Denny's to charge 5% Obamacare surcharge and cut employee hours

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Denny's to charge 5% 'Obamacare surcharge' and cut employee hours to deal with cost of legislation

By JAMES NYE
PUBLISHED: 00:59 EST, 15 November 2012 | UPDATED: 01:33 EST, 15 November 2012

President Obama's election victory ensured his Affordable Care Act would remain the centerpiece of his first term in power - but that has left some business owners baulking at the extra cost Obamcare will bring.

Florida based restaurant boss John Metz, who runs approximately 40 Denny's and owns the Hurricane Grill & Wings franchise has decided to offset that by adding a five percent surcharge to customers' bills and will reduce his employees' hours.

With Obamacare due to be fully implemented in January 2014, Metz has justified his move by claiming it is 'the only alternative. I've got to pass on the cost to the customer.'

The fast-food business owner is set to hold meetings at his restaurants in December where he will tell employees, 'that because of Obamacare, we are going to be cutting front-of-the-house employees to under 30 hours, effective immediately.'

Claiming that he is not anti-insurance Metz has said that he understands the problems this will cause for his employees.

John Metz also owns Hurricane Grill & Wings which has 48 franchises around the country and falls under the umbrella of his firm RREMC Restaurants

'I think it's a terrible thing. It's ridiculous that the maximum hours we can give people is 28 hours a week instead of 40,' said Metz to the Huffington Post.

'It's going to force my employees to go out and get a second job.'

Obamacare requires businesses or franchises with more than 50 workers must offer an approved insurance plan or pay a penalty of $2,000 for each full-time worker over 30 workers.

The program mandates that only employees working more than 30 hours a week are covered under their employers health insurance plan, chains like Olive Garden and Red Lobster are already considering reduced worker hours.
'Obviously, I'd love to cover all our employees under that insurance,' said Metz.

'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.'

Several other restaurants including Papa John's, Apple Metro and Jimmy John's have announced plans to skirt Obamacare by reducing employees hours to make them part-time.

Indeed, Metz is adding the surcharge because he believes that eventually firms will be fined for not covering staff who complete over 30-hours in a week.

In November, a poll for Kaiser Health Tracking found that 43 percent of the United States had a favourable opinion of Obamcare, while 39-percent had an unfavourable one.

'Instead of indirectly charging customers by raising prices, he is directly charging and making a political statement,' said Paul Fronstin, director of the health research program at the Employee Benefit Research Institute in Washington.

Here to stay: President Barack Obama's landmark health care legislation has been cemented into law by his re-election
'Potentially 43 percent of this person's customers may find the explicit charge a turnoff, and vote with their feet and their money and choose not to eat there.'

Despite this, Metz has admitted he is willing to take the heat should the decision backfire on him.

'We're trying to get more restaurant operators rallied around the concept of adding a 5 percent surcharge to their bill to cover the costs of Obamacare as opposed to raising prices,' he said.

Earlier this week Papa John's CEO John Schnatter told shareholders in a conference call this week that Obamacare would cost the company 11 to 14 cents per pizza, a cost that would be passed on to customers.

Read more: http://www.dailymail.co.uk/news/art...ours-deal-cost-legislation.html#ixzz2CQRyWMY2
 

Party Rooster

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Well a Denny's franchise owner...
He does own 40 of them, kind of a big fish I would imagine...

I expect we're going to see a lot of this over the next year as businesses saw what happened with Chik-Fil-A. Even if you piss off half your demographic, the other half will probably more than make up for it.

I love it. Elections have results, guys.
Yep. And your boy lost his.
 
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He does own 40 of them, kind of a big fish I would imagine...

I expect we're going to see a lot of this over the next year as businesses saw what happened with Chik-Fil-A. Even if you piss off half your demographic, the other half will probably more than make up for it.


Yep. And your boy lost his.
Curious to see if something like this happens with say a McDonalds...
 

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Curious to see if something like this happens with say a McDonalds...
McDonald's is sooooo protective of it's corporate brand and all its sponsorships I would imagine there's language in their franchise agreements about owners making "political" statements. They would probably allow them to raise the prices though as long as they don't make a statement about it.

I wonder how it works though, if it's 50 employees per restaurant or 50 employees employed by the franchisee. Because I doubt a McDonalds has more than 50 full time employees anyway.
 
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McDonald's is sooooo protective of it's corporate brand and all its sponsorships I would imagine there's language in their franchise agreements about owners making "political" statements. They would probably allow them to raise the prices though as long as they don't make a statement about it.

I wonder how it works though, if it's 50 employees per restaurant or 50 employees employed by the franchisee. Because I doubt a McDonalds has more than 50 full time employees anyway.
Ya I would have to be like a McDonalds at say Disney... or something similar.

Gonna see if actual Denny's Corporate has made a statement... I know Tim Horton's and McDonalds rule their franchises with an iron fist... curious what the deal is with Denny's.
 
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Edit:

Let the back peddling commence...



Ummm why are they mentioning minorities in this letter?
 

whiskeyguy

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#11
Dennys Corp doesn't face the same ramifications as franchise owners do under Obamacare. Franchise owners deal with more entry-level food service workers, and their positions don't justify health insurance. Dennys Corp, on the other hand, has more white collar positions which probably already come with health insurance. It's pretty reasonable they would take somewhat different stances on the ramifications of this law.
 
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Dennys Corp doesn't face the same ramifications as franchise owners do under Obamacare. Franchise owners deal with more entry-level food service workers, and their positions don't justify health insurance. Dennys Corp, on the other hand, has more white collar positions which probably already come with health insurance. It's pretty reasonable they would take somewhat different stances on the ramifications of this law.
Wonder how this will impact their corporate stores though...
 

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Dennys Corp doesn't face the same ramifications as franchise owners do under Obamacare. Franchise owners deal with more entry-level food service workers, and their positions don't justify health insurance. Dennys Corp, on the other hand, has more white collar positions which probably already come with health insurance. It's pretty reasonable they would take somewhat different stances on the ramifications of this law.
That's why a Denny's is a shitty place to eat.
 

whiskeyguy

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Wonder how this will impact their corporate stores though...
I don't know how many corporate stores they have... if I have time later I'll look into it. I'd assume the corporate stores would have the same issues, but maybe Dennys Corp will take the hit for some good overall publicity. Franchise owners don't have the same ability to offset costs from Obamacare.

That's why a Denny's is a shitty place to eat.
How so? I mean I agree it's a shitty place to eat, but are you referring to the low quality of employees Dennys attracts?

It's how they exist in their market segment. Obnoxiously cheap, filling food that attracts low-income families, drunks, and "young people". You don't need master chefs to provide that type of food, and if Dennys paid more for quality employees it would substantially rise the cost of food and completely go against the Dennys market segment. They want to be the bottom rung of the ladder. Increased labor costs would bring their price points up to the level of say Applebees (couldn't really think of a better example of a 24 hour diner), and their business model isn't capable of competing with them.
 

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#20
It's how they exist in their market segment. Obnoxiously cheap, filling food that attracts low-income families, drunks, and "young people". You don't need master chefs to provide that type of food, and if Dennys paid more for quality employees it would substantially rise the cost of food and completely go against the Dennys market segment. They want to be the bottom rung of the ladder. Increased labor costs would bring their price points up to the level of say Applebees (couldn't really think of a better example of a 24 hour diner), and their business model isn't capable of competing with them.
Hence the reason they mention minorities so much in that statement above.
 

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How so? I mean I agree it's a shitty place to eat, but are you referring to the low quality of employees Dennys attracts?

It's how they exist in their market segment. Obnoxiously cheap, filling food that attracts low-income families, drunks, and "young people". You don't need master chefs to provide that type of food, and if Dennys paid more for quality employees it would substantially rise the cost of food and completely go against the Dennys market segment. They want to be the bottom rung of the ladder. Increased labor costs would bring their price points up to the level of say Applebees (couldn't really think of a better example of a 24 hour diner), and their business model isn't capable of competing with them.
That's why a mom and pop diner will always be better, because the employees their are either family members or are more "career" type staff than just entry level young people who really shouldn't be in the restaurant business.

Maybe if they payed a more attractive wage (or offered health insurance) they'd get a better class of employee and I would eat there. I actually ate in one the first time in 10 years about a month ago because a couple of us had gotten off work at 10:30 pm and it was the only place open. Saw the waitress once, someone else threw the food on our table, no one checked back, and the PLACE WAS DEAD. I know they were all in the back texting on their phones or bullshiting with each other, I've worked in the industry and I can tell. Of course that's also a slam at management, no way I would tolerate that if I was running the joint.

Say if it cost you an extra dollar an hour to give someone insurance, would you make the investment to get a better employee and reduce turnover and its associated costs? Older, more experienced employees would see the value of that benefit and would want to work for you and make you happy to stay employed.

Hence the reason they mention minorities so much in that statement above.
I think that had more to do with their previous racist controversies where nobody wanted to wait on the black customers because they're the absolute worst. Denny's got caught and paid out millions in a settlement years ago.
 

whiskeyguy

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That's why a mom and pop diner will always be better, because the employees their are either family members or are more "career" type staff than just entry level young people who really shouldn't be in the restaurant business.

Maybe if they payed a more attractive wage (or offered health insurance) they'd get a better class of employee and I would eat there. I actually ate in one the first time in 10 years about a month ago because a couple of us had gotten off work at 10:30 pm and it was the only place open. Saw the waitress once, someone else threw the food on our table, no one checked back, and the PLACE WAS DEAD. I know they were all in the back texting on their phones or bullshiting with each other, I've worked in the industry and I can tell. Of course that's also a slam at management, no way I would tolerate that if I was running the joint.

Say if it cost you an extra dollar an hour to give someone insurance, would you make the investment to get a better employee and reduce turnover and its associated costs? Older, more experienced employees would see the value of that benefit and would want to work for you and make you happy to stay employed.
I agree with most of this, and don't eat and Dennys nor would I want to run a business like that. Theoretically they've done cost/benefit analysis and have determined the current business model is best for them. 20 years ago Dennys was still fighting to be a "family restaurant"... now I think they've decided to just operate in mostly low-income areas, hire the cheapest labor possible, dish out obnoxiously cheap food, and cater to a certain type of people... and if it works for them so be it.

The one thing I don't really agree with about your post (or at least am undecided about) is if attracting slightly better employees would help Dennys that much. I think focusing on providing the cheapest product possible is the only thing that can keep them in business.
 

Buster H

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#23
so wait.... a law is forcing the business owners of America to have higher expenses and the owners of said business are passing that expense on to the customers? You don't say?

That's the one thing that cracks me up about the "just tax the greedy rich" crowd. If they are indeed as greedy as you say, it just means higher prices for everyone.
 

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They mention minorities for two reasons:

1. Anyone who criticizes the regime is automatically racist.
2. Race hustlers have shaken Denny's down for millions over the years.
 

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The one thing I don't really agree with about your post (or at least am undecided about) is if attracting slightly better employees would help Dennys that much. I think focusing on providing the cheapest product possible is the only thing that can keep them in business.
You're probably right. Smarter people than me have crunched the numbers and they're doing it that way. But that's the thing, sometimes when you've got bean counters making all your decisions (instead of frontline employees) it's not always going to be the best thing. Their numbers have been going down over the years, can't find any other numbers more long term as I'm sure the recession affected those a bit.
http://finance.yahoo.com/q/is?s=DENN+Income+Statement&annual