Benefits & Compensation News

Burger chain: Obamacare to force price hikes or job cuts

Those trying to predict what Obamacare’s impact will be on their business may be interested to see what one burger franchise owner has projected he’ll have to do.

Mike Ruffer, an owner of eight Five Guys Burgers and Fries locations, told the Washington Examiner Obamacare will add about $60,000 in new costs to his restaurants.

As a result, he said he’ll have to pass the added costs on to his customers, which he fears could result in a drop in business.

Ruffer also said he’s looking into whether he can avoid the health care reform law’s requirements by firing workers or cutting their hours.

Another consequence of the reform law: Ruffer’s put plans to open three more Five Guys on hold until the Obama administration explains all the rules and penalties employers will face under the law — both of which are expected to become available in October, reported the Examiner.

Not the first, probably not the last

This makes Five Guys the latest in a growing line of famous restaurant chains to warn the public their prices may increase due to the Affordable Care Act.

In November, John Metz, an owner of around 40 Denny’s and Dairy Queen restaurants announced that, among other things, he’d pass along a 5% Obamacare surcharge to his customers.

However, shortly after his announcement Denny’s went into damage-control mode, telling the media the plan was only speculative.

This past summer, “Papa” John Schnatter, CEO of Papa John’s International, Inc. announced Obamacare will cause the pizza chain to increase the price of its pizzas by about 11 to 14 cents per large pie.

Businesses will be grouped together

Many small operations will not be impacted by the law as only businesses with 50 or more employees are on the hook for providing health insurance coverage or paying a fine for not offering coverage.

Ruffer thought his Five Guys outlets would slide in under the 50-employee rule because he established each as its own company. But the feds have said the law doesn’t work that way.

With the way the law’s written, Ruffer as a franchisee would have to employ 50 or fewer employees in total to avoid the law’s requirements. The number of workers employed at each individual location doesn’t matter.

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