Papa John's and Applebee's Warn of Obamacare Cuts

Monday, 12 Nov 2012 04:27 PM

By Bill Hoffmann

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Applebee’s and Papa John’s have joined the growing chorus of employers who warn the upcoming implementation of Obamacare will lead to damaging cuts in its workforces.

"That's what you do, is you pass on costs,’’ John Schnatter, founder and CEO of Papa John’s, told students at Edison State College in Naples, Fla. “Unfortunately, I don't think people know what they're going to pay for this."

John Schnatter compared the federal government's involvement in healthcare to the Postal Service.
(Getty Images)
Schnatter, who supported Mitt Romney, compared the federal government’s involvement in healthcare to its running of the U.S. Postal Service.

"The worst entity in the world for running the thing is the government,’’ he said. Schnatter’s remarks were first reported by
He estimated the new law will cost Papa John’s $5 million to $8 million annually.

Zane Tankel, CEO of Apple-Metro, which owns 40 Applebee’s in the New York metropolitan area, told Fox News he is also preparing for changes.

“We’ve calculated it will cost 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,’’ Tankel said.

According to the new law, employers with 50 or more employees must provide government-mandated healthcare or risk a $2,000 fine.

“If you have 40 or 50 employees at a restaurant and the penalty is $2000, and you’re going to pay $80,000 or $100,000 penalty, there goes the profit,’’ Tankel said.

Editor’s Note: New 'Obamacare Survival Guide' Reveals Dangers Ahead for Your Healthcare

“If it’s possible to do it without cutting people back, I am delighted to do it. But that also rolls back expansion, it rolls back hiring more people, and in a best-case scenario, we only shrink the labor force minimally. Best case.’’

Last week, the non-profit political action group FreedomWorks listed nearly a dozen top United States companies that plan to start laying off hundreds of employees with the implementation of Obamacare.

Those firms include:
  • Welch Allyn — a manufacturer of medical diagnostic equipment in central New York — which says it will cut 275 employees, about 10 percent of its workforce, over the next three years.
  • Dana Holding Corp. — a global auto parts manufacturing company — which warned of layoffs due to "$24 million over the next six years in additional U.S. healthcare expenses.’’
  • Stryker — a medical device manufacturer — which plans to close its facility in Orchard Park, N.Y., eliminating 96 jobs in December. They also say they’ll slash 5 percent of their global workforce, about 1,170 positions.
  • Boston Scientific — a medical device manufacturer — said it plans to cut between 1,200 and 1,400 jobs, while shifting investments and workers overseas to China.
  • Medtronic — a medical device maker — which cut 500 positions over the summer, with 500 more set to be eliminated by the end of 2013.
  • Other companies promising job cuts include: Smith & Nephew — 770 layoffs; Abbott Labs — 700 layoffs; Covidien — 595 layoffs; Kinetic Concepts — 427 layoffs; St. Jude Medical — 300 layoffs; and Hill Rom — 200 layoffs.
Among the reasons for the layoffs: increased costs for health insurance and, in the case of medical manufacturing companies, a new medical-device tax.

Editor’s Note: New 'Obamacare Survival Guide' Reveals Dangers Ahead for Your Healthcare

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