Restaurant Chains Cut Estimates for Health-Law Costs 

Restaurant owners have been fierce critics of the health-care overhaul law, fearing that its mandate for employers to offer insurance more broadly will drive up costs and deter hiring.

Now, some operators say the law may not be that costly after all. They say many employees won't qualify for coverage, and many of those who do qualify will decline company-offered insurance.

Wendy's Co. (WEN) initially estimated the health-care law would increase the cost of operating each of its 5,800 U.S. restaurants by $25,000 a year. But Chief Financial Officer Steve Hare told an investment conference on March 14 that executives have cut the estimate by 80%, to $5,000 a year, primarily because they expect many employees to decline the insurance offering.

"It is still going to be an additional cost that both the company and our franchisees will have to absorb, but we think it is going to be manageable," Mr. Hare said. A Wendy's spokesman said the company continues to refine its cost estimates and it would be "premature" to discuss them further.

Executives of other restaurant chains, including Chipotle Mexican Grill Inc. (CMG), Jack in the Box Inc. (JACK) and Popeye's Louisiana Kitchen, have offered similar cost estimates in recent months.

They say many employees will decline company-offered insurance, either because they can get insurance through Medicaid or a family member, or because they prefer to pay the penalty for not having health insurance. The penalty next year will be as low as $95 next year, much less than most employees will be asked to pay through company-sponsored insurance plans.

wow - that's quite a difference.

estimates are just that - estimates.

everybody running around with the 'sky is falling' mentality needs to take a deep breath!

Originally Posted by: 4PackGirl 

After all the posturing about the financial impact upon businesses and the potential to financial devastate them to the point of reducing services or staffing.. it appears that the impact is being scaled back substantially.

Now the doesn't mean the package is actually going to improve the quality of health care for the workers of this nation.. or make it more affordable or improve their coverage.. but it certainly will not impact the businesses like the fear mongering projected. Basically, the costs will be passed through to the workers that will either see a decline in actual coverage or a overall rise in individual costs. And many will, as notated, just accept the minimal fine and roll without.

But the angst that it is going to fundamentally hurt the business sector greatly.. that was and always will be overstated. Simply provide coverage that is not viable for most and pass the buck. Just now.. the government is more directly backing the gaps.

Originally Posted by: Pack93z 

Er, no.

Big business won't be hurt as much as it claimed. Big business is rarely hurt much by big government. Big business can afford to spread the cost over millions of customers at a time. (An extra penny on a Wendy's burger is trivial to people who eat there.)

The business that will hurt will be small business. And remember, the great majority of businesses (99%+) are companies with less than 100 or so employees. Companies that don't have the luxury of spreading the costs out that way. Companies that are far closer to their individual margins than many think. Far closer.

There''ll always be jobs at the Wendy's of the world.

Heck, there's a good bet there will be more of them than ever.

Whether that is a good thing for the economy or not....well, it'll give us continued opportunities to complain about the unfairness of the gap between rich and poor, I suppose.

Originally Posted by: Wade 

We shall see. I hope you are correct and I am wrong.

Unfortunately, I fear the law of unintended consequences will frustrate your optimism.

But, as I said, I hope that optimism prevails.

We shall see.

Originally Posted by: Wade 

wow - that's quite a difference.

estimates are just that - estimates.

everybody running around with the 'sky is falling' mentality needs to take a deep breath!

Originally Posted by: 4PackGirl 

I live in a place where we have been unaffected by the recession in a way, shape, or form. So I have real problem with wealthy small business owners who don't offer a health care plan with an employee's compensation package, but said employers bitch about not being able to retain quality workers. Because of the oil boom, contractors have had to double wages they use to pay just to entice their workers to stay. The businesses around town aren't crying about providing health care so much as a lack of work force.

Romneycare will have a lot more good than bad when more and more people get the health screenings they use to avoid. Small businessmen will just have to get a little more creative with their budgets. Hell, maybe their income tax bill will go do if their bottom lines are a little more lean. A businessman with real sound ethics wants to provide health care to his employees; afterall, the employees make him what he is not the other way around.

Originally Posted by: DakotaT