ObamaCare Causing Restaurant Recession


Recently released 2017 prices for healthcare insurance reveal that the average cost of premiums is going up more than 25 percent across the nation. As reported in an earlier post (Skyrocketing Insurance Premiums as ObamaCare Implodes) some states are reporting increases as high as 116 percent!

This trend in higher healthcare costs has been getting worse since the passage of the Affordable Care Act (ObamaCare) despite President Obama’s claims it would actually lower costs by $2500 per year per family. The impact of these higher prices is felt throughout the economy – especially in the restaurant industry.

Andy Puzder, CEO of CKE Restaurants, writes in The Wall Street Journal of a recession already happening in the restaurant industry. This was predicted in July by analyst Paul Westra of the brokerage firm Stifel Nicolaus who downgraded 11 restaurant stocks and warned that it might be the first sign of a more widespread U.S. recession in 2017.

Puzder reports Westra’s predictions are coming true. Restaurant traffic is down 2.8% through the first three quarter of 2016 according to the Restaurant Industry Snapshot, a survey of some 25,000 restaurants by research firm TDn2K. As a result, eight major restaurant companies, representing at least 12 chains, including Cosi, Logan’s Roadhouse, Old Country Buffet and Zio’s Italian Kitchen, have filed for bankruptcy.

A September survey by the research firm Civic Science found that more Americans are spending less on dining out. The number one reason was a worsening of their personal finances. The number one factor mentioned in the survey was increased healthcare costs. The survey also found that consumers whose health insurance costs had increased over the past year were 30% more likely to say they were “significantly” cutting back on restaurant spending than those whose insurance costs had not increased.

The White House would have you believe that rising insurance premiums don’t affect many Americans because the government subsidies pick up the increased costs for most people. Former Obama economic advisor, Austin Goolsbee, recently claimed that only 3% of Americans are impacted by the increases. But a more realistic number is 15.5% (50 million) who are paying the higher prices (Democratic Excuses for Failing ObamaCare). Puzder calls this a “government mandated restaurant recession.”


Worse in 2017

Since these numbers reflect 2016 consumer choices, the restaurant recession is sure to get worse in 2017 when the higher healthcare costs kick in. Even some Democrats are beginning to acknowledge the obvious. Democratic Minnesota Governor Mark Dayton recently said, “The Affordable Care Act is no longer affordable to increasing numbers of people.” Even former President Bill Clinton admitted ObamaCare is “the craziest thing in the world”, lamenting that hardworking Americans “wind up with their premiums doubled and their coverage cut in half.”

The restaurant industry may be the “canary in the coal mine”, according to Puzder, warning of the impending impact this imploding healthcare system will have on the broader national economy. He says, “With GDP already averaging a mere 2% since the recession ended (in 2009) and hovering around 1.5% over the past four quarters, we should be making faster growth a political priority. That is not what the Affordable Care Act is doing.”

It may be the restaurant industry today, but what other industries will be adversely impacted in 2017 by declining consumer spending as healthcare costs eat up more and more of the family’s budget? The solution is the repeal and replacement of ObamaCare and the new Trump administration plans to do just that as soon as possible. Democrats should drop their fantasies of socialized medicine and get on board the Trump train that is moving toward a better healthcare system.


(Note: Andy Puzder was just nominated by President-elect Trump to be the next Secretary of Labor.)

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