Affordable Care Act could drive up restaurant prices - WKRN News 2

Affordable Care Act could drive up restaurant prices

Posted: Updated: July 26, 2012 10:13 PM CDT
NASHVILLE, Tenn. -

The Affordable Care Act, also called Obamacare by opponents, could translate into higher prices the next time you eat at a popular Middle Tennessee restaurant.

Demos' restaurants say pending federal health care mandates, along with food costs, will force them to increase prices possibly drastically in the coming weeks.

"We just know we are going to have issues coming down the line with food costs that we have been dealing with for a really long time, but so far we have not passed those costs on to the customer," Demos' President Peter Demos said.

Demos said the Affordable Care Act will require the company to provide health insurance to its 530 employees or face penalties.

"They have not come out with the regulations to explain exactly how its going to impact us, so we are having to guess," Demos said. "The range has been anywhere from $250,000 to $600,000 off of our bottom line."

In response Demos' leadership team started looking at areas to increase revenue and possibly cut costs.

One way would be to increase prices. That is always a struggle for the company, because it was founded in part on keeping prices low.

The hamburger steak entrée, for example, is still $6.95, the same price it was in 1989 when the first Demos' Steak and Spaghetti Restaurant opened in Murfreesboro.

"We were looking at all the options we had and everything was going to impact the customer," Demos said." We wanted to see what would be the best option out there instead of us guessing for them."

The restaurant is asking customers to weigh in on how to pass the increases on.

They are providing a survey that offers options such as adding $1 to every entree, a charge of $1.50 extra for complimentary soup and/or salad, adding a 20% "health care surcharge", close low performing stores, decrease portion sizes or decrease staff (thereby decreasing quality).

The survey asks customers to rank each option from one to five, with one being most acceptable and five being not acceptable.

"On our tables we have comment cards that people can fill out and it impacts the courses that we make and things that we do," Demos said. "Again the customer is who we are here for so if we don't know what they want and don't get their feedback we really don't know what to do."

The survey was released to 12,000 customers and also posted on Facebook. By Thursday evening more than 1,600 people responded.

Some comments on Facebook centered on the Affordable Care Act and its effect on the restaurant.

But Demos said the survey was not meant to send a political message, despite the option to add a 20% "health care surcharge."

"It is what it is and we just want to make sure it is as transparent as possible," he said. "Right now we have a food and liquor tax broken down on our receipts so people understand what they are paying for."

The Tennessee Democratic Party said Demos' survey plays politics with customers and the Affordable Care Act I meant to help businesses.

"For many small businesses that want to, the Affordable Care Act provides generous tax credits to help them pay for it and creates exchanges that will level the playing field so
small businesses can better compete with big corporations," Communications Director Brandon Puttbrese said. "This is a big win for business, in short, because healthy employees are better workers and better consumers."

Demos said the survey will continue until he feels the company has received enough feedback to accurately gauge what customers prefer.

He also said everything in the survey is an option, including combinations of some of the options given to customers.

The survey also said Demos' may not implement any of the options.

 

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