Restaurant owner tries to work with Obamacare
It's going to be a tough road for one Jimmy John's franchise owner, but he's trying to plan for it and figure out a way.
Restaurant owners are spitting mad about what implementing Obamacare will do to their already thin margins.One Denny's franchisee threatened a 5% surcharge on meals, and suggested that customers could tip less. An Applebee's franchisee threatened to cut worker hours. Papa John's (PZZA) founder, John Schnatter, threatened to raise the cost of a pizza by as much as 14 cents and said he would "find tactics to shallow out any Obamacare costs."
So perhaps it is newsworthy, then, that one restaurant owner is simply going to try to make Obamacare work.
The Nebraska owner of 18 Jimmy John's franchises says he's going to figure out how to give his employees health care. "I'm trying to save for it and plan for it so I can comply with the government, provide health care and still pay for it," Dean Hodges said in an email to the Huffington Post.
Already, 38 of Hodges' 550 employees receive health care benefits because they are full-time employees. You can only get those benefits after working full-time for six months, and so another eight or nine workers will become eligible next year, the Post reports.
But the Affordable Care Act considers an employee working 30 or more hours a week a "full-time equivalent." Restaurants will have to insure them or pay them more so they can buy their own health insurance.
For Hodges, that means 150 more employees will be considered full time. And that's a huge new expense for his business. He told the Huffington Post that those 150 employees would add some $500,000 in premiums, making 10 of his 18 stores unprofitable.
This is a very tight spot to be in. But kudos for Hodges for talking about it rationally and showing exactly what he's dealing with under Obamacare. He's trying to do the right thing by his employees, but he's got a tough road ahead.
"We're not cold people who don't want to insure people," he told the Huffington Post. "It's not a nasty greediness on our part. But if I'm unprofitable I can't go on, I can't exist and I can't employ anyone."
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$1.60 per hour more per employee, based on 2,080 hours a year, for 150 employees. Raise your prices; if your products good people will pay the additional cost. How many people actually hesitate about the price when they go out to eat. If people are willing to pay $5.00 for a beer when they eat, why won't they pay the residual costs?
"We're not cold people who don't want to insure people," he told the Huffington Post. "It's not a nasty greediness on our part. But if I'm unprofitable I can't go on, I can't exist and I can't employ anyone."
He may be trying, but with numbers like these, I doubt he's going to be very successful at making it work. When stores becomes unprofitable, companies close them. That would mean 10 out of 18 stores that become unprofitable will close.
Jimmy John's corporate citizenship (if sincere) is to be applauded and such companies deserve government help (if needed) and cooperation to make the ACA a reality " Let them go bankrupt" should apply to sweat shop operations when they fail to work within the spirit and intent of the law. Good corporations will step in to fill the void to the profit of employer, employee and country.
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