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Where to shop? Where to eat?

by: DocJess

Mon Nov 19, 2012 at 06:00:00 AM EST


We all know that 70% of the economy is dictated by consumer spending. This means shopping, and often eating out. Some people shop at Wal-Mart. A LOT of people. The numbers below are from 2010.

  • Every week, more than 176 million customers shop at Wal-Mart's 5,300 stores.
  • With $401 billion in revenue, the company is bigger than 160 nations.
  • Wal-Mart is China's eighth-largest trading partner, ahead of most countries.

Do they have low prices? Kinda-sorta. The shelf prices are low, as is the quality. There are issues with additives, like cadmium and other deadly substances showing up in their baby, pet and grooming products imported from China. So if your toothpaste is really cheap but it kills you....

Wal-Mart has been successfully sued for the maltreatment of workers. The Pennsylvania settlement was $187 million, and Wal-Mart lost again on appeal. Their warehouse employees (hired via jobbers) have struck this year over working conditions, and a series of walkouts by Wal-Mart employees is planned for Black Friday.

I hope you will consider spending some of your holiday money at Small Business Saturday - being held this coming Saturday, 24 November. This is a way to support your local businesses. Incongruously, it's sponsored by Amex, which has a site that helps you find small businesses in your area. Nonetheless, it's still a good idea. 

So you're out shopping and you're hungry and want something to eat. Choices abound, from those same small, local restaurants to the big chains. And here's where we get to the politics of it. Let's start with this list:

  • Red Lobster
  • Olive Garden
  • Longhorn Steakhouse
  • Bahama Breeze
  • Seasons 52
  • The Capital Grille
  • Eddie V's
  • Yard House

What they all have in common is that they're owned by the Darden Restaurants, Inc., which employs about 185,000 people, of whom approximately 45,000 are full time. They used to provide health insurance for their employees. For the part-timers, it was that crappy insurance where there are annual limits of $10,000 - $25,000, but it was better for full-time employees. No more - now it's a defined contribution program in lieu of a defined benefit program. This is always a situation good for management and bad for workers. They are doing this to "prepare" for Obamacare, after having acquired a waiver for the past couple years to enable them to continue the crappy insurance programs. Their other program to cut wage costs and increase return to investors? Cutting hours: from full-time to part-time. Source. They also steal wages from employees: yes, there's a suit, and it's expanding. This suit involves stealing money from waiters and waitresses, who earn in the neighborhood of $3.00/hour before tips. Think about it - stealing from the low-paid.

But it doesn't stop there. Darden has no franchisees, so their actions affect about 2,000 restaurants across the US. Other chains have both company stores and franchisees, and the latter can make their own decisions. The NYC Applebee's group has announced cuts from full-time to part-time, although this is not a company-wide undertaking. Other franchisees who will be cutting hours belong to the groups of IHOP, McDonalds, Burger King, Wendy's....you know the list.

You've certainly heard the Papa John's plan to cut hours AND raise the price of pizza. I truly do not understand the Papa John's thing. I really don't. I get the cut hours and raise prices thing: John Schnatter is a greedy Republican. What I do not understand is why anyone would ever eat pizza from Papa John's. Several years ago, I was at someone's house, and they'd ordered Papa John's pizza. The crust tasted to me like a cross between matzoh and cardboard. As a Native New Yorker, I can tell you, that stuff was NOT pizza. If you want to argue Chicago-style vs. NY-style with me, that's fine, there are points to be made on both sides. But Papa John's isn't pizza. 

So my question is this: why would you spend your money at these places? Now, I've spent my share of dollars at a lot of Darden's restaurants, and years ago, I'd been to the Wal-Mart. But not now. In point of fact, I had dinner at Bahama Breeze last Friday night. Some friends had wanted to take me to dinner to celebrate the election, and I'd picked Bahama Breeze. One of the managers came to sit with us for a while (he's new in town, and will need to register to vote -- I swear it never stops.) We talked hours and insurance, and he assured me that everyone at Bahama Breeze had insurance, and that Darden was committed to its employees. That was what made me come home and research. Liar, liar, pants on fire. So no more Peruvian corn cakes for me. 

It's an ever-expanding list of people who put profits in front of people. It's actually hard to keep up. A company with no employees has lost its greatest asset. We, as progressives, fight to make sure the government does right by all Americans. It's a belief system. As this whole bad-restaurant thing joins the bad-Wal-Mart thing, it becomes imperative for us, as individuals, to keep our money local, and keep our dollars away from people who do EXACTLY what the GOP wants their minions to do, which is create a huge chasm between the haves and the have nots. We need to stand together.

DocJess :: Where to shop? Where to eat?

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How do you know a small business is better? (0.00 / 0)
You did research on Darden. If you eat at a small business, how do you know they're treating their employees better? They are, after all, exempt from Obamacare, so they might not give health care even to their full-time employees. And if the manager of the Bahama Breeze lied to you, what's to keep the owner of a small business from lying to you, especially since it's much harder to check if they're lying?

as always (0.00 / 0)
It is how you define small business.  I think you best bet is somewhere where the owner is essentially an employee[be it the chef/maitre'd/whatever].  It is hard to mistreat someone you interact with on a daily basis without them quitting or the mistreatment showing up in the quality of the product.  One of the advantages/disadvantages of big chains is that the quality is more dictated by procedures.

[ Parent ]
I don't think that's true (0.00 / 0)
There are a number of cases where it's not so hard for an employee-owned business to mistreat his or her other employees:

--If the employees are undocumented. That's not an uncommon situation for that kind of business.

--If the employees are from a community where it's really hard to find work. This can happen in impovershed urban areas (maybe impovershed rural areas too, but I know less about that).

--Paradoxically, if the employees are from the same close-knit community as the owner-operator. Child labor laws, for instance, may be ignored.

While Etucson's suggestion makes sense in some circumstances, in these cases you might not get an honest answer from the server. It's certainly not treu that the mistreated employee would be likely to quit or slack off, as in all three of the cases I mentioned almost all of the power lies with the owner-operator.


[ Parent ]
I've owned small businesses (0.00 / 0)
I think that part of the issue is how "small business" is defined. People who are certainly NOT small business owners can, by virtue of the tax code, set up sub-chapter S corporations and be considered "small" even when they're making millions of dollars a year and employing thousands of people. Not to mention hedge funds with small numbers of employees, but huge amounts of income.

My late husband came from a family that had owned and operated restaurants for generations. When we met, he and a partner were just launching a small deli. Back then the statistic was that over 90% of new restaurants failed in the first year for financial reasons, and having been there, I understand. We didn't fail, but we could have. While building a following, there are all sorts of costs post-construction that you might not consider -- machinery breakdowns, food spoils, people steal. All sorts of things. Could we have given our employees insurance that first year? Insurance wasn't an issue back then, but we couldn't have. We paid expenses first, which were rent, food, salaries, taxes....if there was ANYTHING left at the end, it was poured back into the business. If I hadn't had a "regular job" we would have had trouble paying rent for our small apartment.

It took 2 years to make a profit, and like many restaurants back then, that first dollar went in a frame on the wall, next to the framed first dollar ever that we had taken in.

We never ignored child labor laws. There were no I-9 forms back then, nor "undocumented" people - it was about 30 years ago so things were different. But we NEVER mistreated any employees. We paid them everything we could, because you can get the best cooks, waitpeople, etc., if you can pay more than the joint down the street.


[ Parent ]
I also had this in mind (0.00 / 0)
But wasn't sure how to articulate it.  It is hard to blame a business owner when he is at the business 60 hours a week trying not to go bankrupt.

Another thing that comes to mind: if you are dealing with a business on a cost above all else basis, the business is probably dealing with its employees on the same basis.  I mean really, if you are going to one of these national chains like Olive Garden its because it is cheap as far as a sit down meal goes and you don't feal/have the time/are in a position to cook yourself.  It's not because you think the food is great.


[ Parent ]
I have questions about ACA details (0.00 / 0)
Do employees of small businesses that do not offer health insurance have an advantage over employees of large companies who offer insurance at unaffordable premiums or high deductibles? I am guessing that employees with no health insurance available from employer are eligible for the exchanges whereas employees with employer-provided insurance (no matter how cr...py) are not eligible? Does anyone know answer to this?

As to Scott's question as to how do you know owner of small business would lie to you about health insurance for employees: why ask the owner -- I would ask the server.


ACA Details (0.00 / 0)
When you look at the numbers, there is an economy of scale for buying insurance for a company's employees. Once you're over a certain number of employees, and that differs by state, but is generally in the 300-1000 person range, you lose the ratings that can drive up the cost of insurance.

If you're a 10 person-shop, you'll be rated based on age, gender and pre-existing conditions, which can make the cost of insurance prohibitive. That is going away in 2014, and will be based on the new HHS rules that came out yesterday. There is still some rating ability for age, tobacco use and a few other things, but no longer gender or pre-existing conditions.

The rules for the exchanges have gone into effect in some states, and will go into effect in 2014 for everyone, whether via state-run exchanges or the Federal exchange. Vermont is an exception since they've gotten a waiver and are going single-payer. Basically, using PA as an example, if you have no health insurance for 6 months and your company doesn't offer it and you have a pre-existing condition, you can get state insurance which runs about $275/month with a $1,000 deductible, co-pays and no max.

When you ask

Do employees of small businesses that do not offer health insurance have an advantage over employees of large companies who offer insurance at unaffordable premiums or high deductibles?

...it's a mixed bag answer.

What someone earns is a combination of wages and benefits. People often don't see benefits as income, so they don't realize what they're getting. If you work for a company that underwrites the cost of insurance, you may get lower wages, but the value of the insurance could be $5,000 - $15,000/year depending on family size.

I think the real issue has to do with what gets paid out to employees vs what gets paid to investors. If you are running a business, and you're privately held, you can afford to pay more to your employees in salary and benefits than a company whose first obligation is to the stock holders.

Most businesses would prefer to offer health benefits for a number of reasons: healthier employees for one, less sick time used, fewer sick people coming to the office, being more competitive against similar businesses, lower overall costs to the business BECAUSE of healthier employees.

If an employee gets the flu, goes to the doctor and gets Tamiflu, as an employer, you lose the person from work for a week. If the person has no health insurance, and ends up with pneumonia from that flu, the person could be out for a month. At that time-period, you'd have to pay for temporary help, or lose business....healthy employees are a good thing.

Does that help at all?  


[ Parent ]
nooo! (0.00 / 0)
We like our Longhorn. One of the main managers is also the main chef. They bend over backwards for their employees, a lot of whom go to college.


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