This Restaurant Chain Said It Was Bankrupt by Obamacare, But Not For the Reason You'd Think
In the aftermath of the Affordable Care Act, more than one restaurant owner ran around telling everyone how the added costs of Obamacare were going to put the entire food industry out of business. Since the implementation of the legislation though, few, if any, stories of restaurants being sunk by health care costs have grabbed the media’s attention. This week, however, Last Call Guarantor LLC – operator of 80 restaurants under three brand names: Fox & Hound, Champps and Bailey’s Sports Grille – said in its bankruptcy filing that Obamacare played a part in its downfall… not because of the added healthcare costs, but because trying to avoid following the law proved too costly.
In trying to skirt the legislation, Last Call did what a number of restaurants threatened to do: cut employees’ hours to reduce its number of fulltime workers, moving almost all of its employees to part time according to Nation’s Restaurant News. Ironically, in the business’s bankruptcy filing, Last Call admitted this change was an ill-advised choice because it caused many of their workers to simply look for jobs elsewhere. As a result, the restaurant chain had to invest more money into finding, hiring and training new employees. “High turnover results in higher labor costs,” the company was quoted as saying, as if someone had just walked out of the first lecture from their first day of business school.
Admittedly, the Obamacare fiasco was just one of a laundry list of problems from a business that had filed previously for bankruptcy a mere three years ago. Rebranding problems, a failed new menu, higher labor costs in general (in fairness, partly because of minimum wage increases), CEO instability and a “weak casual dining environment” were all also cited as contributing factors. But none of these issues come with the bizarre irony of the Obamacare folly.
I don’t run restaurants, so maybe there’s a bit of a “damned if you do, damned if you don’t” sort of situation here with the Affordable Care Act. Though maybe it’s simply proof that avoiding the law doesn’t pay. Also, hey, just a thought: “Champs” is only spelled with one “p.”