Fast-Food Chains Cut Worker Hours, Blame Obamacare

[Zimbow]

By Lisa Scherzer | The Exchange – 8 hours ago

Count Wendy’s (WEN) as the latest fast-food restaurant to respond to Obamacare with a reduction in worker hours. Following some other chains that have made headlines recently, a Wendy’s franchise owner in Omaha, Neb., told about 100 workers in the area that their hours would be cut in anticipation of mandates in the Affordable Care Act (ACA).

According to a local TV station, the store said that employees in non-management positions will have their hours reduced to 28 a week. A spokesman blamed the cuts on the new law that, beginning in 2014, will require employers to offer health coverage to employees who log at least 30 hours a week, or pay a penalty starting at $2,000 per worker. The Wendy’s spokesman said, as a small-business owner, he can't afford to stay in operation and pay for everyone's health insurance. Under the law, any company that has more than 50 full-time workers falls under the new health insurance mandate.
According to a report from an Oklahoma station on Monday, a Taco Bell (YUM) in Guthrie, Okla., adopted a similar policy.

And in October, Darden Restaurants (DRI), which owns Olive Garden and Red Lobster, said it has stopped offering full-time schedules to many hourly workers in at least a few of its restaurants in an “experiment aimed at keeping down the cost of health care reform.” Soon after the company said it would back off somewhat from its plan, presumably and at least in part because of the negative reaction following the announcement.

Higher prices to come?


According to a recent survey from consulting company Mercer, 51% of employers who do not currently provide health coverage to employees working 30 or more hours a week indicated they’d change their workforce strategy so fewer workers will be eligible.

More important for consumers is that many companies are likely to pass on to them the higher health-care costs associated with Obamacare. “Ultimately, consumers may see higher prices for some goods and services,” says Tracy Watts, national health care reform leader at Mercer.

Restaurant chains tend to be fairly low-margin businesses. “They can’t really absorb the change without either taking costs out of their operations somewhere or passing costs onto consumers," says Helen Friedman, director of workforce analytics and planning practice at Towers Watson, a consulting firm. "You just don’t have a lot of options.”

And company analysts are assuming costs will rise and thus are baking those expectations into their forecasting models. “I do expect to see overall health care costs go up for most quick-service restaurants, even though they’re looking for ways to offset the costs,” says RJ Hottovy, a Morningstar analyst who covers several casual dining chains, including McDonald’s (MCD), Darden and Yum Brands (YUM).
“I think some of these companies are going to face a significant cost burden and I would expect to see prices to go up generally for a lot of them,” Hottovy says.

Damaged reputation


Last year Papa John’s (PZZA) CEO John Schnatter said he would raise pizza prices and cut employee hours because of Obamacare’s expected higher costs. According to a Politico report, Shattner said, "Our best estimate is that the Obamacare will cost 11 to 14 cents per pizza, or 15 to 20 cents per order from a corporate basis."

Anti-Obamacare comments by Shattner and Zane Tankel, the CEO of Applebee’s franchisee Apple-Metro, put a dent in the public image of the companies, as measured by YouGov BrandIndex. (The class action lawsuit in November accusing Papa John's of sending unsolicited text messages to customers probably played a part, too.)

When it comes to Obamacare and other such issues, it's important for companies to consider the business consequences associated with their actions. “When you’re evaluating options, some of these employers are between a rock and a hard place," says Jane Jensen, senior consulting actuary at Towers Watson. "Our clients are looking to their corporate image. The viewpoint of their potential workforce and the viewpoint of their customer base all come into play.”

http://finance.yahoo.com/blogs/the-e...224911846.html

[shrewsbury]

this will get worse before it gets better

[mrveggieman]

What can you do? If you work a medial job w/o health insurance and try to get public assistance you are consider to be mooching off the system. When the gov't tells business to take better care of their employees they pull crap like this. The business who are making bilions off the backs off the common man show their gratitude by spitting in his face. What these big business fail to realize with the common man buying their products and services they would not be in business. Keep treating your employees as well as your customers like crap. You know what they say about karma.....

[shrewsbury]

if they are going to be forced to provide health care, they should get a tax break to help pay for it, not a tax increase.

[Wickabee]

My hours got cut when working at McDonald's 10 years ago. Who knew that was Obamas fault!

[centrehice]

Papa john's and Applebees both make garbage food, so having their reputation damaged is what they actually need. Make crap food, end up with crap results.

[shrewsbury]

hey, I can agree with that one!!!!!!!

[ajcorleone]

Were they cut for healthcare reasons 10 yeras ago?

My hours got cut when working at McDonald's 10 years ago. Who knew that was Obamas fault!

[Wickabee]

Were they cut for healthcare reasons 10 yeras ago?

Doesn't matter. If only I'd known about Obama then I could get my revenge NOW!

[ajcorleone]

It kind of matters to this discussion.If you wre let go for healthcare reasons it makes sense.If you were let go for cutbakcs,or poor work performance then it does not apply to this particular point

Doesn't matter. If only I'd known about Obama then I could get my revenge NOW!