Last week, the Supreme Court voted to uphold the Affordable Care Act. At first glance, this legislation may seem completely unrelated to the foodservice industry. However, two of its provisions could have profound financial implications for restaurateurs, particularly those who own franchises.
Beginning in 2014, restaurant owners with 50 or more full-time employees will be required by law to offer affordable health insurance to employees and their dependents. In this case, a full-time employee is anyone who works 30 or more hours per week. Additionally, the law also covers “full time equivalents”, which includes seasonal and part time employees, workers that make up a large percentage of the restaurant industry.
How does the law define “affordable”? Premiums for employees must not be more than 9.5% of his or her adjusted gross income for the lowest cost plan option. Also, employers must offer plans that cover at least 60% of the benefits.
Failure to comply with any portion of this law could result in a penalty of up to $2,000 per employee per month.
The Affordable Care Act also requires restaurants with 20 or more locations in the United States to display nutritional information on menus. Already standard in some parts of the country, menu labeling is intended to help people eat healthier, thereby reducing healthcare costs associated with obesity-related illnesses. Restaurants will be required to list the calorie count of each menu item, as well as have information about sodium and cholesterol readily available for customers. Many restaurateurs will therefore have to redesign and reprint menus with this information, incurring additional operational costs.
Profit margins in the restaurant industry are often thin, leaving restaurateurs anxious and concerned about how the Affordable Care Act will affect their bottom lines. Industry groups such as the National Restaurant Association have already spoken out against the legislation, stating that the act will ultimately hurt the restaurant industry: “The unworkable law cannot stand as is. We need reform that addresses the increasing costs that our members are faced with each year. Restaurant owners are looking for solutions that will allow them to provide better health care coverage options for their team members, but they cannot be saddled with excessive costs and regulatory burdens that threaten their very business. We ask members of Congress to take action that helps the restaurant industry continue to create jobs and grow the national economy”, said Dawn Sweeny, President and CEO of the National Restaurant Association.
As a restaurant owner, what can you do to prepare for the upcoming changes? Learn as much as you can about the new law. You can read the full version online here. Also, think about some ways that you can cut costs now. Are there alternative processes you can follow to save money on energy, water, or supplies? Staying informed and planning in advance could save you thousands once the law goes into effect.