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Fast Food Chains Quiet Down After Realizing Health Care Costs Will Be Negligible

Fast food restaurant owners, after loudly and publicly denouncing the Obama administration’s health care mandate, are now changing their tune after realizing the costs will barely be noticeable for the multi-billion dollar industry.

Among the litany of unhappy restaurant chain chief financial officers, Steve Hare of Wendy’s Co. initially estimated that each of the nearly 6,000 Wendy’s stores would be hit with a $25,000-a-year premium for health care costs. But, on March 14, Hare said at a conference that he drastically overestimated the costs - by 80 percent - and that the health care bill would only cost each store $5,000 per year.

"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," Hare said. 

The estimated costs have shrunken so much because Hare and other CFO’s believe many of their employees will forgo the health care plan offered by the restaurants. Most of the employees likely already receive health insurance from a family member or Medicaid, or they prefer to pay the $95 penalty for forgoing the insurance plan.

Popeye’s president estimates that only 5 percent of its employees will pay into the company's health care plan because of its high deductibles and cost of $2.50 per week. Next year, the plan may cost as much as $25 per week.

"It's just not affordable for employees," Mr. Bower said.

The health care law requires any business with more than 50 employees to offer health care to those who work more than 30 hours per week. Among all industries, the restaurant industry has one of the highest rates of uninsured employees - only 40 percent are insured, as opposed to the 62 percent across all other industries.

Even those who strongly lobbied against the mandate, such as Dunkin Donuts Group Inc., are calling off the dogs. Nigel Travis, chief executive of Dunkin Donuts Group Inc., said the costs “are not as high as some people have said.” He went on, “We feel that without increasing prices, we can mitigate those costs very easily.”

Sources: Yahoo!, Wall Street Journal


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