Gee, what a surprise. Not. Via the Washington Examiner’s Paul Bedard
(bolded emphasis added by me):
The fight over Obamacare, so far held at the 30,000-foot level, is about to hit home. The latest impact hot off the grill: prices of burgers and hot dogs at Five Guys, the national chain that started in Washington, are going to rise to cover the president’s mandated insurance coverage.
“Any added costs are going to have to be passed on,” said Mike Ruffer, a Five Guys franchise holder with eight of the popular restaurants in the Raleigh-Durham, N.C. area. He will need all the profits from at least one of his eight outlets just to cover his estimated added $60,000-a year in new Obamacare costs.
What’s more, he’s iced plans to build another three restaurants until after the administration explains the exact rules and penalties employers will face. The law’s plan to have those available March 1 has been pushed back to October.
“I’m kind of in a holding pattern,” said Ruffer, a former Marriott executive who added that many franchise owners are in a similar situation.
Ruffer was the star witness at a Monday Heritage Foundation seminar on the impact Obamacare will have on small businesses. He is typical of many: Because he has enough full time employees to activate the law, he faces either coughing up the money to provide health insurance or paying a fine of up to $3,000 per worker.
Ruffer initially thought he would escape the law because he created each restaurant as its own company. But the law doesn’t recognize that distinction, so now he’s trying to determine if he can fire enough workers, or cut enough hours, to slide out of the grasp of Obamacare.
Neither of which he indicates he really wants to do, as the article made clear.
As I’ve pointed out here before on several occasions, he is far from the only franchise holder having to decide how much this will impact consumers, his bottom line, and the fate of his employees as a direct result of the implementation of the bloated monstrosity known as ObamaCare. He won’t be the last, either.
Ask a staunch proponent of ObamaCare how they feel about this disturbing trend amongst business owners both small and large to face the possibility of having to cut back hours, cut back on employees, and/or pass the costs of ObamaCare onto consumers, and they’ll snidely tell you that the owners can “afford to do with less money and should put more emphasis on keeping people employed than on the profitability of their business(es).” Ignorance of how to run a successful company is bliss, I guess – for pro-socialism leftists, anyway.
Don’t be surprised if you find out far left “activists” are calling for a boycott of the particular Five Guys establishments in question. Because in their warped minds, boycotting a restaurant to make sure they have less business and less customers for the existing employees to take care of is a sure fire way to reverse staggering negative unemployment trends and get employers to change their minds. Or something …
Phineas Butts In: Coincidentally, I read a short piece last night by Slate’s Matt Yglesias on Mr. Ruffer and his restaurants that essentially called BS on his need to pass on costs:
The only situation in which it would make sense for Ruffer to raise prices is if price increases will on net lead to higher revenue. And if price increases will lead to higher revenue (which they might) then it makes sense for Ruffer to raise prices no matter what happens with Obamacare.
Either from economic illiteracy or mendacity, Yglesias confuses gross revenues with net income. Sure, raising prices will raise revenues, up to the point at which customers decide it’s too much to pay. But, if operating costs go higher (thanks to ObamaCare, in this case), then net income (roughly, revenue minus operating costs) will either stay about even or go down, if he follows Yglesias-nomics and keeps raising prices. And it’s that net income that Ruffer needs to make his business worth running, in the first place, and to expand it and –think about it, Matt– hire more people.
Be sure to read it all for a textbook example of the Left’s fantasy economics, and check out my Elections Have Consequences category for other examples of businesses dealing with reality, instead.
Meanwhile, Matt Yglesias should put down his copy of The Nation and pick up a good book on microeconomics.