ACA surcharge on your bill

Discussion in 'Food & Cooking' started by phatch, Feb 28, 2014.

  1. phatch

    phatch Moderator Staff Member

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    This topic involves the intersection of a contentious political policy and dining. Politics is off limit discussion here at Cheftalk so let me layout some ground rules for this thread.  No discussion pro or con about the Affordable Care Act itself. Such posts will be deleted. This is just about how customers will respond to this and how restauranteurs will implement handling the new economic requirements. 

    A Florida restaurant is calling out a 1% surcharge to cover some of their increased costs due to the implementation of the Affordable Care Act. They include signage at the entrance to the restaurant and other places to make the customer aware of the add-on. 

    http://money.cnn.com/2014/02/27/news/economy/obamacare-restaurants/

    Personally, I think the surcharge is a reasonable way to handle the increased cost burden INITIALLY. It explains to the customer WHY the bill is higher and the restaurant doesn't have to reprints their menus and other infrastruture. I think after a year or 18 months, or at least by the next menu printing, this should be made invisible to the consumer and the restaurant will be able to merge the extra costs into their price structuring with a more informed adjustment.
     
  2. kaneohegirlinaz

    kaneohegirlinaz

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    Okay, so here's is just another nail in the coffin for me...

    Should I see such signage in the window of any establishment,

    I will simply not go in and hand over my hard earned monies.

    Sorry guys, I know many chefs/owners here at CT are just trying to make a living

    and this is something that you won't have a choice in,

    but I will not pay for yet more hand outs.

    (this is not a political statement nor reference, just my opinion)
     
  3. kuan

    kuan Moderator Staff Member

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    What makes them different from any other business subject to the same laws?  Can you imagine going to a gas station and seeing a 1% surcharge on your gas bill?

    How about someone advertising that they have no surcharge?
     
  4. cheflayne

    cheflayne

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    Any time you pay a bill, whether you think about it or not,you pay for the expenses incurred by the establishment. This is just a case of an operator telling you up front where your some of your money is going.

    Not sure that it is good business sense, a lot of times when it comes to customer relationships, the less a business tells customer about the business's expenses and bills, the better. Ignorance is bliss.
     
  5. kuan

    kuan Moderator Staff Member

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    This could easily morph into another thread about tipping.
     
  6. kaneohegirlinaz

    kaneohegirlinaz

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    braddah @cheflayne  I can appreciate and happily pay for some expenses that a restuarant owner may have, but handing out more money for those on the dole, I just can not do any further... why must I, you, or everyone else pay for those who can not afford their health care when we are dining out?

    this boggles my mind!
     
  7. kuan

    kuan Moderator Staff Member

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    They can't afford healthcare because they get paid $3.35 an hour?

    Edit to add:  You're paying the establishment to provide healthcare for its workers.   If you work somewhere and someone buys product they're paying for part of your health insurance.
     
    Last edited: Feb 28, 2014
  8. dillbert

    dillbert Banned

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    >>handing out more money for those on the dole
    unfortunately, that pretty much means you'll have to stop buying anything.  as cheflayne pointed out, every and any cost regardless of source has to be covered by "income" - any place that does not operate at some measure of profit - industry is irrelevant (government excepted) - will go out of business.  

    the owner of your local (insert business here) is not going to pour hundreds/thousands/millions of dollars out of his/her/their own pockets into the business every year so they can "feel good" about the fact their employees now have health care plan(s)

    it's just plain simple math.  whether it is a surcharge or an increase on the menu price is not going to make a different on your wallet.

    a surcharge notation may draw consumer attention to the fact, short term.  long term, utterly meaningless.
    short term it can serve only as a 'stance' - in the event citizens ever get to vote yes/no on the idea.

    >>not having to reprint menus
    and we've know about this situation how long?  lame excuse.  
    then again, it's a excellent reason some places I know should reprint their cruddy stained mucked-up menus.....

    any business with more than 50 full time employees is forced to provide a minimum health care package to full time employees.  that's the law, good / bad/ doesn't matter at this time - run duck and hide if you wish, but the business cannot.

    they can reduce your hours from 37.5 to less than 30, so as you're no longer full time.
    they can split and splinter the business into smaller and smaller portions so no portion exceeds 50 full time employees.  
    so many possibilities . . . . and we'll likely see them all.
     
  9. ed buchanan

    ed buchanan

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    It is  your option if you want to patronize  this place. This is still America and it is your option

    , Me, I would walk away. The proceeds from this charge would probably never help the employee but in the majority of cases would help make the owner wealthier.

          Most but  not all restaurant owners don't give a hoot about employees no matter what they tell you. I am 70 years old and have been in this business for 55 as both owner and employee and believe me they are only concerned with DOLLARS AND PROFIT.  ejb. 
     
  10. dillbert

    dillbert Banned

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    sorry Ed.

    somewhere in the fine fog of confusion, you have overlooked the fact that "owners" pay the flipping bills.  when something costs more, and owners charge more, that does not mean the owners do not pay the "cost more bit" and just profit from the "charge more bit."

    yes, it's a legally mandated cost.  

    yes the business has to pay it. 

    no, you can't call up your alternate / secondary government and ask for a better deal.

    read the flipping background.  the owners figure it's going to cost them $500,000 a year, and the surcharge will bring in $150,000 a year.  now, if you call pulling $350,000/year out of your IRA to pay the higher expenses making you wealthier, obviously your IRA is a whole lot better than mine.
     
  11. kuan

    kuan Moderator Staff Member

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    You know, everyone is affected and will have to make adjustments.  That means your competition as well.
     
  12. brianshaw

    brianshaw

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    Would any restaurant ever put a surcharge on the bill because the cost of tomatoes just went up?  Seems like the right way to run a business is to ensure that the prices charged cover all expenses plus generate a profit.  Why not just raise the prices?  From a customer perspective they will either find the higher price worth paying or not.  But adding silly surcharges makes the proprietor look like a putz... which will likely generate less good-will than would a small change of the price.  BTW, anyone who is running a business on such a slim margin that a 1% change in costs will break them needs to re-think their business plan.
     
  13. dillbert

    dillbert Banned

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    >>that a 1% change in costs will break them needs to re-think their business plan.

    but that's their surcharge.  not what it costs.

    go forth and price employee health care plans. 

    $10,000-$15,000 _per employee_ is pretty much the norm; varies by area.  ACA requires minimum degrees of coverage, no you can't opt to "no cover X" to save money.  Ed's 70 year old wife, if he has one, will have by Federal mandate, maternity coverage - whether she thinks she needs it or not.

    52 weeks a year, 40 hours per week = 2,080 hours per year.

    do the math.
     
  14. cheflayne

    cheflayne

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    According to the "2010 Operations Report" by the National Restaurant Association and Deloitte & Touche LLP...Full-service restaurants at all levels ...Those with checks under $15 showed a profit of 3 percent. Those with checks from $15 to $24.99 boasted the highest profit margin at 3.5 percent. Finally, those with checks of $25 and over had the lowest profits, at 1.8 percent.
     
  15. petemccracken

    petemccracken

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    For each $173/month the health insurance costs, that is equal to $1/hour for a standard 40hour work week for a month.

    Stated differently,for every $2,080 of annual health insurance cost,it is equivalent to an average of $1.00/hour.

    Say the annual health insurance cost per employees is $8,320 (693.33/month), that is the equivalent of an increase in payroll of $4.00 for each employee. If the average employee pay is $12/hour, that is a 25% increase in labor costs, less, of course, if the average pay is higher.

    Say "Sam's Stop'N Gulp" has a $10 menu item, the "rule of thumb is close to $3 labor, $3 food, $3 overhead, $1 pretax profit, maybe as low as $3.25 labor, $3.25 food, $3.25 overhead, $0.25 pretax profit.

    If labor goes up 25%, without a surcharge or price increase the numbers become $3.75 labor, $3 food, $3 overhead, and $0.25 pretax profit in the best case and $3.75 labor, $3.25 food, $3.25 overhead, and $0.25 loss in the worst case.

    Net consequences? To maintain pretax profit levels, some combination of price increase and surcharge must equate to $0.75 or 7.5%.

    A price increase, IMHO, buries the issue and may lead the customer to think the owner is simply greedy, a surcharge makes it clear to the customer.

    Whatever the choice, the CUSTOMER eventually pays for the increase costs, not the employer. Why? Because employers do not "pay"anything, they simply transfer money from the customer's pocket to someone else's pocket; employee, vendor, government and, hopefully, a small token to their own pocket.
     
    Last edited: Mar 1, 2014
  16. brianshaw

    brianshaw

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    No doubt, Cheflayne... I believe those numbers.  But anyone who stays open long enough to achieve those profit levels is probably smart enough to factor ALL costs of doing business into their financial planning.  Yup, those "high-end" restaurants look very expensive to operate so a lower profit, while extremely sad to see how low it really is, is understandable.
     
    Last edited: Mar 1, 2014
  17. brianshaw

    brianshaw

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    Yes, I know.  But the proprietor seems to think that all he needs to generate is that additional 1%.  That is why I addressed only the 1% surcharge.  Read the words.  Presumably he is willing to eat the rest of the associated costs... IDK. 
     
  18. petemccracken

    petemccracken

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    Oh, BTW, THAT s precisely why I do NOT have, and do NOT plan to have any employees!
     
  19. cheflayne

    cheflayne

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    Large part of the reason why I decided to be an ex-owner of a restaurant.
     
  20. cheflayne

    cheflayne

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    They get factored in all right. It just comes down to semantics and whether it is higher prices or a surcharge it is still the same thing.