Thursday, February 27, 2014

Obamacare fee…

A Florida chain of restaurants with 500 full-time employees will not cut their workers' hours to avoid a coverage requirement due to the Affordable Care Act. Instead the eight Gator's Dockside eateries will charge customers a 1% ACA Surcharge.

A sign in the restaurants' window states, "The costs associated with ACA compliance could ultimately close our doors." This appears to be negative politicking in the face of increased business costs across the board.

A very recent national drought summary reflects a need for restaurants to keep their bottom line viable. The 'central and southern plains' report notes, "…broad expansions of various categories of dryness for Kansas, Oklahoma, and Texas with Texas alone seeing a 'poor to very poor' condition increase from 28% to 47%.

The 'Mississippi valley' had year-to-date precipitation deficits from northern Louisiana to southern Missouri.

The southwest reported 'lingering pockets of dryness centered on northwestern sections of Alabama and Florida.

The west is hardest hit with extreme to exceptional drought from reserves amounting to only 15% to 22% of normal in various locations. (Reference)

The supply chain must increase its prices to restaurants. The eateries can increase prices or cut portion sizes. However, a surcharge for increased supply costs would be a poor business model.

The electricity price index soared to a new high in January 2014 with the largest month-to month increase in almost four years, according to the Bureau of Labor Statistics. (Reference)

One might predict that the 1% ACA surcharge will accumulate funds to both cover ACA expenses AND increased supply and energy costs. All costs increases associated with continuing to do business "could ultimately close [their] doors." Pinning the plan to raise enough money to keep bottom line status quo fluid on Obamacare is a cheap shot.