Regal Theater Chain Cuts Employees’ Hours To Avoid Obamacare

You are the one mixing apples and oranges in deflecting my comparison between Costco and Sam's Clubs, two direct competitors, to one between Costco and Walmart. Walmart does release the differences in employee benefits and wages between Sam's Club and Walmart employees despite your allegations, and financial analyst do report the differences in profitability between the two divisions. Costco is considerably more profitable than Sam's Club despite spending considerably more on employee benefits. This is because the fact that employee productivity, employee loyalty, reduction in employee theft, etc. translates into higher productivity rates, better customer service that translates into customer loyality and high profits. Employee turnover at Costco is around 12% annually (20% for new hires, 6% for those employed over a year) while Sam's Club is around 35% (50% for new hires, 20% for those employed over a year), Sam's Club cost of recruiting, hiring, training, etc. is 350% greater than Costco.

As to how this relates to Regal, if you had actually read the article, or my earlier post, you would note that Regal is now having trouble retaining theater managers due to their shortsighted strategy. This leads to higher costs in recruiting, evaluating, hiring, training new employees, decreased customer service, loss of institutional knowledge, leading to loss of customers, and lower profits.

Another important consideration is that businesses such as Regal and Walmart, who combine low wages with no benefits pass on the costs to the taxpayer by forcing their employees to supplement their existence with food stamps, inability to pay medical bills, etc. Even if Regal or Walmart employee a worker 40 hours per week, that translates to just over the poverty level or below in most cases, qualifying that employee for taxpayer benefits. Essentially Regal and Walmart are using taxpayer subsidies to reward their executives with multimillion dollar bonuses, while Costco and other companies who pay their employees with livable wages and benefits reward the taxpayer instead.

You not only compared Costco to Sam's Club, but also to Walmart, Regal, and food service companies as well.

Something the Dog Said wrote: Contrast the actions of Regal, Walmart, Darden Group (Red Lobster, Olive Garden) and other entities that believe in squeezing their employees for every cent with that of Costco. Costco pays its employees on average $17 per hour with great benefits ( best insurance coverage in the industry and pay only 12% of the premiums) compared to its direct competitor Sam's Club who pays $10 per hour with little or no benefits ( those lucky enough to get health insurance pay 40% of premiums).
Guess which company is more profitable, gets more production from the employees, has very little turnover, very little theft, higher customer loyalty?
Costco reports 8% increase in earnings this year compared with 1.2% for Sam's/Walmart and .4% for Target.

In Walmart's annual report, the only financial number that I can see specific to Sam's Club is their increase in earnings for US stores, and it doesn't match your number anyway. Their report shows Walmart worldwide increased sales 5.6% in 2012, and 1.6% in the US. Sam's Club increased US sales 8.4% which is better than the 8% you reported for Costco. The report does not show the other numbers you mention specific to Sam's Club though I did find Sam's Club total sales buried in an SEC filing.

http://www.walmartstores.com/sites/annual-report/2012/WalMart_Financials.pdf

The bottom line is you are suggesting that the Costco business/employee model would work for other businesses like Walmart and Regal. It's amazing they haven't figured that out yet. As I already mentioned, not even Costco seems to of figured it out or else why aren't they going after Walmart's customers too?

If you read the earlier link I gave, Costco targets their stores in limited markets where they attract a much more affluent customer base than Walmart. Costco customers average $85K a year in income. Their business model is not interested in catering to the lower income people that a Walmart does. Nor do they stock nearly the amount and variety of products that a Walmart does.

Don't get me wrong, I love Costco and have been a member for many years ever since I could afford the membership fee. Speaking of which, if it weren't for the $55 membership fee, Costco would not even be profitable (see my previous link).

If you really think the Costco employee model would work at a restaurant, why don't you go ahead and open one and pay your employees $17 an hour? Give them the best health care too, but not too good otherwise Obamacare will tax it at 40%. Let's see how well you do. You might even make it if you open your restaurant in a very affluent area (Denver might not even be affluent enough; you might have to try San Francisco or New York) and have a great chef. But then try doing the same thing on a national level. Good luck.

Actually Regal employees aren't the only ones seeing themselves squeezed. The studio that is releasing Wolverine this year is demanding a higher percentage of ticket sales than last year. The theatre chains are fighting this new demand by refusing to do pre-sales for the superhero movie.

The only direct comparison was between Costco and Sam's Club. I then compared the business model of Costco (paying employees a living wage and benefits to keep productive employees) to the business model of cheap labor with high turnover (Walmart, Sam's Club, Regal). Regal has reported that they have had high turnover in theater management. Tell me this, which customer service companies have longevity in business, those who churn workers or those who keep productive employees for the long term. If you look at the restaurant threads in the local forums, there is a common theme, locals love restaurants initially because they have great customer service, then turn on those same restaurants as the restaurant employees are churned and customer service deteriorates.

As to why Costco does not expand into direct competition in poor neighborhoods with Walmart, I would suggest that Walmart does not expand into poor neighborhoods as you claim, but into middle class and affluent suburbs and into high traffic areas. Costco obviously goes into regional areas with easy access rather than going into every neighborhood. Walmart's strategy is predatory to squeeze out local merchants while Costco coexists with them. In fact, many local merchants use Costco as a supply source.

You keep glossing over my main points and then creating absurd comparisons that I did not utilize to attempt to deflect from my points. Also, you fail to address the issue with taxpayers forced to subsidize the employees of companies such as Sam's Club, Walmart and Regal at the same time that the executives of those companies receive multi million dollar compensation packages. You also fail to address my point on the cost of churning employees and recruiting, hiring and training new employees.

Have I said anywhere that restaurants should pay $17 per hour? No. But those restaurants who are able to provide benefits (as even Papa Johns and the Darden Group have come to realize) keep productive employees and maintain customer service which in turn translates to customer loyalty and profits.

Your claim that you were only comparing Costco to Sam's Club is not correct. When you compared Costco's 8% increase in sales (your number) you compared it to Walmart (and you still got it wrong according to Walmart's own 2012 financial report), not Sam's Club. Why didn't you use the 8.4% Sam's Club number instead? I think I answered my own question.

Something the Dog Said wrote: Another important consideration is that businesses such as Regal and Walmart, who combine low wages with no benefits pass on the costs to the taxpayer by forcing their employees to supplement their existence with food stamps, inability to pay medical bills, etc. Even if Regal or Walmart employee a worker 40 hours per week, that translates to just over the poverty level or below in most cases, qualifying that employee for taxpayer benefits. Essentially Regal and Walmart are using taxpayer subsidies to reward their executives with multimillion dollar bonuses, while Costco and other companies who pay their employees with livable wages and benefits reward the taxpayer instead.

Your claim that a Regal or Walmart worker who works 40 hours a week is at the poverty level is also not true, nor even anywhere close to it. The 2013 Federal poverty level for the 48 contiguous states is $11,490 or about $5.52/hr for an individual. The lowest minimum wage is $7.25 an hour. I don't know what Regal pays, but I assume they at least pay minimum wage. It appears even the lowest paid Walmart employees make over $8 an hour.

So far as Sam's Club goes, I'm not sure anyone knows for certain what their wage scale is. I've seen very different numbers reported in different articles. Here is a liberal source that says pay starts at $10/hr compared to Costco which starts at $11/hr and that's from 5 years ago. That would put an employee at nearly double the current poverty level.

http://www.slate.com/articles/business/moneybox/2008/06/wage_against_the_machine.html

To qualify for food stamps you have to make below 130% of the poverty level. Even that is below minimum wage.

Now, if you work at one of these places and are the sole supporter of say a family of four, then you will possibly qualify for food stamps (the link below says $14.41/hr for a family of four). But that would be true even if you started work at Costco, if the Slate figures are correct.

http://www.fns.usda.gov/snap/applicant_recipients/eligibility.htm

I guess I'm somewhat baffled out this outcry..........for YEARS now, K. S. on the mountain has "creatively crafted" schedules that do NOT allow enough hours for health care benefits for their employees (just UNDER what is required)
IF that practice has changed,feel free to correct me......(I worked there several years back and the cashiers were
lamenting this practice)........