Obamacare’s Unhappy Meal: McDonald’s Reports Rising Costs
The Wall Street Journal reports this morning about an earnings call yesterday in which McDonald’s Chief Financial Officer admitted Obamacare could cost his company nearly a half-billion dollars in revenue:
The Affordable Care Act could cost McDonald’s and its franchisees more than $400 million a year in additional health-care expenses, Chief Financial Officer Peter Bensen said on Monday.
McDonald’s estimates that each restaurant will incur between $10,000 and $30,000 in added annual costs, Bensen said in response to an analyst’s question on a conference call to discuss the fast-food giant’s second-quarter results, according to an unedited transcript of the call provided by FactSet. There are about 14,000 McDonald’s restaurants in the U.S., meaning McDonald’s expects the total cost to the company and its franchisees to be in the range of $140 million to $420 million….
Spokeswomen for McDonald’s added that the final cost will also depend on what percentage of its eligible employees elect to accept health insurance from the chain, as well as any changes McDonald’s might make to its health-care plan. McDonald’s worked with its franchisees to analyze and estimate the potential costs, the spokeswomen said, which could be mitigated by higher menu prices.
Because the federal government will be imposing hundreds of millions of dollars in regulatory costs and mandate penalties, the company may have to lower wages and/or reduce job opportunities for workers. In addition, the article notes that the company may “change” – read: “reduce” – its health care plan, and increase prices to respond to the new costs of Obamacare.
Any way you slice it, it’s a very unhappy meal for McDonald’s, which will be facing penalties from a new “Hamburglar” – the federal government.