Wendy’s franchise cuts hours to avoid Obamacare

The action is the latest in a series of challenges against next year's implementation of the Affordable Care Act.

By Bruce Kennedy Jan 9, 2013 10:13AM

Doctor sitting in office with patient talking and smiling -- Paul Bradbury, OJO Images, Getty ImagesThe small-business backlash against Obamacare continues. A Wendy’s fast-food franchise in Nebraska is cutting the hours of non-management employees so its owners won't be required to pay health benefits.


The local franchise vice president in Omaha tells WOWT-TV the cuts are coming in several weeks’ time because he cannot afford to pay health insurance for all his employees.


Starting next year the U.S. Affordable Care Act, also known as Obamacare, will require employers with 50 or more full-time employees to offer full-time workers "minimum essential" healthcare coverage. The Act defines a full-time employee as someone who works at least 30 hours a week.


As a result, about 100 Wendy’s workers in Omaha have been told their hours are being cut.


"It has a huge effect on me and pretty much everybody that I work with," T.J. Growbeck, who currently works 36 to 37 hours a week at the restaurant, told WOWT. "I'm hoping that I can get some sort of promotion because then I would get my hours, but everybody is shooting for that because of the hours being cut."


Wendy's spokesman Denny Lynch told the Huffington Post the decision was being made at the franchise level.


"Our franchisees are independent businesspeople, and they make the decisions regarding their restaurant teams," he said. "As small-business employers, our franchisees are facing rising food and operating costs and many new government regulations."


While Wendy’s says the hours-cutting action by its Omaha franchise is not "a company decision," several major restaurant chains have been very vocal in their criticism of Obamacare.


A case in point: Papa John's (PZZA) CEO John Schnatter said the Affordable Care Act would cost his company up to $8 million a year, which would force him to increase product costs and cut workers’ hours.


Other restaurant franchises, meanwhile, are also looking at options ahead of Obamacare. John Rigos, owner of a Five Guys franchise in New York City, told CBS News the new regulations will affect hiring policies at his restaurants. 


"It'll probably have to reduce the staff to some degree," he said, "and again, focus on building [a] smaller stronger team rather than being as aggressive in opening up new stores and creating new jobs."


Rigos said while he "absolutely" supports Obamacare, he still finds it challenging.


"There's 25,000 restaurants within the New York City market we're competing against," he notes, "so it's not like we have surplus profits that we could just earmark a portion of them to go toward these types of initiatives."


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1973Comments
Jan 10, 2013 12:32PM
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"Papa John's CEO John Schnatter said the Affordable Care Act would cost his company up to $8 million a year, which would force him to increase product costs and cut workers’ hours."

In 2011 Papa John's net income was slightly over $55 million. Having to fork out $8 million to provide healthcare coverage for all of their employees would only leave them $47 million a year in profits, which would be devastating to the point that CEO John Schnatter might have to take a pay cut from his almost $3 million a year to $2 million a year...how in the world will he ever survive on that? He might even be forced to sell some of his stock in the company valued at almost $240 million. Dang, just with his stock alone he could cover every Papa John's employee for 30 years.

Folks, all of their rhetoric stems from greed, not job creation. I hear it from a CEO that I sit next to in the boardroom. They want to keep excessive profits and let average Americans foot the bill for uninsured hospital visits in the form of higher taxes and increased medical expenses for all. If we allow employers to not cover their employees, that is basically a bailout for them. Think about it.
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No one owes anyone else anything, yet after very few are forced to provide for the many, then they are told that they are greedy by those who never gave to anyone!
Jan 10, 2013 12:26PM
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News flash!!! Obama lies through his teeth,,, so much for not taxing or impacting the middle class... My first paycheck this year took a major hit, and I'm lower middle class...
Jan 10, 2013 12:23PM
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IDIOTS , Welfare Parasites, aka 'LOW INFORMATION VOTERS" have re-elected these Gangsters into the White House and the Congress mostly DEMO-CRATS, LIBERALS, now the effect of their "RISKY SCHEMES" are being felt across the Land!

 

Jan 10, 2013 12:18PM
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My son works for Pizza Hut-as a driver they gave him basic health insurance over a year ago so it has been policy to give insurance. Now theyhave taken away paid vacations and limited scheduled hours to 30-you can work more but not over 40. They say it is because of Omama Care.
Jan 10, 2013 12:14PM
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Hello! There is no free lunch! Not even at Wendy's. You are already paying for the healthcare of those uninsured workers. If they get sick or injured they go to the hospital and get care. Who do you think pays for that? The healthcare fairy, no you do by paying more for your healthcare. So the pizza guy and the hamburger guy (hello heart attach) are neglecting a cost of doing business and making bigger profits because we are paying for their employees healthcare!  To say that asking a company to accept the responsibility of paying a cost of doing business is " war on business" is just dumb. Is the requirement for a contractor to carry liability insurance "war on business"? If an electrician makes a mistake and burns your house down you would not think so.
Jan 10, 2013 12:03PM
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gotta love Irony........  the companies the peddle cheap unhealthy food and are a big reason for Obesity.....doesnt wanna pay health care.  \

 

Wendy's is an owner, operator, and franchiser of 6,543 fast food restaurants. Of those, 1,447 of the restaurants are owned directly by Wendy's, with the remainder owned by franchisees.

 

The top 25 per cent of stores (based on profit) from 2009/2010 had average sales of $485,000 and average earnings before interest tax depreciation and amortisation of 22 per cent

 

it would cost the average franchise owner apprx 18k per year  for 10 full time employees. (that is assuming the company will cover 1/2 the cost and the employee the remaing 1/2.)

 

this shouldnt hurt the top 25% but it will be touch on the bottom 25%.  the bottom line is people that have ZERO health insurance have the same chance of getting hurt or sick as people that do have insurance.  i have seen first hand when people come into the ER....injured...sick..... without insurance...guess what. we stilll help them. they get the same care as an insured patient.  what happens is the hospital is forced to write off these outstanding unpaid bills. in turn you the tax payer, you the insured patient is forced to pay.

 

i do not think it is unreasonable for these "small" buisnesses to help pay the cost of health care for their employees, and i do not have a problem paying 1.25$ instead of .99 cents for an item off of the "value menu"  to help cover these costs.    

 

this should be a republican/democrat issue. this is a human issue and we are all humans.

Jan 10, 2013 11:55AM
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This is just the beginning...

Oh, and guess what?

$700.00 or 2.5% of gross income is going be the penalty for anyone making over $14k a year (28k for married couples) who doesn't purchase health care insurance when 2016 hits.  Penalties start in 2014, but the really bad stuff hits 2016...I wonder why...So, if you can't afford the 10k-12k in healthcare insurance a year, you get penalized for it.

Oh, by the way.  There's a $300.00 penalty per child for those of you who (according to Obama and friends) are so irresponsible as to not purchase healthcare insurance.

Not sounding like "healthcare for everyone" now, is it?  
Jan 10, 2013 11:53AM
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This guy has to have more than one wendy's operation if he has more than fifty employee's. Health insurance for them would not break the company but it would cut into his profit so he cuts hours so he can continue to line his pockets. I am not speaking from lack of experience either I have ran many bussiness's and know that these costs can be offset in tax breaks and through smart shopping around of insurance for your employees. in most cases it would cost both the employer and employee less than 25 dollars a week. So 100 a month devided by 160 equals 62 cents an hour. Now if i have fifty employees making that that would be 32 dollars an hour more that this guy would be spending tell me that is not affordable. The mark up on fast food is huge due to the volume of bussiness if you are paying 7 dollars for something odds are it costs less than $1.50 to make. I worked for papa johns back in the day and the most exspensive pizza cost less than two dollars to make and was sold for fifteen. So this is about greed not profit because both can exist within smart operations
Jan 10, 2013 11:51AM
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.  This pay- your-fair-share tax will cost us several jobs and may even kill our 30 year old business. 

MichaelMurphy and for 30+ years way too many tax breaks and people cheating on their taxes, tax-loopholes....whatever can affect  our revenue intake, that and 10+ years of a war(we couldn't afford that either especially since there was not much revenue generated by DUMBYA,  that your party wanted to " infuse democracy into the middle east BS."  You can blame Obama all you want, ****, but remember the other part of this Obamacare, Heath insurance companies have driven up the cost of care that no one really can afford health care and employers are in no way going to pay for it, so Spud what would you have this country do to insure the 8 million or so who need it? Blame the Democrats, really?
Jan 10, 2013 11:43AM
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It's okay to elect someone who advocates war and is against women’s rights, gay rights and builds obstacles to voting but not easy health care for everyone. Give me a break.

 

The CEO's of Wendy's and Papa Johns need to go back to business school and learn strategies on how to compete when change happens.

 

 

 

Jan 10, 2013 11:40AM
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So much for the hoopla of supporting small business owners by penalizing them millions of dollars to abide by the Affordable Healthcare Act. How is it supposed to be "affordable" if small business owners are losing money and their employees are losing wages by having their hours cut?!?
Jan 10, 2013 11:39AM
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About 53 -54 percent of the country voted for  this president.. You now get what you voted for.

Continued high unemployment, high debt ,more taxes. and small business being hurt..

 

But wait most of those voters can't read these comments because they are on goverment assistance,

Oh wait  ,t    They have also been given Free computers, phones and I-pads so maybe they can read this.

Jan 10, 2013 11:33AM
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The slow death of America...I seen it coming and people thought I was Crazy..
Jan 10, 2013 11:29AM
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WOW.  Did you know that 2100 millionaires have have left the USA since Obama was reelected. I do not blame them. I only worth 400000 and I am planning to leave. Who will invest in a County that does not encourage Jobs, Or a Return on there money. They already paid taxes on it when the earned it...To tax the rich more will only cause more to leave. Other countries love our money and our investments...America...A Dying breed. What a Shame....  I will not let them Have my Guns either...Give me Liberty or Give me death...
Jan 10, 2013 11:27AM
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I too watch those programs. We have a small business and we provide insurance.

With the affordable care act we are going to get compensated to provided insurance we have just under 50 employees and we are growing so, we will be hireling more people and we will provide insurance. We don't make the money Wendy's makes but, we are not greedy.

Jan 10, 2013 11:26AM
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Having spent the last 20 years in the small business arena this scares the hell out of me! I own a company that employs over fifty people, I am in the office every day(often seven days a week), my employees and I take a great deal of pride in what we have buildt here. All of us have made the sacrifices needed to be a success. And now it is at risk because of the actions of a group of well intentioned morons! I have struggled for years to provide my employees with any and all benefits that the company can afford. The biggest challenge has been health care coverage! It has never been affordable, even to me as the owner of the business. Much less my employees, who are well paid! My average full time person makes $40K+ per year, but with decent coverage costing upwards of $8K-$10K/yr for a family it is impossible to provide! If the company is forced to absorb the full cost of providing for these employees that means an additional $400K per year in operating overhead! This is more than the margins will allow, in other words it will BANKRUPT the company and force us to close the doors! I have worked hard and taken a great deal of personal financial risk in order to build this company, and yes, Mr. Obama,  I DID BUILD THIS! And now I am faced with the coice of either drastically cutting staff, reducing benefits, or close the doors??? Thanks LIBS!!!!!!!
Jan 10, 2013 11:22AM
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Does anyone that actually thinks beyond an 8th grade level expect businesses to simply accept this law and not make adjustments?   This is just the tip of the iceberg as the burden of Obamacare becomes more and more a reality.

 

Further, what happens to healthcare when doctors who are receiving reduced payments stop accepting new patients, or retire, or worse yet, the next generation of doctors simply choose other professions?

 

And let this be lesson to all of the "living wage" supporters - with Obama in office, you may get your living wage, but expect a significant increase in unemployment.  I ask all of you, which is better for the overall economy, 2 people employed at $7/hr or 1 person at $11/hr?  Do not forget that a majority of minimum wage workers are teens with limited skills, knowledge and experience.  For those adults on minimum wage, why?  What has prevented them from moving up the wage scale as they gain knowledge, skills and experience?  

Jan 10, 2013 11:17AM
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These places should never have been allowed to be in business not providing decent working conditions, pay, hours, and benefits in the first place. Retaliation against laws should be built into these laws and all possible loopholes and ways around them should be prohibited. Corporations will find any way to get away with paying Americans as little as possible, because this nation is in serious decline. That decline may be intentional. Papa Johns, Red Lobster, Olive Garden, and the like are receiving public backlash for their threatening to cut employees. Poor workers have to live off of others, get government assistance, and kill themselves working two or three jobs. Consumers need to start caring about where they spend their money and the damage it is causing. Government regulation is not the problem, lack of worker respect and protection laws are the problems. 
Jan 10, 2013 11:16AM
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It is just outrageous--outrageous I say, that anyone should expect healthcare--even minimal healthcare with their minimum wage jobs. I mean who do these burger-flippers think they are anyway? You peons want healthcare? Get to the ER with rest of the swine. At least the unions can't get as many people the healthcare and benefits they only THINK they deserve. The sooner we come to worship the Job Creators for the benevolence they bestow on this society the better. Obamacare today, Communism tomorrow. My God where will it end?
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