Thanks to President Barack Obama and his signature health care law, you may not be able to afford fries with that burger at Five Guys in the near future.
President Obama and his administration will celebrate the third anniversary of Affordable Care Act, known to most as “Obamacare,” on Tuesday, but for many business owners and consumers there will be little to celebrate.
At a Heritage Foundation event in Washington, D.C. today, Five Guys Burgers and Fries franchise Mike Ruffer said the costs incurred to comply with Obamacare was forcing him to make some very difficult decisions about how to financially manage his business.
“Likely, any added cost to the business is going to have to get passed through to the customer,” Ruffer said at the “Part Time America? – Impact of Obamacare” panel Monday afternoon.
Ruffer, who owns Five Guys francises in North Carolina and Virginia, explained that he signed a deal in 2004 to build 11 of the burger joints, not knowing the economy would come crashing down a few years later and that the government would mandate that he provide healthcare to employees working over 30 hours a week.
Ruffer said he thought he would be safe from the repercussions of Obamacare because he opened each restaurant under a separate Limited Liability Company (LLC) and no more than 20 people worked at any one burger place. Unfortunately, under the umbrella of Obamacare, if a person or family members own all the establishments, then they are considered one entity, bringing small businessman like Ruffer under the purview of the law.
The Five Guys owner said he employs 147 people, 60 of whom work more than 30 hours per week, which is considered full-time under Obamacare. Ruffer said he will either have to fire or reduce the hours of 31 employees in order to avoid paying for their insurance. The cost of paying for their healthcare would be added on top of the roughly $2.4 million he spent on last year’s payroll.
When Obamacare comes to full fruition in 2014, the law will cost him the profit equal to one of his Five Guys Burgers and Fries.
Still, Ruffer noted that he needs those employees to maximize his profits. He must expand expand his business to to three more restaurants regardless of Obamacare due to his agreement with the corporation, which is why he sees charging the consumer more as his only real viable option.
Many franchise owners are feeling the same Obamacare induced heart burn as Raffer. Quiznos, Burger King, Subway, McDonalds and Dunkin Donuts have also voiced concerns about how the costs associated with Obamacare will affect local franchise owners’ hiring and firing decisions as well as menu pricing.
“I don’t have the profit margin to pay for it,” one franchise owner told the Wall Streed Journal last year.
This news is especially bad for young people and recent college grads who are most likely to work in these part time jobs and are still facing a 12.5 percent unemployment rate. Getting a part time to job pay for school or pay back student loans will likely get a little bit harder in the coming year.