Billion Dollar Chains Applebees, Papa John's & Hardees Threaten Cuts And Layoffs Due To Obamacare

Owen Poindexter
Despite sales in the billions, CEOS of Applebees, Hardee's and Papa John's restaurants have threatened to cut, freeze or layoff employee hiring and benefits in response to Obamacare.

The CEOs of Hardee's, Applebees and Papa John’s are making noise about layoffs, hiring freezes and cutting hours to avoid increased payments from Obamacare, President Obama's signature healthcare reform bill, despite profits that dwarf the expected increase in costs.

Papa John’s CEO John Schnatter said that “[Cutting employees’ work hours is] probably what’s going to happen. It's common sense. That's what I call lose-lose.” Under Obamacare, employers must provide health coverage to employees working more than 30 hours a week.

According to Market Watch, Papa John’s brought in over $454 million in gross income in 2011 from over $1.22 billion in sales. Schnatter estimates that implementing Obamacare will cost Papa John’s $5 to $8 million annually or less than 2% of their gross income on the high end. Progressives organized a boycott of Papa John’s in response to the news.

The CEO of Applebees was similarly unhappy. In an interview with Fox News, he said that “We’ve calculated it will be some millions of dollars across our system. So what does that say — that says we won’t build more restaurants. We won’t hire more people— exactly the opposite of what the President says.”

According to anonymous reports submitted to Glass Door, many Applebee’s employees make under $7/hour.  MarketWatch estimates that DineEquity, the parent company of Applebee’s brings in $85,639 per employee. They had $1.08 billion in retail sales in 2011 and $419 million in gross income. Perhaps someone should ask him if there isn't enough left over to provide health insurance to his employees in his next interview.

Hardee's, a $1.3 billion/year company, estimates that to give all their employees healthcare who would currently require it when Obamacare takes full effect in 2014, would cost an additional $18 million a year. The money, CEO Andy Puzder says, will have to come from somewhere. And he is not referring to the $1.3 billion they rake in annually. Instead, it will mean, according to Puzder the loss of 175 potential new jobs.

With public support for Obamacare steadily rising since it first passed, these CEOs might best be served by taking a small hit in net profit in exchange for happier, healthier employees.