NC Five Guys franchise holder: ObamaCare costs will be passed on to consumers

Posted by: ST on March 12, 2013 at 11:00 am

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.

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7 Responses to “NC Five Guys franchise holder: ObamaCare costs will be passed on to consumers”


  1. Carlos says:

    Gosh, this ObamaCare thingy is just chock-full of unintended consequences, isn’t it?

    Who could have ever guessed that would be the case? Certainly not the smartest man in the world, or the sycophantic drone Democraps like Pelousy and Dingy. They’re all so smart, they can not only run their own lives but know what’s best for all of us turnips, too!

  2. Duane says:

    He avoided the mistake that Papa John’s made of actually revealing the amount a pizza would go up (Papa said 11 cents, independent analysis said 5 cents). The only figure mentioned is $60,000 which is a lot of money but spread over a year and 8 restaurants. When people see the actual amount of the increase of their burger the terror subsides. Most people earning minimum wage are either skipping medical treatment or getting us to pay for it through taxes. Getting insurance through the employer is much more sensible and fair to everyone or you can just say “screw the workers, I am not paying an extra 15 cents on a $10 burger”

  3. Great White Rat says:

    ObamaCare costs will be passed on to consumers

    Which will comes as a shock only to liberals. Liberals tend to think of everything in a government-centered way. If costs go up there, you simply print more money. Or else forcibly confiscate it from people. The idea of needing to maintain profitability is completely alien to the leftist mind. They don’t grasp economics well at all.

    But the bigger issue isn’t in ST’s headline, it’s further down in the link:

    he’s iced plans to build another three restaurants until after the administration explains the exact rules and penalties employers will face.

    So there’s another example of ObamaCare killing economic growth. No additional restaurants, so no new jobs. And this isn’t just with burger chains, in case any liberals are inclined to scoff at not providing low-wage jobs.

    So we needed to pass the bill to find out what was in it. And it turns out that one of the things in it was fewer jobs. Well done, liberals.

  4. The past is prologue. If Obhammud walks through the door of any business it is headed for the skids. Every solar energy concern he has touted is down the tube a la Solyndra. And any political candidate he endorses promptly loses their election bid, as evidenced by his going 4-for-4 in the 2010 mid-terms sabotaging fellow commiecrats.

  5. Questionman says:

    Yep, all about Obama wanting to take money out of your pocket. Just like the way people without health insurance take money out of your pocket everyday when they go to the ER for routine medical treatment.

    Tell me Five Guys dude, how much do you actually have to raise prices? Papa John’s guy had to raise his, what? “11 to 14 cents”? If raising the price of my burger by 12 cents brings your employees healthcare, and stops them from going to the ER for routine B.S. thus driving up my own healthcare costs then I’m okay with it.

    I’d rather pay on the front end, than the back end. Also, Mr. Five Guys, don’t you think by doing this you might end up with happier employees? People who actually care about their jobs versus some guy who just is collecting a paycheck and is PO’d by a boss too cheap to let him work a 40 hour work week so he can get healthcare and pay for the IBD he probably gets from eating your food every day because he can’t afford anything else? Five Guys, Papa John’s, Wendy’s, Denny’s . . . they’re looking at the bottom line. I get it. They want as much take home as possible. I get it. However, there are A LOT of fast food joints. Some actually treat their people well. Such is the cost of doing business in America.

  6. Carlos says:

    You’re assuming there will actually be reasonably efficient healthcare available, questionman.

    What I’m assuming (because I’ve actually talked to many doctors and seen a few studies) is that the Five Guys employees (or anyone else, for that matter) will be lucky if they can find a doctor, ANY doctor, within a reasonable timeframe, so our ER’s are going to be flooded even worse with folks who have appointments 75-120 days out but are sick NOW. And that still comes out of your pocket, genius.

  7. Great White Rat says:

    Questionman is also missing the big picture, which is that this isn’t an isolated instance. This scenario is being repeated in business after business. You won’t just have to pay a bit more for a burger. You’ll have to pony up more across the board to pay for ObamaCare – and that’s assuming every business follows your advice and just raises prices.

    So what happens when your find prices rising everywhere? Well, unless you’re Obama, you have to cut back somewhere. So your standard of living decreases, and whatever business you patronized but no longer can afford to buy from loses too, and if it happens to them enough then they’ll lay off more people, or even close up shop.

    So you lose, the businesses lose, and more jobs are lost. The only ones who do well in this are the government bureaucrats who want to regulate your life and socialists like Obama who want to push you into a government health care plan so they have the final say over your medical issues.

    Think and apply some basic econ to this – it isn’t just about a few cents more for a burger.