Five Guys' franchisee attacks Obamacare
The owner of 8 North Carolina outlets says health care will cost him a store's worth of profits. The growing burger chain -- which counts the president as a fan -- has distanced itself from that complaint.
By Jason Notte 23 hours ago
Just a few years back, a then-upstart Five Guys Burgers and Fries got a visit from President Barack Obama and rode the exposure to a still-burgeoning coast-to-coast burger empire.
On Monday, a Five Guys franchisee in North Carolina returned the favor by saying that, according to The Washington Examiner, the president's new health care law is forcing him to put plans for new stores on hold and may result in higher prices for burgers. Mike Ruffer, a former Marriott (MAR +0.38%) executive who owns eight Five Guys restaurants in the Raleigh-Durham area, told attendees of a seminar dedicated to the new health care law and hosted by the Heritage Foundation that all the profits from one of his eight outlets would have to be dedicated to health care and that “any added costs are going to have to be passed on."
Five Guys headquarters, perhaps with the president's 2009 visit to a Five Guys in its Washington, D.C., birthplace in mind, immediately put a few peanut bags' worth of distance between itself and Ruffer.
"Mike Ruffer is a franchisee of Five Guys and independent business owner," Molly Catalano, director of communications and public relations, wrote in an email to The Huffington Post. "He does not represent Five Guys on this or any other subject matter."
Restaurant owners haven't exactly checked their disdain for the new law requiring employers with more than 50 full-time workers to provide health care coverage for them or be fined $3,000 per worker. Chief executives and franchise owners for Denny's (DENN +1.93%), Papa John's (PZZA +2.49%), DineEquity's (DINE) Applebee's, Wendy's(WEN +0.46%), Darden Restaurants (DRI +2.35%), Whole Foods Market (WFM +2.56%) and others have all bemoaned the new expenses and have publicly suggested that they will cut employee hours to avoid the mandate. A Denny's franchisee in Florida went so far as to suggest that customers pay a surcharge for it and deduct the amount from servers' tips.
Five Guys appears to want no part of this discussion, lest it stifle the chain's exponential growth over the last decade. Five Guys began franchising in 2002 and has already grown to more than 900 locations across the U.S.
In 2011, it came in just below $1 billion in sales at $950.6 million but added more than 182 locations to land in a spot in QSR Magazine's Top 25. Its sales increased 32.8% from 2010, according to research firm Technomic, while its $1.156 million in sales per restaurant in 2011 fell just below Burger King ($1.245 million) and topped Yum Brands' (YUM +1.13%) Pizza Hut ($875,000), KFC ($940,000), Sonic (SONC -1.68% $1 million) and Starbucks(SBUX +0.81% $1.14 million).
Franchisees are going to talk, but upstart chains like Five Guys tend to turn down the volume if keeps customers from coming in for a double and a sack of fries.
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