While many small-business owners continue to wonder how they'll be able to afford higher insurance premiums under Obamacare, there's one controversial approach that keeps popping up in the news: passing the cost to the consumer.
Gator's Dockside, a restaurant chain based in Florida, is the latest to try this approach, adding an "ACA surcharge" to patrons' meals, CBS affiliate WPEC reported. At least eight of the chain's restaurants will employee this tax, TIME reported. CNN Money's executive editor tweeted a photo of the bill with the fee attached to his meal.
— Chris Peacock (@peacockc) February 27, 2014
Signs are up at the restaurants exercising the ACA surcharge (Gator's Dockside restaurants owned by a different company won't be participating), explaining the reasoning behind the new fee.
"We wanted to definitely be transparent that affordable health care is part of the cost of doing business," Sandra Clark, Gator Dockside Group's director of operations, told WPEC. "We're definitely doing it to stay afloat. It's not political in any way."
The 1 percent tax is the chain's attempt to stem the expense of paying for full-time employees' insurance, a projected cost of $500,000 a year for the company, according to Clark. She projected the surcharge would bring in $160,000 a year.
Previous public attempts to skirt Obamacare costs haven't played out so well for other companies. In 2012, John Schnatter, the CEO of pizza chain Papa John's, announced plans to charge 11 to 14 cents more for pizzas and to cut employees' hours to under 30 a week to avoid paying for their benefits. That same year, Zane Tankel, an Applebee's franchisee, claimed he wouldn't hire any new employees and would also cut existing employees' hours. And Darden Group said it would look into hiring more part-time workers and fewer full-time employees at its Olive Garden, Red Lobster and Longhorn Steakhouse restaurants.
Papa John's, Applebee's and the Darden Group immediately suffered a big blow to their bottom lines. YouGov BrandIndex, a survey analyzing the public's perceptions of brands, found that all their "buzz" scores had dropped significantly. And once an industry leader, Darden Group's shares plummeted 10.7 percent, CNBC reported.
This probably won't be the last time we hear of an Obamacare tax or threats of cut hours in the restaurant industry, as Obamacare is projected to add more than $6.4 billion to franchise businesses, The Huffington Post reported. And according to human capital intelligence from People Report, nearly 60 percent of chains "said they’d have to raise menu prices to help cover cost increases [and] 80 percent of the companies said they planned to substitute part-time workers for full-timers," Yahoo Finance reported.
Read more articles on Obamacare.