Red Lobster and Olive Garden restaurants to shift more workers to part time to avoid ObamaCare

[Anonymous]

Anonymous wrote:I am a small business owner from out of the DC area. I do not fault those restaurants, even though I feel badly for their employees.

For around the past 3 years, the recession has hit my business and similar businesses in my area very hard. Our customer base dropped as much as 30% from where it was prior to the recession. We are the most successful of our type of business in our area, and I know that other, similar businesses in our area have been hit harder.

Most in our customer base (blue collar-middle class) are suffering through the recession: lost jobs, lower wages, higher gas prices/utilities/food prices, so raising prices, even a bit, to bring in more revenue is not an option. If we raise our prices, even a bit, customers who are sacrificing to pay for our services will no longer be able to pay. Raising prices will result in lower revenues for us, so we have to hold our prices where they are at.

I don't want to fire my employees, because they are valuable, talented employees who work hard for me and are dedicated to giving their best. My overhead has gone up significantly (for example, my highest electric bill from this past summer was double what the highest bill was last summer, even though we have taken steps to cut back on energy usage). The only option I have been left with is to cut my own salary. I have been working for the past 2 years and not drawing any salary in order to help my family business of over 20 years to make it through the recession. Fortunately, my spouse makes enough that our family is fine.

Just now, as things seem like they might be turning a corner, we have Obamacare looming. I guarantee you that I am will not A) hire any more employees B) will consider cutting back hours/employees to avoid the extra expense C) might consider closing down this once successful family business if A and B do not work.

My story is not unique. It makes me very sad. Business owners are not the demons many of you would like to believe. My employees do not know that I have not drawn a salary, nor do my customers. So please think before you disparage business owners and employers. We have done our share of carrying the burden, and have sacrificed more than you know.

Small businesses are different and are largely exempt from Obamacare. Darden Restaurants is a publically traded corporation that owns and operating 2,000 restaurants.

[Anonymous]

Pizza Hut was keeping people on part-time hours 25 years ago to avoid having to give benefits.

If Darden moves people to part-time, then these people are going to start looking for FT work at other restaurants. Some will be able to find jobs that pay health insurance and will leave. Darden will have to pay more, offer better benefits, or hire less skilled people as a result, which may affect business. That's the way the economy works. Its not perfect, but the company will feel the effect of their decisions in some way.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I am a small business owner from out of the DC area. I do not fault those restaurants, even though I feel badly for their employees. ... Just now, as things seem like they might be turning a corner, we have Obamacare looming. I guarantee you that I am will not A) hire any more employees B) will consider cutting back hours/employees to avoid the extra expense C) might consider closing down this once successful family business if A and B do not work.

Small businesses are different and are largely exempt from Obamacare. Darden Restaurants is a publically traded corporation that owns and operating 2,000 restaurants.

Small business owner, you should be sure to read up on the law. If you have fewer than 50 employees, then you're not required to offer your employees healthcare. In fact, if you have fewer than 25 employees, you may be entitled to additional government benefits! Even Forbes is making these points:

Smart business owners will be gathering all the facts they can to figure out how to make this change work for them. Smaller businesses — those with fewer than 50 full-time workers — are exempt from the penalty. If that’s you, you could stand out by offering coverage nonetheless, or perhaps leverage that economic advantage to gain some ground against bigger competitors. No question there will be winners and losers here — and the smart business owners are expending their energy now figuring out how to come out on the up end, not issuing threats. More people with healthcare — which is what happened with Massachusetts’ healthcare law – means fewer sick days for workers. It should mean more healthy customers, too. Nobody’s factoring that upside into the equation when they bluster about how healthcare reform will be the death of their business.

http://www.forbes.com/sites/caroltice/2012/07/17/will-small-business-owners-kill-their-companies-to-thwart-obamacare/
http://www.billlosey.com/articles/how-will-obamacare-affect-your-small-business.php
http://www.slate.com/articles/business/small_business/2012/07/nfib_is_wrong_on_obamacare_the_aca_should_actually_help_small_business.html

[Anonymous]

Small businesses are different and are largely exempt from Obamacare. Darden Restaurants is a publically traded corporation that owns and operating 2,000 restaurants.


Small businesses and all of the big businesses that Obama cut deals with exempting them from the law.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This was completely foreseeable. Health insurance is a huge cost for employers. I would blame Obama for this, not the employers.

We need a system that doesn't base health insurance on employment.

They don't have to make profits by harming employees, though. They can shift costs to the consumers. Paying a few cents more for a lobster is no big deal.

It might not be a big deal to you, but I bet these companies have done the research and determined that more people on the margin will stop coming to their restaurants if they raise the prices than if they change more of the staff to part-time. I'm sure that if they thought they could charge a buck (or whatever amount) more per lobster and make a greater profit compared to shifting to part-timers they would do so.

That's the problem. The only thing that matters is money. Why not make a smaller profit (still a profit) but treat employees well?

It's a business that survives by making money. If it can't make a profit, it goes out of business, which would be bad for the employees. If it can make a profit, why are we all better off if the customers lose more money in prices than if the employees get paid less?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This was completely foreseeable. Health insurance is a huge cost for employers. I would blame Obama for this, not the employers.

We need a system that doesn't base health insurance on employment.

They don't have to make profits by harming employees, though. They can shift costs to the consumers. Paying a few cents more for a lobster is no big deal.

It might not be a big deal to you, but I bet these companies have done the research and determined that more people on the margin will stop coming to their restaurants if they raise the prices than if they change more of the staff to part-time. I'm sure that if they thought they could charge a buck (or whatever amount) more per lobster and make a greater profit compared to shifting to part-timers they would do so.

That's the problem. The only thing that matters is money. Why not make a smaller profit (still a profit) but treat employees well?

It's a business that survives by making money. If it can't make a profit, it goes out of business, which would be bad for the employees. If it can make a profit, why are we all better off if the customers lose more money in prices than if the employees get paid less?

I didn't say they shouldn't make a profit. I just don't think they should maximize profit at the expense of employee welfare. It's easier to spread the cost among millions of diners to cover the cost of health insurance for thousands of employees. So yes. I'd rather spend $2 more (or however much) on my dinner if it helps employees get $400 month health insurance.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This was completely foreseeable. Health insurance is a huge cost for employers. I would blame Obama for this, not the employers.

We need a system that doesn't base health insurance on employment.

They don't have to make profits by harming employees, though. They can shift costs to the consumers. Paying a few cents more for a lobster is no big deal.

It might not be a big deal to you, but I bet these companies have done the research and determined that more people on the margin will stop coming to their restaurants if they raise the prices than if they change more of the staff to part-time. I'm sure that if they thought they could charge a buck (or whatever amount) more per lobster and make a greater profit compared to shifting to part-timers they would do so.

That's the problem. The only thing that matters is money. Why not make a smaller profit (still a profit) but treat employees well?

It's a business that survives by making money. If it can't make a profit, it goes out of business, which would be bad for the employees. If it can make a profit, why are we all better off if the customers lose more money in prices than if the employees get paid less?

I didn't say they shouldn't make a profit. I just don't think they should maximize profit at the expense of employee welfare. It's easier to spread the cost among millions of diners to cover the cost of health insurance for thousands of employees. So yes. I'd rather spend $2 more (or however much) on my dinner if it helps employees get $400 month health insurance.

Even if that works for some restaurants it won't work for all. The Bertucci's in Arlington just closed. Big successful chain but it couldn't make it in this economy. Maybe it could have if it could have lowered prices or paid less for health care.

In addition, most businesses need investors. An investor won't buy your argument. If I can make a slightly higher return with my money in one restaurant than another, I'll pull my money out of the one that is more generous than the market requires to its employees.

I assume you agree that if they charge more per lobster they will get fewer customers. At some point they've already discovered the right combination of price and willing customer that maximizes profit. There's no reason to assume they'll be able to charge enough more to cover the increase in health care cost without losing too many customers.

[Anonymous]

Anonymous wrote:Even if that works for some restaurants it won't work for all. The Bertucci's in Arlington just closed. Big successful chain but it couldn't make it in this economy. Maybe it could have if it could have lowered prices or paid less for health care.

In addition, most businesses need investors. An investor won't buy your argument. If I can make a slightly higher return with my money in one restaurant than another, I'll pull my money out of the one that is more generous than the market requires to its employees.

I assume you agree that if they charge more per lobster they will get fewer customers. At some point they've already discovered the right combination of price and willing customer that maximizes profit. There's no reason to assume they'll be able to charge enough more to cover the increase in health care cost without losing too many customers.

I don't think you're accurately predicting how the law will affect businesses. I doubt many businesses will pay for any additional employee benefit costs (like healthcare) solely by increasing the cost of their products (ex: charge more for the lobsters).

Instead, I predict that many businesses which are not currently offering employee healthcare options, and which are required to start offering healthcare, will pay for those additional employee benefits by freezing or even reducing what they pay their employees. In essence, those employees will be getting paid more in benefits, and less in salary. And presumably, the employees may even gain in the bargain, because the cost of group healthcare purchased through the employer will be lower than the cost of individual healthcare that employees might purchase on their own. So for example: while the employee pay might decrease by $100/month, the employee might be receiving $120/month in healthcare benefits.

Obviously, for the many companies that already offer healthcare benefits to their employees, there will be no meaningful change.

Won't employees immediately quit when their employer starts freezing their salaries to cover new healthcare costs? No, because all employers are operating under the same rules. Any employee who quits will not be able to get a better deal from some other employer.

What about employees who were choosing not to buy any health insurance previously, and now will find their pay reduced to cover the costs of health insurance they don't really want? Aren't they the real losers here? I'm not sure how many of those employees exist. But my personal answer is "tough luck." One of the goals of the legislation is to ensure broad healthcare. If some people were choosing not to have any healthcare, and instead were relying on free emergency room care to meet their healthcare needs, that's ultimately an extremely inefficient method of healthcare, and one where I'm paying extra high prices for their healthcare (via taxes to support those emergency clinics). Under that old system, I'm essentially forced to subsidize the decision by those people to spend their money on something else besides healthcare. But under the new system, everyone is essentially paying for her own healthcare.

The program makes lots of sense economically. That's why Romney (and the Repubs and the Dems) supported it when it was created in Massachusetts. But now that it's a political football, each side feels a need to fight over it. Since a Dem pushed it, the Repubs have to oppose it. If Bush2 had proposed something similar, the Dems would have criticized it.

[Anonymous]

"Even if that works for some restaurants it won't work for all. The Bertucci's in Arlington just closed. Big successful chain but it couldn't make it in this economy. Maybe it could have if it could have lowered prices or paid less for health care. "

As far as I know, they closed because they could not settle on lease renegotiation.

I shudder to think how the conversation is going to get distorted as provisions of the ACA take effect: every business that shuts down for any reason will be because of Obamacare.

Good gravy.

[Anonymous]

Even if that works for some restaurants it won't work for all. The Bertucci's in Arlington just closed. Big successful chain but it couldn't make it in this economy. Maybe it could have if it could have lowered prices or paid less for health care.

Lots of national chain restaurants can't hack it in Arlington and Bethesda because there is so much competition in the form of interesting local restaurant choices. Why do you think there are so many jokes about Applebee's on this board?

[Anonymous]

Anonymous wrote:Pizza Hut was keeping people on part-time hours 25 years ago to avoid having to give benefits.

If Darden moves people to part-time, then these people are going to start looking for FT work at other restaurants. Some will be able to find jobs that pay health insurance and will leave. Darden will have to pay more, offer better benefits, or hire less skilled people as a result, which may affect business. That's the way the economy works. Its not perfect, but the company will feel the effect of their decisions in some way.

+1
And we all know the quality of pizza hut food.
Darden has been planning to do this for some time, it has nothing to do with obamacare. They will soon be food-wise at the level of arbys.
Those who want good food will to elsewhere. And the good workers will leave

[Anonymous]

Most of the small businesses in the area that close are a result of rent hikes. I work for a small business owner now that deals with this on a regular basis as we have 8 stores in the area. This is particularly true in areas that were emerging when the business first opened so rents were a bargain (Chinatown for example). They sign these 10-15 yr leases and they can't afford the market price after the end of that lease. Obamacare will have some negative effects but it's worth what's being gained.

[Anonymous]

Another failed policy by a community organizing rookie

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This was completely foreseeable. Health insurance is a huge cost for employers. I would blame Obama for this, not the employers.

We need a system that doesn't base health insurance on employment.

They don't have to make profits by harming employees, though. They can shift costs to the consumers. Paying a few cents more for a lobster is no big deal.

It might not be a big deal to you, but I bet these companies have done the research and determined that more people on the margin will stop coming to their restaurants if they raise the prices than if they change more of the staff to part-time. I'm sure that if they thought they could charge a buck (or whatever amount) more per lobster and make a greater profit compared to shifting to part-timers they would do so.

That's the problem. The only thing that matters is money. Why not make a smaller profit (still a profit) but treat employees well?

Because if the management doesn't maximize profit it is cheating the owners of the company out of their money. Since this is a public ally traded company, that means the stockholders. The stockholders include lots of rich people, but also lots of retirement accounts.

[Anonymous]

Agree - small businesses are not affected by this. Legit big businesses already offer benefits. If there is a restaurant chain too slimy to do so -- maybe a boycott is in order.