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Editor's Note: This is part two of Jenny Agnew's two-part series. For part one, click here.
Local chains, in particular, which employ thousands of people, may be affected the most by the act. A tension already exists between chains and independents as employees often make more money at a chain but prefer the working environment and prestige associated with an independent. If chains must offer insurance, Unger believes he will need to make his positions more attractive, and is worried about losing good employees to the chains.
Like the NRA, the National Council of Chain Restaurants (NCCR) issued a press release the day after the ruling, “lamenting” the decision. David Jones, Managing Partner of A Sure Thing, LLC dba Buffalo Wild Wings, contributed the following statement, via email, about the decision: “We support the National Restaurant Association’s position that the U.S. Supreme Court’s ruling is deeply disappointing and we hope Congress continues action to fully repeal the Affordable Care Act. Unchanged, this law severely impacts our growth and ability to create jobs in our region. Small business owners, especially in the restaurant industry, already face tax and regulation uncertainty. This health care law puts an additional burden on an industry already facing high inflationary food costs and operating at very low margins.” According to an article on Nasdaq.com, franchise owners of chains “will be stuck with these higher labor costs, which could prevent them from reinvesting in the business in other ways.” Differences aside, it’s clear that owners of chains and independents can agree on what they perceive to be the negative impact of the decision.
With seven restaurants under his purview, including Sugo’s Spaghetteria and Tavolo V, Michael Del Pietro will most definitely be affected by the overhaul. Sharing LaRocca’s, Unger’s, and Jones’ concerns, Del Pietro brought up another facet of the potential consequences one might not readily consider: an increase in paperwork. With the high rate of turnover in the restaurant industry, Del Pietro wonders if he will have to install an HR department to manage the massive and confusing amounts of paperwork connected to extending coverage under COBRA once an employee leaves. Moreover, many of his employees already have health coverage through their parents or spouses and are concerned themselves about having to pay taxes on mandatory insurance through the restaurants. No different from his peers, Del Pietro believes the customer will end up paying for the changes, not just because the restaurant will need a way to offset the insurance premiums, but because some local purveyors and suppliers will too. “It’s going to be a chain effect,” he concluded.
In contrast to everyone else interviewed for this article, Aaron Teitelbaum, co-owner of Herbie’s Vintage 72, isn’t worried about the decision. Since the day Herbie’s opened, Teitelbaum and co-owner Jeff Orbin have offered health insurance to all employees, from dishwashers to general managers. As a result, they may actually benefit from the changes thanks to the tax credits associated with the overhaul. “When you offer health care in this business, you set yourself apart,” he explained, also noting that one end result is loyal staff who stay at the restaurant for a long time. Teitelbaum believes they have saved money in the long run because “when you talk about cost, it’s expensive to hire and train [staff].” One industry insider, quoted in the QSR article linked above, contends that coverage for all employees “is a step toward a professional restaurant cadre, people who look at their jobs not just as something they are passing through.”
Teitelbaum put us in touch with insurance broker Bob Meyer, from The Meyer Group, who drafted the plan currently used at Herbie’s and whose company is endorsed by the Missouri Restaurant Association. On the overhaul, which he does not support, Meyer said that restaurant owners “are going to feel some stress and strain down the line.” Moreover, he warned that it won’t be Health and Human Services that enforces the law, but the IRS—an agency most would like to avoid, especially restaurant owners. “We’re not going to get healthier because of this bill,” Meyer noted; instead, he believes we’ll get more taxes. We asked Meyer where a restaurant owner should start, and he emphasized the importance of wellness plans and basic coverage. The bottom and unavoidable line, according to Meyer, is that customers will pay more at restaurants to cover the owners’ additional expenses.
Stories abound about the uninsured line cook who cuts his hand and has to visit the emergency room for treatment; sometimes he has the money to pay, other times, he skips out on the bill. Or the chef who, though ill, has no paid sick days and can’t find someone else to take her shift, so she comes to work, possibly contagious. Restaurant Opportunities Center United (ROC United), an organization that strives to “improve wages and working conditions for the nation’s low-wage restaurant workforce,” as stated on its website, publishes reports for workers, consumers, and employers. According to a 2011 report, “Behind the Kitchen Door: A Multi-Site Study of the Restaurant Industry,” based on findings from eight regions across the US, the organization determined that of the workers polled, 89.7% had no insurance, 87.7% were without sick days, and 63.7% worked while sick.
Most people would clearly agree that a problem exists in the industry when it comes to health insurance. What’s unclear is how to fix that problem. While those of us on the outside might think we’re not directly involved in the matter, we are, and we’ll have to wait and see what transpires through the fall election and over the next two years.
