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Restaurants Face Unique Challenges Under Obamacare

Filed by KOSU News in Business.
June 8, 2013

The U.S. Department of Labor says 175,000 new jobs were created last month, but the unemployment rate ticked up one-tenth to 7.6.

Currently, almost 20 percent of American workers are working only part-time, a historic high. Those part-time workers will be able to get health coverage beginning next year under Obama’s Affordable Care Act, but many business owners worry about how they’ll pay for it.

Clyde’s Restaurant Group is a family owned chain of 14 restaurants in the Washington, D.C. area. For half a century, Clyde’s has been a meeting place for politicians and lobbyists — like those who passed this very legislation — to meet over drinks away from Capitol Hill.

Restaurants will face particular challenges. Most restaurant employees work for low wages, supplemented by tips, leaving owners to pay a larger portion of premiums to make health care affordable. At Clyde’s, about three-fourths of the staff is under the age of 26, and may not feel that they need coverage.

Clyde’s chief financial officer Jeff Owens says the company has had to rethink his business plan.

“It started out as a brain-storming exercise for us,” Owens says. “We were able to sit in a room and … list out any ideas that would generate either cost savings or additional revenue.”

Some of those ideas included things like using paper napkins over cloth, reducing portion sizes and of course staffing changes. There is also raising prices, which he says is last on the list.

“It’s a tricky thing because it’s hard to forecast what the decrease in your traffic is going to be,” he says.

All of this, in order to prepare for bearing the increased cost of covering employee health care under Obamacare. It’s a challenge, Owens says, and for restaurants it’s not as simple as just cutting employee pay or raising prices to bring in the extra money needed. They have to make sure they can still operate.

“For one to two years it’s been the number one issue on our radar,” he says. “We’re not trying to run away from it, but it’s a frightening proposition.” [Copyright 2013 NPR]

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