Applebee's Backlash Sparked By Zane Tankel's Obamacare Slam

Applebee's Faces Backlash Over Franchisee's Obamacare Threat

Heated comments from an Applebee's franchise owner sparked viral outrage against the giant restaurant chain, marking a new phase in the war over Obamacare.

Over the weekend and on Monday, Applebee's employees and customers expressed their anger over comments made on the Fox Business Network last week by Apple-Metro CEO Zane Tankel, who owns 40 Applebee's franchises in the New York metropolitan area. Tankel said he would not hire any more workers and was considering cutting the hours of current employees because of the Affordable Care Act, aka Obamacare.

Already Applebee's parent company, DineEquity, is distancing itself from Tankel's remarks. "It's certainly our hope that our guests recognize and realize that Mr. Tankel's views are not representative of the broader Applebee's brand," said Dan Smith, a spokesman for DineEquity. Smith said the company has received a torrent of customer feedback on Tankel's comments and noted that individual franchise owners do not speak for all of Applebee's.

Tankel, who declined repeated requests for comment through a spokesman, is just one of several CEOs who've announced they will take drastic measures to deal with Obamacare. Last week, Papa John's CEO, John Schnatter, said he'd likely reduce workers' hours as a result of President Barack Obama's reelection. In October, Jimmy John Liautaud, founder and CEO of Jimmy John's sandwich shops, said he would cut employees' work weeks -- "bring them down to 28 hours" -- in order to skirt Obamacare requirements on providing health insurance for full-time-equivalent employees. Liautaud was a prominent Mitt Romney supporter.

These outspoken businessmen may find such political comments hurt their bottom lines. Some employees seem eager to find new jobs. And customers are threatening boycotts -- on Twitter and Facebook.

Applebee's waiter Brandon Baker is considering quitting in light of Tankel's remarks. "It's ridiculous with all the money they make they can't take care of their employees. They sit in their mansions and we scrape by," said the 35-year-old artist, who waits tables to pay the bills. "I have no idea what it would be like to get a real break or have sick days or insurance." Baker, who lives in Seattle and doesn't work at a Tankel-owned store, pays out of pocket for his dentist and doctor visits.

Ninety-nine percent of Applebee's 2,000 locations are owned and operated by about 40 franchisees. DineEquity doesn't mandate its franchisees' health care policies and coverage, and Smith, the DineEquity spokesman, said that "it's not Applebee's place to engage in political commentary."

Despite that clarification, many customers don't differentiate between a franchisor, its franchisees and the overall brand. "Zane Tankel is a pathetic, greedy, mentally and follicle-impaired fraud," wrote Rex Kenneth, a New York City resident, in an email to The Huffington Post. "By [boycotting] Applebee's you can save money and improve your health." Kenneth is planning to boycott the chain in his area and hopes to persuade his nieces and nephews in Ohio to do the same.

"I would rather pay a few cents more at a business that treats employees with decency than one like [Tankel's]," Sandy Goodwick, another potential customer, wrote in an email to The Huffington Post.

Jimmy John's and Apple-Metro would not comment on the current controversy. Papa John's did not immediately respond to a request for comment.

Even before the Obamacare brouhaha, Applebee's, like others in the casual dining industry, didn't offer the best wage and benefits packages. Many of its franchisees other than Tankel pay low wages, keep workers part time and offer unaffordable benefits plans, according to testimonials from six current and former Applebee's employees.

"Most employees live paycheck to paycheck," said German Ramos, a former manager at an Applebee's in Newtown, Pa., who supervised 60 workers. "As managers, we did not promote the insurance as a benefit because the premium was tough to manage."

"The [franchisee] has done a lot to cut all benefits for hourly employees and managers," said Ramos.

"Applebee's had an insurance plan, but the cost was more than I was earning," said Krista Trovato, who worked at locations in Pennsylvania and Florida. "I think paying insurance for employees is the cost of doing business, and if they can't afford it, they need to get out of business and accept their failure."

Smith of DineEquity responded that Applebee's "certainly can't comment without knowing the details about these individual cases. I can speak on behalf of Applebee's the brand, but not on behalf of our franchisees."

Meanwhile, many franchise owners beyond Applebee's argue that the costs of Obamacare are just too high to stay in business. "I can't tell you how many franchises say they would like to be able to provide coverage, but once they start analyzing the costs, say this isn't going to work," said Judith Thorman, senior vice president for government relations and public policy with the International Franchise Association, a trade group that has opposed the health care law. "They're looking at a tough business climate and this tremendous cost. It's hard for them to deal with this law, however they decide to deal with it."

Under Obamacare, businesses with 50 or more full-time-equivalent employees that do not provide health insurance coverage must pay a penalty of $2,000 per full-time employee in excess of 30 full-time employees.

Many more franchise owners may be quietly considering taking the same actions as Tankel. Obamacare will add more than $6.4 billion in costs to franchise businesses, not including the cost of regulatory compliance, according to a report prepared for the International Franchise Association. The report warns that this could cause about 3.2 million full-time employees at tens of thousands of franchise businesses -- mostly quick- and full-service restaurants and retail stores -- to lose their jobs.

Thorman acknowledged that franchise owners are discussing several ways to deal with Obamacare, including reducing employees' hours to part-time status.

As for the customers who object, Thorman said, "This is a country where people have the right to express their view. [Boycotting] would be unfortunate, though, because these are small-business people trying to deal with a complicated law and keep their employees employed."

Christina Wilkie contributed reporting.

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