Denny's CEO Smacks Down Franchise Owner Over Talk of Obamacare Surcharge

A blog about business and economics.
Nov. 20 2012 10:52 AM

Denny's CEO Smacks Down Franchise Owner Over Talk of Obamacare Surcharge

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EMERYVILLE, CA - FEBRUARY 03: Denny's customers wait in line to get a free breakfast February 3, 2009 in Emeryville, California.

Photo by Justin Sullivan/Getty Images

I did a column on chain restaurant owners' absurd whining about Obamacare with special attention to John Metz who owns a bunch of Denny's franchises. Metz said he was going to start placing a special Obamacare surcharge on customers' checks, and advised people that if they didn't like it they could just tip their servers less. Today the news comes that he got a stern talking-to from the Denny's CEO and is backing down on the plan.

Good for the CEO. But, again, this is just good business sense. As I wrote in the column, evidence from San Francisco suggests we should be very suspicious of firms pleading poverty as they charge surcharges. The city adopted pioneering universal health care legislation that, like Obamacare, imposed higher costs on some classes of employers. Many of them responded with special health care surcharges. Upon investigation, much of this surcharge money just ended up in the pockets of business owners, as with any other price increase.

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Businesses, obviously, are free to raise prices if they think that's the best strategy. And if they think the best way to market a 5 percent price increase is to call it an "Obamacare surcharge" then why not? But my strong suspicion is that the CEO is right about this and that's actually a terrible way to market a 5 percent price increase. The basic business proposition at any restaurant is the idea that we're giving you a dining experience that's more valuable to you than the money we're asking for. It's a good deal, come eat our tasty food. Whining about the fact that your servers now have health insurance is neither here nor there in terms of the value proposition on offer, and is only going to serve to alienate people by making you look like an asshole.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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