With the CEO of Papa John’s recently going public and saying that he will cut employees hours to avoid paying the high costs of insurance due to Obamacare, other business owners seem to be playing “follow the leader” and saying they plan on doing the same. One CEO is going one step further in hopes of being able to handle the costs and penalties that are associated with the Affordable Care Act.
John Metz, CEO franchise owner of Denny’s restaurants and five Hurricane Grill and Wings, has decided to add a five percent surcharge to the bills of its’ customers. Knowing he could end up facing a backlash from customers, Metz feels he has no choice and is also sending a message to customers in the hopes that they will contact elected officials and tell them to put a stop to Obamacare.
While many voters celebrated when Obama won his reelection campaign bid, many business owners were not happy as they saw the writing on the wall. They knew Obamacare was soon to become a reality; a costly reality that they would have to find the money to fund health insurance to their employees working 40 or more hours a week. However, one option was not to provide the health insurance to their employees but to instead reduce employee’s hours or simply laying them off.
Applebees, for example, has announced they are planning massive layoffs as a result of Obama winning a second term and because of Obamacare. Metz has looked at his options and in order to deal with the impending health care costs that are associated with Obama’s Affordable Care Act, not only must he take away hours from his employees but also add a five percent surcharge to the bills of customers.
Metz has tried to be open to both his employees and customers saying that he has no other alternative but to pass costs on to his customers. He said that, “because of Obamacare, we are cutting hours to under 30 hours, effective immediately.” He added that, “Everyone’s looking for a way to not have to provide insurance for their employees. It’s essentially a huge tax on all of us business people.”
Metz went on further by telling the Huffington Post that, “I think it’s a terrible thing. It’s ridiculous that the maximum hours we can give people are twenty-eight hours a week instead of forty. It’s going to force my employees to go out and get a second job.”
The average check at a Denny’s restaurant is $9, Metz said, meaning if the surcharge was implemented, 45 would be added to the bill. The average bill at a Hurricane Grill & Wings location is $14.50, so the surcharge amount would be 72 cents.
Starting in December, Metz will hold meetings at all his Denny’s restaurants to talk about the surcharge to his employees and tell them “that because of Obamacare, we are going to be cutting front-of-the-house employees to under 30 hours, effective immediately.” He hopes that the meetings in the future will not alienate his employees but inspire them. He said, “What we’re going to ask them to do is to speak to their elected officials, to try to convey what this means in terms of their jobs and their livelihoods,” Metz said.
Though he wants to cover his employees with insurance, his current coverage has costs of $5,000 to $6,000 annually for full-time employees. Metz said, “Obviously, I’d love to cover all our employees under that insurance. But to pay $5,000 per employee would cost us $175,000 per restaurant, and unfortunately, most of our restaurants don’t make $175,000 a year. I can’t afford it.”
Though Metz feels that Obamacare is more harmful than beneficial, he may not realize the positive effects of choosing to have employer-based health care. There have been studies to support that Obamacare ultimately decreases the costs of health care for small businesses. Not only that, by providing insurance coverage for employees generally leads to higher retention rates, a more competitive hiring market and more satisfied employees.
If Metz follows through with his plan on a five percent surcharge for customers, a simple option is to go to another restaurant; at least for now. With other restaurants contemplating on reducing staff hours to deal with Obamacare, such as the Olive Garden and Red Lobster, it may be only a matter of time before restaurants adopt Metz’s idea for a five percent surcharge that all customers will have to pay.
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