Wednesday, November 21, 2012

surcharge, shmurcharge

In the aftermath of the election, some CEOs of chain restaurants are spitting mad that healthcare may be in their employees' future.  The head of Papa John is charging 10 cents more per pizza, which frankly strikes me as a bargain. I'm happy to pay an extra dime if it means a struggling, hardworking pizza chain employee can go to the doctor.

As Wonkette reports with delicious snark, another CEO is trying to egg customers into stiffing waiters on their tips to punish them for wanting healthcare and Obama:
 John Metz is nobody’s fool, so John Metz, CEO and owner of Hurricane Grill and Wings as well as some Denny’s and Dairy Queen franchises, is going to pass the cost of Obamacare onto the employees AND the customer. “If I leave the prices the same, but, say on the menu that there is a five-percent surcharge for Obamacare, customers have two choices. They can either pay it, and tip 15 or 20 percent, or if they really feel so inclined, they can reduce the amount of tip they give to the server, who is the primary beneficiary of Obamacare,” Metz told The Huffington Post. Metz is a WINNER, you guys, and WINNERS do not pay for the health care coverage costs of others. They make you, the customer pay for it (SUCKER) and if you don’t want to, then YOU get to be a winner and make the waitress pay for it.
Frankly I'm all for him doing that.   We've done that already in San Francisco, and restaurants, waiters, and diners all seem to be fine after adjusting to a new reality.  When a new law called "Healthy San Francisco" was passed, restaurants of a certain size had to start providing healthcare to their employees.  Many restaurants decided to put a surcharge on the checks labeled "Healthy San Francisco", to make it clear to the consumer that she was having to pay out of her own pocket extra for her meal in order to give the doctor-craving waiters and cooks health insurance.  And you know what?  All the doom that was forecast didn't happen.  Restaurants are still opening at a crazy rate (our economy has perked up here, thanks to Silicon Valley); people are still eating out.

Just yesterday I took little Lolz and a pal of hers out to lunch, and we paid our "Healthy San Francisco" surcharge on top of our tab.  The heavily tattooed staff who waited on us and bussed our table looked healthy, and the surcharge was modest enough.   Funnily enough I didn't have any sort of class rage against my waiter, the way that John Metz seems to think I should.  We all of us get sick, and we all of us need some medical care from time to time.


Jon G said...

Thiong is, there is a price over which people will not pay for an item (economic 'elastic items'). This price has pretty much been detirmined already by the owners, as if they can charge $5 for a burger instead of $4 they already have done so. They have always wanted to max out their profits.

So if they raise the prices (even with a surcharge) it still makes prices rise, which means fewer people will eat there. This means that if they want to stay in business they will have to shunt off some of their X million dollar salary to offset the difference, NOT raise prices.

And, it gets a LOT of bad publicity for the chain, so fewer people will eat there. It also generates bad will with employees who will have to answer to it, so expect more turnover, and employee theft andn such - raising owner costs even more.

the Drunken Housewife said...

I disagree. When I took microeconomics at Stanford (from the economist who was Dukakis's chief economic advisor!, there's your Mass. tie-in), we learned that there are 2 ways to approach pricing in order to make a metric fuckton of cash. Sell something super cheaply, much more cheaply than you can, and get a ton of volume (McD's). Alternatively, price it as high as you can and have a much smaller number of transactions but a high profit off each. And the real winning strategy of strategies, if you can pull it off, is to do both, and he gave the example of a client company he helped to do that. They sell the exact same liquor (and he refused to tell us the brands) under two images and names: one is one of the most prestigious, highly-priced brands in its category, and the exact same thing is sold for almost nothing positioned as rotgut for street alkies. MONEY IN THE BANK!

And here in SF we haven't had bad will with employees, haven't had more turnover, haven't had more theft, haven't had people stop eating out... We have done this already, and the bugaboos haven't popped up.

the Drunken Housewife said...

Anyhow so I contend that you cannot assume healthcare is going to kill off restaurants. Ten cents more for a pizza is not going to cause people to stop buying pizza and employees to rob Papa John's blind.