I'm not worried about an Obamacare induced fast food shortage

Mid-sized, low wage companies will feel the effect of Affordable Care Act (ACA) implementation. Currently, many of their workers are uninsured but that is meant to change next year. Health insurance will be an added cost for these employers, but government subsidies will soften the blow.

Opponents of the law have been making a big deal out of how it will harm businesses and stop their growth plans. But even though today’s Wall Street Journal article (Eateries Fear Health Law’s Bite) starts to take us down that well-trod path, if you read it closely you’ll see there’s little to fear.

The article leads off describing East Coast Wings & Grill, which is temporarily limiting its franchisees to ownership of 3 to 5 stores due to uncertainty about whether the stores are viable when they need to pay for insurance. The International Franchise Association shares survey data indicating 72 percent of franchisees say the law creates “some” or “significant” uncertainty for long-term planning. Rat burger purveyor White Castle is also planning to slow down its expansion.

Overall it’s a pretty feeble argument against ACA expansion. Certainly there are other things prospective Wing operators and franchisees in general are uncertain about, including the cost of food and how the sequester will impact the economy. It’sĀ convenient to blame the Affordable Care Act for a chain’s problems. But if it weren’t that we might be hearing some other explanation, like bad weather.

Interestingly, the more well-established chains don’t seem overly worried about ACA. Wendy’s, Dunkin Donuts and McDonald’s are all aware of ACA and making plans for the modest impact it is likely to have.


By David E. Williams of the Health Business Group.

May 15, 2013

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