The implementation of the Affordable Care Act, also known as “Obamacare,” is off to a shaky start, with website technicalities and low purchase numbers tainting the high hopes the government had for the healthcare plan’s first month. For the most part, the restaurant industry is nervous about the implications of the Affordable Care Act for restaurants, as one of the industries most affected by it. Some restaurant businesses are reevaluating the way they run in order to brace themselves for the financial repercussions predicted as a result of the law, and in an attempt to try keep their restaurant profits as high as possible.
Obamacare Impact on Restaurants
Obamacare will affect restaurants in a few ways. Firstly, the Affordable Care Act requires restaurant nutrition information to be printed on menus for chains that have more than 20 locations, effective six months after the FDA’s rules are finalized. This requires budgeting for new printed menus and menu boards for those not using electronic menus, and possibly menu item changes (to make the dishes more attractive nutritionally), as well as hiring scientists who will analyze the restaurant nutrition information for each dish. The more recent implications of Affordable Care Act that have been put into action, are the requirements for businesses with more than 50 full-time restaurant employees to provide healthcare coverage for their staff. Failure to do so will have a steep financial penalty that will increase over the years. The law defines full-time employees as those working more than 30 hours per week, a number which many businesses find too low. Statistically, less than 1% of US businesses with more than 50 employees don’t currently offer healthcare coverage to full-time employees. However, when considering the Affordable Care Act, restaurants see slightly different numbers. About 20% of restaurant employees work 30-36 hours a week, compared to about 9% in all other industries (Berkeley’s Labor Center). These statistics mean that the Affordable Care Act will cost the restaurant industry more than most other industries. Restaurants will have to find ways to respond to the new laws, in an attempt to maintain restaurant profits.
Possible Affordable Care Act Restaurants’ Response
Restaurant employees, as well as owners, in businesses with over 50 employees, are sure to feel the Obamacare impact on restaurants. The most affected businesses will be small businesses with around 50 employees, and some restaurant chains. Obamacare impact on restaurants, for these businesses, will mean creating an incentive to cut restaurant staff, reduce restaurant employees’ hours, or shoulder the added costs, losing a chunk of the profit margin. About 16% of restaurant employees are at risk for getting their work hours reduced (Berkeley Labor Center). The Obamacare impact on restaurants goes beyond businesses with over 50 employees, which the law refers to. Even businesses that do not have 50 full-time employees have responsibilities to fulfill in order to adhere to the law. A restaurant covered by the Fair Labor Standards Act is required to give restaurant employees a written notice about the changes. In addition, businesses that offer health benefits will have to offer a plan that meets the Affordable Care Act guidelines. This may cause the Obamacare impact on restaurants to mean less small businesses offering health coverage to their restaurant employees.
The implications of the Affordable Care Act reach almost all restaurant businesses, one way or another. Businesses that are still growing, reaching the threshold of 50 employees, or slightly more, will likely be forced to reevaluate their goals, choosing to take on the added costs, or reduce their size. Cooks and chefs whose hours will be reduced may have to reconsider donning chef-wear at all, and, if so, at a particular venue. Large restaurant businesses and caterers, and small businesses, may find the implications of the Affordable Care Act insignificant. However, businesses that fall in the middle of these two categories are likely to feel the full impact of the new laws. By looking at ways to cut down on staff, or expenditures in other areas, these businesses can prepare to take on the challenges of the Affordable Care Act for restaurants.