Obamacare To Make White Castle Profits Slide Downwards


This is a news item that will drive most of my college buddies absolutely mad.  Although I have never tried them, my college friends always told me that White Castle Sliders are the best fast food hamburgers available. In college many an evening, I was the designated (Kosher) driver, running out to get them some sliders (because they knew I wouldn’t eat them). Sliders are named that way because they slide or the way they slide down your throat.

White Castle is not only America’s first fast food hamburger chain, it is also the first chain projecting a major loss in profits because of Obamacare.

According to a report in the Cleveland Plain Dealer, the Columbus-based  restaurant chain says a single provision in the Obamacare bill will cause 55 percent of its yearly net income to slide away after 2014.

Starting that year, the bill levies a $3,000-per-employee penalty on companies whose workers pay more than 9.5 percent of household income in premiums for company-provided insurance.

White Castle, which currently provides insurance to all of its full-time workers and picks up 70 to 89 percent of their premium costs, believes it will likely end up paying those penalties. The financial hit will make it hard for the company to maintain its 421 restaurants, let alone create new jobs, says company spokesman Jamie Richardson. White Castle employs more than 10,000 people nationwide, and more than 1,200 in Ohio.

Though advocates of the health insurance bill say its reforms will boost employment, House Republican Leader John Boehner of Ohio, a vocal foe of the changes, says White Castle’s analysis shows how the law’s “job-crushing” impact will be most severe in lower-income areas, where jobs like those at White Castle are most needed.

“The irony is that in the name of expanding health care coverage, the administration is making it harder than ever for unskilled workers to get started in the workforce,” Boehner said in a missive on White Castle’s plight.

National Council of Chain Restaurants vice president Scott Vinson says the entire restaurant industry will have trouble dealing with costs the bill imposes in 2014, including a $2,000-per-worker penalty that companies with more than 50 employees must pay if their workers end up purchasing federally subsidized insurance rather than getting insurance from their employers.

“There is the expense of actually providing the insurance, then the expense of not providing insurance,” says Vinson. “It will be expensive either way.”

George Ebinger of New Jersey, who owns several International House of Pancakes restaurants, says the penalties for not insuring his 140 workers will cost roughly half as much as insuring them. He figures he will have to raise prices and possibly lay off workers to come up with the $220,000 he anticipates the penalties will cost.

“We are still figuring out how to deal with this,” says Ebinger. “Ultimately, either businesses will close or consumers will pay more.”


Problems will be felt throughout the retail industry, which employs many entry-level workers, says National Retail Federation vice president Neil Trautwein. He says employers will face tough choices when the mandates become effective in 2014.

“We do worry about this discouraging employment, particularly when employment hasn’t taken off,” says Trautwein.

….White Castle, which began offering health insurance to workers in 1924, is also examining whether it would make financial sense for the company to eliminate health insurance coverage altogether and have all its employees buy insurance on the federal exchange, says Richardson.

“It would be incongruent with how we run our business, but we have to think that through,” says Richardson. “No matter what, we will do what’s best for our team members.”

In the end Obama has done what is best for his progressive friends even if its bad for Americans (especially those who enjoy sliders and IHOP).

You can read more of Jeff’s writing at his website, Jeffdunetz.com

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