Eateries facing a plate of health care issues
Moderated by Rick Badie
Higher menu prices. Fewer work hours and jobs. Zero expansion and possible closings. This, writes a local franchiser, will be the potential impact in the restaurant industry of health mandates under the Affordable Care Act. But the co-founder of a workers’ advocacy group suggests that businesses can profit by taking care of personnel.
Repeal Obamacare
By Aziz Hashim
More than three years into our jobless “recovery,” 12.1 million Americans are still out of work. Nearly 23 million have stopped looking or can’t find full-time work.
The labor participation rate is 63.6 percent, the same level we saw in 1981. Employers are only adding slightly more jobs per month needed to keep pace with normal labor-force expansion.
So why did the unemployment rate go down below 8 percent last month? In large part, due to an increase in part-time work. While the drop in unemployment may seem completely positive, there is an underlying problem for small business owners due to Obamacare.
As employers begin to make their growth plans for the next year, the true costs of Obamacare have started to sink in. They threaten much of the growth forecast in businesses like mine, a franchise of pizza, burger and chicken restaurants that include Atlanta-based Popeyes Louisiana Kitchen. I want to grow my business and add more locations. Obamacare penalizes me every time I add a full-time worker to my franchise.
The employer mandate forces employers to provide coverage or pay a penalty once they reach the 50 full-time-employee threshold. Employers face a decision of closing a business, eliminating jobs, or shifting workers from full- to part-time to avoid the law’s penalties. We are likely going to choose the latter option.
In the franchise industry, there are thousands of multi-unit franchises like me who are put at a competitive disadvantage by the law’s employer mandate. This threatens growth in our industry. In cases where a franchisee owns and operates multiple locations, the law treats these firms as one company for tax and health-care purposes.
Suppose a multi-unit franchisee owns four establishments with 15 full-time employees each. Under the law, this multi-unit franchisee will be treated as a single firm with 60 full-time employees. The employer will be required by law to provide health care benefits for all employees or pay a fine of $2,000 per full-time employee per year. If these four establishments were owned and operated separately, they would be exempt from the health care requirement.
If these four separately owned businesses choose to offer health insurance, they would in many cases be entitled to a tax credit, making this an even further disadvantage for multi-unit ownership.
Businesses cannot operate at a loss for an extended time. That is the choice this law may force companies to face. Another often-overlooked factor is that many businesses will have an added incentive to become more automated and employ fewer workers. Utilizing automated check-out counters and purchasing new machinery are options we must consider to reduce the number of employees and remain profitable under these mandates.
Business owners like me who want to continue to expand would feel more confident about expansion and hiring plans without Obamacare. The only way to change this is by repealing Obamacare in its entirety and starting over with market-based solutions.
Aziz Hashim is president and CEO of Decatur-based National Restaurant Development, Inc.
Health care can help stabilize workforce
By Saru Jayaraman
There’s been a lot of talk about the recent announcement by Darden, the world’s largest full-service restaurant company and owner of Olive Garden and Red Lobster, that it would reduce workers’ hours to avoid having to provide health coverage when the Affordable Care Act goes into effect in 2014.
None of the coverage mentioned the impact on one key stakeholder group: consumers.
The Affordable Care Act (ACA) is a great step to ensure that people who touch our food are not sick, making sure that we don’t get sick as well. Darden claims the ACA is forcing the company to reduce its employees’ hours to stay afloat.
Moreover, the National Restaurant Association would have you believe the industry is going to collapse if it actually provides workers with genuine health-care access. There are plenty of great employers in America already providing benefits.
For the last three decades, Zingerman’s Community of Businesses in Michigan has been providing up to 80 percent of workers’ health care premiums on a comprehensive health care plan. Zingerman’s started as a two-employee deli in 1982. It has grown to an award-winning company with nine businesses that employ 575 workers and realize more than $40 million per year in revenue.
How? Zingerman’s was committed to working benefits into its business model from the start and heard workers’ input in choosing the plan.
Says Zingerman’s founder Paul Saginaw, “What do you get from it? You get a stable workforce. You get a workforce that can stay healthy. You get someone who feels good about the company and is out there trying to help the company be successful. The benefits are enormous. So now you figure out how to make it work.”
Everyone agrees health care costs are high. Saginaw believes a government-funded plan would be best. Without that, Saginaw needs and wants his employees to be healthy, for the sake of his workers and customers, and for his own bottom line. His workers say their customer service is better because they feel secure.
In fact, restaurants in the whole city of San Francisco have had to contribute toward a health care fund for their workers since 2008. Business is booming.
The organization I direct, Restaurant Opportunities Centers United, puts out a consumer guide on which restaurants provide benefits like paid sick days and which don’t at www.rocunited.org/dinersguide. We should support restaurants that do and let others know they shouldn’t cut corners because we put our health in their hands every time we eat out.
Saru Jayaraman is co-director of Restaurant Opportunities Centers United in New York.
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17 comments Add your comment
Rockerbabe
October 30th, 2012
4:43 pm
I worked in restaurants and hotel for many years to get myself throught college. These restaurants all made money and lots of it! Why? Because they didn’t pay decent wages, no benefits and did almost everything on the “down low”. There is a reason, there are so many restaurant chains; they make money and profits for the compay and its managers, not the rank and file workers.
Obama Care is a good thing! It is very sad to see the managers and executives have healthcare and pension and fabulous salaries, but the average worker does not. I have no sympathy.
SAWB
October 30th, 2012
4:43 pm
As the old saying goes “the devils in the details” and that could hold no more true than with OmammaCare. Even Speaker Pelosi said, “We have to pass the bill to see what’s in the bill”. While the idea of providing some form of affordable healthcare to all Americans is a noble and actually doable idea. We should have attacked specific issues individually instead of a large new law that cannot be applied without significant changes.
Michael Gray
October 30th, 2012
4:49 pm
Saru Jayaraman clearly does not have a grasp on the reality of the restaurant industry for the small, especially franchised, firms. I applaud a deli that has 575 employees and $40M in sales. At one time however they were small, and they never would have survived to be 575 employees under the current Obamacare regulations. What about a business that has 130 employees and at the end of the year is able to turn a profit of $200,000. Under Obamacare this business would pay almost all of the $200,000 in fines. This leaves no choice but to close the business, lay off workers or move everyone to part time. This is not an issue facing a few businesses, this has a major impact on the restaurant industry as a whole.
Eateries facing a plate of health-care issues – Atlanta Journal Constitution (blog) | Health and diseases news
October 30th, 2012
5:39 pm
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Eateries facing a plate of health care issues – Atlanta Journal Constitution (blog) | Health and diseases news
October 30th, 2012
6:12 pm
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Colonel Sanders
October 30th, 2012
10:15 pm
0bama JiveTalker and his ugly wife want to take away everybody’s fried chicken and make all you haters eat salad.
DeborahinAthens
October 31st, 2012
6:50 am
Michael Gray, of course Zingermans would have survived. They did! They offer benefits from the beginning. All restaurants have to do is incorporate the health plan as part of their compensation. My son is a chef and once worked for one of the largest Wendy’s franchises in the state, and they gave their employees Blue Cross Blue Shield for which the employees paid not a dime. They were very profitable and still are, I am sure. They didn’t have the high turnover that other fast food organizations have. You Repugs slay me. Now Romney is saying he wants to keep the part of the ACA which will make insurance companies insure you even if you have a preexisting condition but wants to get rid of the mandate. He is either lying or is stupid. You cannot feasibly have one without the other. The ACA personal mandate was good when Gingrich proposed it years ago, and it is good now. If everyone buys insurance, if everyone is part of the pool, the price has to come down. Actuaries base premiums on the average ages, life expectancies, etc, etc of the pool. The larger the pool, the lower the premiums.
umass
October 31st, 2012
10:43 am
So, I guess that there are no franchises in Massachusetts since Romneycare was implemented. I had not heard that.
E
October 31st, 2012
12:02 pm
Hey Rockerbabe, How do you know how much money these restaurants made. Did you see their financials every month? Maybe you didn’t know that restaurant failure rates are some of the highest. Maybe you don’t realize that many independent restaurants make little or no money for the trouble. Maybe you don’t realize that the person putting up all the risk should get the reward. You want to share in the profits of a restaurant you work for but you damn sure wouldn’t want to share in the loss, would you? No one even thinks about a company losing money that still pays their workers.
If the restaurant business is so shady why did you work in it for “many years”. The fact is that it’s good and quick money and tons of people take advantage of that to put themselves through school. If you had such a problem with it you should have quit and got a job at a grocery store making minimum wage. It couldn’t have been that bad for you.
Rockerbabe
October 31st, 2012
2:25 pm
E: I have been in the hospitality and healthcare business for 3+ decades. I have been a manager, general manager and director. I do know what is what and what is going on. I have had medical insurance and benefits since I left the waitress/cook/receptionist ranks and so have all of the other folks in the more senior positions.
I am very aware of the failure rate of restaurants; like most small business, failure is often due to a lack of capital, inadequate and proper oversight managment, poor follow-through, poor location and general mismanagement, as well as not well thought out concept that was poorly executed. I doubt poor salaries, no benefits, etc contributed to the demise.
Your assumption that the work I did to get through college was “bad”. Which it was not. Any employee who works as hard as the front line in any restaurant and/or hotel should be paid a decent wage and benefits; esp if the senior managers all get those benefits.
MrLiberty
October 31st, 2012
2:32 pm
Obamacare is just the most recent intervention into the economy that small businesses are being hurt by. Labor regulations, minimum wage, employment regulations, tort issues, licensure, permits, etc. have all made life miserable both for small businesses and those who remain unemployed because of high employment costs. While republicans and democrats alike pat themselves on the backs for all they have done “for the working man,” they are all so economically ignorant that they can only see the immediate effects of their legislation, but never see the person who is not hired because the small business cannot overcome that financial burden that government has now set up before him.
The free market works. The fascist society we have in america today does not – and never has. It is ironic that we supposedly fought WW2 to rid the world of fascism while our own government was embracing it at home and has been embracing it ever since. Economic ignorance will be the ultimate downfall of this nation.
Eateries facing a plate of health care issues | w13opjene45k
October 31st, 2012
4:17 pm
[...] Last fall, a server at a North Carolina Olive Garden was forced to work with Hepatitis A because the company neither offers paid sick days nor any kind of health care. Three thousand people had to get tested for Hepatitis A and many ended up winning a … Read more on Atlanta Journal Constitution (blog) [...]
zeke
November 1st, 2012
10:27 am
What a socialist left wing commentary by S.J.! People, companies, businesses are not in business to give benefits, hire people! For our government, supposedly our free market capitalist, personal responsibility and integrity, government to require that businesses “provide health insurance” to workers IS NOT CONSTITUTIONAL! Sure it is fine for a GE, Microsoft< Apple, Intel and the like to do so! They can adjust their pricing to account for the extra costs. My small business with 30 employees, and, considering an expansion that will raise the total employment to about 60, CAN NOT DO THAT! I have 20 or more competitors in my market area. I cannot raise my prices will nilly to give away a benefit to my workers. Now, if you want to change the wording to "offer a health care plan or option" , then I can "offer" a plan to my employees and they can pay for it!!!
Andre Plessis
November 1st, 2012
5:46 pm
For all of you who complain about OBAMACARE, you should educate yourself and HAVE A BIGGER VISION. The reason that other companies like APPLE, MICROSOFT, DISNEY, RITZ CARLTON and so many other successful companies offer those benefits is because they had a BIGGER VISION than yours. They found a way to reward THEIR WORKFORCE, because without them, YOU HAVE NO BUSINESS. Take off your workforce, your employees and tomorrow you are OUT OF BUSINESS.
So because they wanted to take care and reward their employees, they implemented steps to reach their goals, dreams and visions. For those of you who bitch because Obama wants workers to get health benefits, shows that you have no vision, no concerns for your workers who do all the job, thus you are not doing well. If you study the most successful companies, they take care of their workers for the most part. Rarely you will see a successful company that does not take care of its employees. It can happen but not easy to find a way to be successful when you ignore the needs of your employees.
Anyone can increase its prices, to afford benefits for its workers, when you know how to do it, when you refuse to be in the commodity business, which does not work unless you are Walmart, and when you understand that YOUR FUTURE IS BASED ON HAVING A SUPERIOR CUSTOMER SERVICE ORGANIZATION.
If you are not successful enough to afford healthcare for your own worker, it’s because you do not give a damn about your employees, thus it is impossible for your workers to give a damn about your company. YOU GET WHAT YOU PAY FOR. YOU REAP WHAT YOU SOW.
Simple as that!
Andre Plessis
November 1st, 2012
5:52 pm
In regards to the restaurant, what kind of risk are you talking about? Most restaurant have INVESTORS, and the owner has just part of the risk. And if you think that the efforts of the WORKERS IS NEGLIGENT COMPARED TO THE RISK OF THE OWNERS OR INVESTORS, then why don’t you tell the workers IN THEIR FACE. WITHOUT WORKERS, THERE IS NO BUSINESS. If you have a problems with GIVING, they don’t get into a business.
The rules in life is that YOU MUST TAKE CARE OF THOSE WHO TAKE CARE OF YOUR BUSINESS IF YUO WANT TO BE SUCCESSFUL. If yu do not consider them, they won’t give a dman about your business. No wonder some of you are struggling with the type of mentality you have. SOME RESTAURANTS MAKE PLENTY OF MONEY. JUST DUPLICATE THEIR SUCCESS. But for that it would require you to READ, EDUCATE YOURSELF, BE PASSIONATE ABOUT WHAT YOU DO. But all you care about is your profit and NOTHING ELSE. THAT IS WHY YOU ARE FAILING. If you want to be successful, your workers must see the big picture. They don’t so you FAIL. Simple as that.
Andre Plessis
November 1st, 2012
5:57 pm
In my experience in the restaurant industry, VERY FEW UNDERSTAND THIS BUSINESS, which is why so many fail. It is not because yo have money, and you have a cook that you will succeed. If you want to succeed, you must understand HOSPITALITY. Hospitality means that you must make people feel as if they were at home. And for that you need people who have those skills that are not TEACHABLE.
Andre Plessis
November 1st, 2012
6:08 pm
70% of shoppers have stopped buying goods or services from a company after experiencing poor customer service.
64% have made future purchases from a company’s competitors after experiencing poor customer service.
81% are willing to pay more for a better customer experience.