Quick flashback to September 2012 when International Franchise Association held a convention in Washington where Radio Shack, Dunkin Donuts, Curves and other franchisers all warned that new federal regulations, especially the impact of Obamacare, would halve their profits and offered up suggestions to keep their businesses viable.
Most, said Atlanta Taco Bell and Kentucky Fried Chicken franchiser David Barr, presumed that the reports about how hard Obamacare will hit them were overblown. "They had their head in the sand," he told Secrets.Business owners are struggling with methods to limit the losses to jobs and possibly having to close their businesses because they can no longer afford to keep the doors open due to Obamacare.
That is until he pulled out his powerpoint showing how funding Obamacare will cut his--and likely their--profits in half overnight. With simple math the small business folks understood, he spelled out that their only choice is to slash employee hours so they aren't eligible for company-paid health care or stop offering insurance and pay the $2,000 per employee fine.
Meet John Metz, franchisor of Hurricane Grill & Wings, which has 48 locations, five of which are corporate owned, and president and owner of RREMC Restaurants, which runs approximately 40 Denny's and several Dairy Queen locations.
Starting in January 2014, Mr. Metz will start imposing the 5% Obamacare surcharge in all of his restaurants.
Some may call it a political statement, others might say it is simply showing his customers the ramifications of Obamacare and Obama and Democrats' policies, but liberals are already howling over a 5% Obamacare surcharge being passed on to costumers in order to mitigate the damage that will be done to his profits from Obamacare.
"I've got to pass the cost on to the consumer." --- John Metz
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Metz said he will hold meetings at all his restaurants starting in December to discuss the surcharge and to tell employees "that because of Obamacare, we are going to be cutting front-of-the-house employees to under 30 hours, effective immediately."
Metz said he hopes the post-election meetings will inspire employees rather than alienate them. "What we're going to ask them to do is to speak to their elected officials, to try to convey what this means in terms of their jobs and their livelihoods," Metz said.
Metz said he understands the problems that will create not just for his scheduling but for his employees. "I think it's a terrible thing. It's ridiculous that the maximum hours we can give people is 28 hours a week instead of 40," Metz said. "It's going to force my employees to go out and get a second job."
Despite the one-two hit his employees might take with possibly fewer hours and lower tips, Metz said he is not anti-insurance. His current coverage for full-time employees costs him $5,000 to $6,000 annually, he said. "Obviously, I'd love to cover all our employees under that insurance," he said, "But to pay $5,000 per employee would cost us $175,000 per restaurant, and unfortunately, most of our restaurants don't make $175,000 a year. I can't afford it."
Currently, the law states that employers with more than 50 full-time equivalent employees will be charged a penalty for any employees over 30 full-time employees that they don't cover. Several employers have cited that provision -- including Darden Restaurants, Papa John's, Apple-Metro and Jimmy John's -- in announcing plans to skirt the law by cutting employees' hours to make them part time.
Metz is prepared for any backlash but he hopes to encourage other restaurant operators to start adding the Obamacare surcharge rather than raising their prices.
By stating it clearly on his menu, customers can be informed of why they are paying more, not because Metz and others that follow his example simply decided to raise their prices, but because of Obamacare and the cut into their profits, those costs must be passed onto the customer.
Businesses do not get started with the intention of losing money, therefore any time a law is passed that affects the bottom line profit, the company in question will raise prices, or follow Mr. Metz's inventive example by adding an Obamacare surcharge to services rendered.
This is not only something restaurants can do, any businesses that provides services or sells a product can list an Obamacare surcharge on their websites, receipts, estimates, menus, fliers, and/or advertising.
Better to lose a little business from those that would protest this type of action, as well as cut worker's hours, than to have to close up those businesses and lay all their employees off.