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

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November 16, 2012

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

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

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.'

"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.

'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.

Wild Thing's comment........................

Not surprising, I don't blame these places at all. I would do the same thing. They have to just to be able to survive.

Posted by Wild Thing at November 16, 2012 02:47 AM


All restaurants will be adding this extra surcharge but they just won't tell you about it. Prices on the menu will just go up.

Posted by: BobF at November 16, 2012 07:31 AM

We are probaly now looking at a deepening and lasting recession thanks to Mr obama. He will try to spend our way out of it. I hate to contemplate a possible depression, but I don't know what will happen when the massive inflation smacks us in the face.

Posted by: TomR, armed in Texas at November 16, 2012 12:11 PM