Restaurants close for a lot of reasons — slow business, rising food costs, expensive rents, bad locations, shaky service — but when Frankie’s Sports Bar in downtown Fort Worth announced on Dec. 5 that it was shutting its doors and cited the Affordable Care Act as one of the main reasons, it touched off another debate about the controversial healthcare legislation.
In a statement posted on Facebook on Monday, Frankie’s owners, Bill and Johnnie Katz, said several factors led to their decision to close the sports bar after more than five years, “but … if we were to stay in business, there was no way for us to have borne the weight of the oppressive penalties for failing to comply with the mandates [of the Affordable Care Act]. Therefore, another establishment goes out of business. Over 50 people lose their job. Suppliers and vendors lose the revenue of our account. Loyal patrons have one less option for dining out.”
In an interview Monday, Bill Katz called the closing bittersweet. “There were a lot of tears and sleepless nights. I was trying to keep it open,” he said. “But I was out of aces. The Affordable Care Act made it impossible.”
His reasoning, however, provoked a wide range of responses from restaurant patrons and political observers alike. Many weighing in on social media questioned Katz’s motivation — and his math — in blaming the ACA, better known as Obamacare. Instead, they suggested that “mediocre food,” “slow service,” and “a bad location” were more likely culprits.
Katz declined to comment further when contacted Wednesday, but several other local restaurant owners shared their thoughts on the legislation and how the “employer mandate,” which requires businesses with more than 50 full-time employees to provide health insurance to workers, has impacted their businesses.
Fort Worth chef Jon Bonnell, who has three restaurants — Bonnell’s Fine Texas Cuisine, Buffalo Bros. Pizza Wings and Subs, and Waters Bonnell’s Coastal Cuisine (in the process of moving to Sundance Square) — says he prepared for the employer mandate by providing a health-insurance plan for his 150 employees about a year ago.
“It’s costing us a tremendous amount of money,” said Bonnell, who emphasized he did not want to take a pro or con position on the ACA. “And the plan that all our employees were on just got canceled, so we have to find a new plan that will probably cost more. So when somebody says, ‘These expenses are what put us over,’ I believe them.”
Bonnell added that other costs are going up, which can be reflected in menu prices.
“Anytime you talk about increasing wages and acquiring more benefits, the prices at restaurants are going to be higher,” he said. “There’s really no other way around it — prices keep going up, whether it’s the price of food itself, or the price of the server, or the dishwasher or the driver or delivery guy. The different costs associated go up, so the prices at restaurants go up.”
Shannon Wynne, whose DFW restaurant empire includes Bird Cafe, Flying Saucer Draught Emporium, the Flying Fish and Rodeo Goat, had a slightly different view.
“All restaurants are struggling right now, but the impact ACA has on the overall success of a restaurant staying open is small,” Wynne said via email. “Might as well blame the weather. I would be hard-pressed to blame the annual burden of Obamacare on the closing of a restaurant.”
Joe T. Garcia’s, one of the largest restaurant operations in DFW (it also includes two Esperanza’s Cafe locations), has provided health coverage for its employees since April 2014 and is meeting all ACA requirements, says Jody Lancarte, director of special events and catering for the iconic Stockyards restaurant.
“Initially Joe T’s was worried about the cost, but it has not been as bad as we expected,” Lancarte said. “Also, a majority of our employees have chosen not to take advantage of the program, but it is there for them if they want/need it. While there are some issues with the law, we hope that they will be addressed in the future.”
One thing is clear: There is still a lot of confusion about the law, as well as political conflict.
“Even years after the healthcare law was passed, business owners face confusion about their new options under the law,” said Rhett Buttle, former director of private sector engagement at the U.S. Health and Human Services Department. He offered two reasons for that in an e-mail. “One is that we need to spend more time educating business owners about the law or connect them with trusted resources. … Another reason is because of the unfortunate politics that remain with the law. Oftentimes, business owners are unsure about whether the law is in effect and because they hear a variety of legislators saying they’ve voted to repeal it or something to that effect.”
Buttle said the Small Business Administration and the department host a weekly webinar to try to help clarify things at www.sba.gov/healthcare.
As to whether he thinks ACA penalties could be the “proverbial straw” that closes a business to close, as Katz decribed it in his Facebook post, Buttle said: “Every business situation is unique, but the requirements are definitely not intended to close down a profitable business. Most business that are above 50 employees are already offering coverage — 96 percent across the country,” he added. “Most of them are offering coverage because they want to be competitive and they have realized that it is a tool to attract and retain quality talent.”
Vance Martin, who runs Lili’s Bistro on Magnolia Avenue and is getting ready to open a new Magnolia bar, the Lazy Moose, says he has only 30 employees so he is not affected by the employer mandate. But he is critical of the ACA.
“In my opinion, the Unaffordable Care Act benefits very few but adversely affects many,” Martin said via email. “This country already had (and has) national health care. It’s called the county hospital! Where you can receive some of the best trauma treatment and pre-natal care anywhere. Imagine if our government had the good sense to take just a portion of the money spent on UCA and put it towards the improvement of our county hospitals.”
Of course, with the election of Donald Trump as president and a majority Republican Congress, there is hope among ACA opponents that it will be repealed, but Buttle says it’s not likely to happen quickly.
“While some legislators and even the president-elect are making it sound like it can easily be done, the healthcare law is deeply embedded into our laws and economy,” he said. “For example, several states have already passed market reforms. … So trying to repeal a law so quickly that has taken years to implement state by state would be irresponsible [and] create damage to peoples lives and the economy.”
U.S. Senate Majority Whip John Cornyn, R-Texas, told Politico as much this week. “We’re talking about a three-year transition now that we actually have a president who’s likely to sign the repeal into the law,” he said. “People are being understandably cautious, to make sure nobody’s dropped through the cracks.”
Russell Kirkpatrick, general manager of Reata in downtown Fort Worth, says the restaurant has offered health insurance for its employees since he started there 11 years ago. But he understands the strain that many restaurants face in the current business climate.
“Profit margins for restaurants are razor thin to begin with,” Kirkpatrick said. “Any added expense makes it that much more difficult to operate.”
While there appears to be a restaurant boom in North Texas at the moment — just in Fort Worth, Magnolia Avenue has turned into a restaurant row, the West Seventh Street area has a gaggle of restaurants, and the Alliance Town Center/Presidio Junction area seems to sprout a new restaurant every week — Bonnell points out there’s a flip side to that.
“We’re always going to have restaurants opening, but we’ve seen a lot of restaurants closing,” he said. “The [ACA] makes it more difficult to be an independent restaurateur.”