CKE, which owns and franchises 3,182 restaurants in 42 states and 23 foreign countries under the Carl’s Jr. and Hardee’s brand names, employs about 70,000 people in the United States. As Puzder explains, his company is “a job creation machine,” but he fears that Obamacare, or the Patient Protection and Affordable Care Act (PPACA), will be the wrench that grinds it to a halt.
“I’m very concerned that in the coming years we’ll be unable to create as many jobs as we would like due to the increased expenses necessitated by laws such as the PPACA,” Puzder testified.
Puzder points to two aspects of Obamacare that pose concerns for his company: the menu labeling provision which requires disclosure of the caloric content of their food on menu boards, and the law’s health insurance mandates. Puzder says the menu requirement alone will cost CKE approximately $1.5 million—17 percent of what it invested in new restaurants in 2010. And Obamacare will increase CKE’s health care costs by an estimated $18 million per year—a 150 percent increase. Puzder says that the money to pay those costs would have been used to grow the company—in other words, to create jobs.
The money to comply with the ACA must come from somewhere. We use our revenue to pay our bills and expenses, to pay down our debt, and we reinvest what’s left in our business. That’s how we create jobs. There’s no corporate pot of gold we can go to to cover increased health care costs. New unit construction will cease if we have to allocate moneys for that construction to the ACA. And building new restaurants is how we create jobs.
When CKE builds a new restaurant, Puzder says, the company invests about $1 million in the community and ultimately employs 25 people at the new location. Last year, CKE spent more than $1.25 billion on capital projects, media and advertising, and supplier products and services—all of which supported jobs in those related industries. If CKE must allocate those dollars elsewhere, the company’s job-creation engine effectively shuts down.
Puzder isn’t the first restaurant CEO to speak out on Obamacare. Indiana small-business owner Scott Womack fears the effects the law will have on his business, which includes 12 IHOP restaurants in Indiana and Ohio. As we wrote in March:
Under the year-old law, Womack must provide health insurance to all full-time employees beginning in 2014. Right now, he employs nearly 1,000 full- and part-time workers and already offers insurance to his management staff. He simply does not know how he’ll generate the revenue to do more.
Womack estimates the cost of the law to his company will be 50 percent greater than his company’s earnings — in other words, beyond his ability to pay.
And if Obamacare isn’t repealed, Womack’s plans to expand his business will be in jeopardy, along with the construction, real estate, and manufacturing jobs that would go along with them.
Even the Obama Administration, it seems, has recognized the problem. Last year, it granted Obamacare waivers to McDonald’s and Jack in the Box, and the list keeps growing (the total number of companies receiving waivers now stands at 1,471.) CKE and Womack haven’t been so lucky, though, and the threat to their businesses remains. If Congress and the President truly care about job creation, they should repeal Obamacare and allow America’s job creators to get back to work.
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Click here to watch Heritage’s interview with Andy Puzder in which he discusses job creation, how it works, and why government doesn’t understand it.
Source material can be found at this site.