Obamacare Surcharge

Obamacare Surcharge

The image above comes to us from Jonathan Chait, who does not have as much fun with it as you might expect, Obamacare-Hating Restaurant Now Charging Obummer Tax. Gator’s Dockside is a sportsbar chain with 21 restaurants in northern (conservative) Florida. And they have put a sign outside some of their restaurants that reads, “The costs associated with ACA [ie, Obamacare] compliance could ultimately close our doors. Instead of raising prices on our products to generate the additional revenue needed to cover the costs of ACA compliance, certain Gator’s Dockside locations have implemented a 1% surcharge on all food and beverage purchases only.” And you can see the extra 20¢ “ACA Surchar” on the receipt above.

In one way, this is hilarious. You can imagine some owner calling into Rush Limbaugh, “You wanna know what I’m gonna do! I’m gonna charge my customers an Obamacare surcharge and see how all those moochers like it!” But in a more fundamental way, this is very sad. It shows that one can own a successful business and not understand the first thing about business. It makes me wonder if such business people are just lucky. There must be some fraction that fall into that category.

From a business perspective, customers don’t care what the cost is of your doing business. If the cost of hot dogs went up, it is most likely that the owner of Gator’s Dockside would not raise the price. He would instead just eat the loss in profits. If the cost increase was particularly large, he might raise prices—at least eventually. What he would not do is put a sign on his door that read, “The costs associated with Chili Cheese Dogs have gone up. Instead of raising prices on them to generate the additional revenue needed to cover the increased costs of Chili Cheese Dogs, Gator’s Dockside has implemented a 1% surcharge on all Chili Cheese Dogs.” That would be ridiculous. No customer cares. If they saw a sign like that, they would think, “What a whiner! Just serve me my Chili Cheese Dog and shut up!”

With Obamacare, it is far worse. In this case, they are admitting that they don’t care enough about their workers to provide them with health insurance. When the government steps in and makes them, they don’t deal with it. They don’t find ways to be more efficient so they can absorb the cost. No, they whine about it and shove it off on the customer. They make a big public spectacle of themselves so that everyone knows that they don’t value their workers or their customers.

Also, it is important to remember that prices are not set by costs. There is no doubt that almost all of that $2.49 for an “ice” tea is profit. Gator’s Dockside charges that much because that’s the amount that maximizes their profits. If the same number of people would be willing to pay $2.52 (1% more) for it, why are they not charging that? The very idea that the difference between staying in business and going bankrupt is 1% is ridiculous. This isn’t an iron mine! And if Gator’s Dockside really is that inefficient that they barely make a profit for a $2.49 “ice” tea, then it is best that they go out of business and yield the market to a business that can do better.

Of course, it is highly likely that this is all just a stunt. The 1% surcharge sounds too convenient. I doubt Obamacare is costing this company anything at all. This is probably yet another conservative who just doesn’t like the idea of Obamacare and so is making a protest. People are allowed to use their businesses any way they like. But this is a bad business move. Roughly half of the Gator’s Dockside customers are Democrats. And the vast majority of all their customers just don’t care.

I’ll tell you how this all plays out. Eventually they take the signs down and remove the surcharge. And everyone will forget that the owners of Gator’s Dockside are hateful, but ultimately silly people. What won’t happen is that this catches on and restaurants all over start adding an Obamacare surcharge. Remember, the new healthcare law is just one of many laws that business owners must follow. How about a “FDA Making Sure Your Beef Isn’t Bad” surcharge? Or a “Zoning Ordinance So the Roof Does Crash Down on You During Your Meal” surcharge? Or a “Police So You Aren’t Murdered by Roving Gangs While Walking From Your Car” surcharge? The only thing that is different from these ridiculous surcharges and the ACA surcharge is that those have been around longer.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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