call center employees in Costa Rica are as effective as transitional in-house staff for half of the cost. This proven strategy will give small to medium sized companies the option to scale up their BPO staff without getting caught in the Obamacare challenge in 2014.


Leave a Reply