Common Sense

Ways some businesses are avoiding ObamaCare hits

How are they rescuing themselves?

 

This is a rush transcript from "Your World," November 18, 2014. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: Well, are small business owners out-Gruber-ing Gruber?

If my next guest is right, many of them are rescuing themselves from ObamaCare`s hits and rescuing workers while they`re at it. But how?

Jon Taffer, of course, to many of you is a familiar face. He is the host of the very popular "Bar Rescue." He is in person as he is on the show. A very strong presence. You know when you`re with him.

And...

JON TAFFER, OWNER, TAFFER DYNAMICS, INC.: Hi, Neil.

CAVUTO: ... you help these guys set themselves right. They come to you as the answer man.

TAFFER: They do.

And, unfortunately, they have made a lot of bad decisions that got me there.

CAVUTO: Yes.

TAFFER: So, you know, every failing business has a failing owner behind it.

CAVUTO: But they also have complications, like the government telling them what to do.

TAFFER: No question.

CAVUTO: Right?

TAFFER: No question.

And the regulatory environment today is difficult. And in my business, things like meat prices are high, produce prices are high. Now you take health care costs and energy costs and the other elements together, our margins are getting tighter and tighter and tighter.

CAVUTO: Well, how do the health care cost things, without getting too wonky, affect your clientele?

TAFFER: Well, for example, we`re a business with a lot of part-time employees.

And our part-time employees, during the past economic time, have not done so well. So we have more full-time employees now, because you were turning people over.

CAVUTO: Right.

TAFFER: They weren`t making enough money during difficult times.

The all qualify for health insurance now. So we have the economic burden of ObamaCare upon us. But what is interesting is, so does the employee. So, they`re taking home less dollars because of their own contributions. The expense is sort of a double whammy on both of us. So, it impacts employee stability, fines, penalties, costs on...

(CROSSTALK)

CAVUTO: Well, how many of that -- when they seek you out, you know, Jon, help us out, help us out, how many of them are lately saying this is a big problem? There`s not so much you can do on that front, right?

TAFFER: Well, sure there is.

CAVUTO: Really?

TAFFER: Let`s say it`s a cost issue.

CAVUTO: Right.

TAFFER: And we break out all the costs, Neil. I can`t change the impact of an ObamaCare. I can`t change the impact of taxes and regulatory issues.

We have to build a business model around those things, which means we take from the customer. A steak is an ounce less. Glassware isn`t as nice.

CAVUTO: I always had a feeling they were getting smaller.

TAFFER: Because we have to make money at the end of the month.

CAVUTO: Yes.

TAFFER: So it has to come from somewhere.

CAVUTO: But the customers have to notice that kind of stuff.

TAFFER: Well, that`s the challenge.

CAVUTO: Yes.

TAFFER: And that can destroy your...

(CROSSTALK)

CAVUTO: Do you tell your...

(CROSSTALK)

CAVUTO: So, you sneak it through or do you have to be honest?

TAFFER: Well, you change plate sizes, you change the thickness of meat. You change specifications.

CAVUTO: I`m on to that. When Ponderosa did that with their all-you- can-eat buffet, I saw it a mile away.

TAFFER: Yes, but there`s a way to do it in specks of meat.

CAVUTO: Oh.

TAFFER: And changes of meat. There`s ways...

CAVUTO: Have horse meat.

TAFFER: Yes, there`s also -- for example, I can box items on a menu, steer you to buy less expensive, more profitable items.

CAVUTO: No, it`s interesting. You and I were talking during the break. I always wondered how your clients, when -- especially on the show, how do they take to your criticism? Obviously, they called you in. They need the doctor. You`re the doctor.

But what you advocate sometimes is a lot of tough love. Right?

TAFFER: Yeah, it is.

I was in a boardroom for a major brewery a few weeks ago. And they showed me a program in a room with about 12 people. And they said, what do you think? And I looked at all 12 and said, I think you guys are nuts.

CAVUTO: Really?

TAFFER: I did. The program has been changed.

CAVUTO: You would mind saying who the client is?

TAFFER: No, I can`t do that.

But the program has been since changed. I make my living by challenging people to think better, be better. Think out of the box.

CAVUTO: Don`t you tell them to cut corners?

TAFFER: No, I don`t. What I tell them to do is look at economic modeling, look at building costs, look at rent costs, look at occupancy costs. Look at all the other things that you possibly can.

CAVUTO: All that stuff has gone up. All that stuff has gone up.

TAFFER: It has, and prices, unfortunately.

CAVUTO: Right.

TAFFER: Now, the restaurant business is up.

CAVUTO: So, they can`t get around that without either laying people off or what?

TAFFER: But, the restaurant is up about 9 percent now. We`re starting to make a turn.

CAVUTO: Nine percent in total sales?

TAFFER: That`s...

CAVUTO: OK.

TAFFER: But most of it, interestingly, Neil, is guest counts, not spend.

So guests aren`t spending more. They`re going out maybe that one or two more times a month. So we`re starting to feel that impact. It`s...

CAVUTO: More of them doing that or fewer just spending more?

TAFFER: More of them going out.

(CROSSTALK)

CAVUTO: More of them, OK.

TAFFER: But they`re not spending more yet.

CAVUTO: I got you.

TAFFER: So the confidence starts to settle in now, we think.

Once they start to spend more, upgrade to a premium spirit, upgrade to that steak, add that appetizer...

CAVUTO: Yes.

TAFFER: ... then we will start to see a different level of confidence back to where we once were.

But we see that, and that confidence impacts employees. It not only impacts their revenue. It impacts attitude.

CAVUTO: You have got an app that essentially spells this all out and minimizes the need for you directly, right?

TAFFER: I do. And these are really, honestly, for the thousands of bars that I can`t help, we put together this app. It`s completely free.

CAVUTO: Right.

TAFFER: Provides them with promotions, marketing, revenue programs.

CAVUTO: Well, where do you get the money on this?

TAFFER: I have a sponsor base.

CAVUTO: I got you.

TAFFER: But the sponsors are hidden on a corner of the screens.

CAVUTO: OK.

TAFFER: They don`t impact. You don`t have to click through things to get there.

CAVUTO: You just print the money, don`t you?

TAFFER: I try.

CAVUTO: You have a lot of money, don`t you?

TAFFER: Some of it is still wet.

(LAUGHTER)

CAVUTO: Could I ask you something else?

I was thinking of you and wanted to get your thoughts on Jonathan Gruber. Now, there`s a guy who came in as an adviser, consultant to sell ObamaCare.

TAFFER: Yes.

CAVUTO: Now, you`re very big on still being very honest with your clients, and that they have to be honest to their customers and explain what`s going on, why maybe plate sizes are changing or what have you.

So, how deceitful do you think he was, or do you think he was just trying to have them adjust to an environment where they have to re-explain things?

TAFFER: Committed fraud, in my view. I`m going to be direct.

If a guy by the name of Barry O`Brien went to sell you an investment and moved line items around and changed classifications, and you bought that business, and he didn`t properly disclose what you were buying, would that not be fraud?

CAVUTO: Yes.

TAFFER: We have been defrauded.

CAVUTO: But yet he is one of the instrumental faces behind the very law that is complicating things for your very customers.

TAFFER: All based on fraud, in my view, all based on misrepresentation, nondisclosure, manipulation. That`s why we`re here.

CAVUTO: That`s a very good point.

Jon, continued success, although I don`t think you need it, wet money or not.

TAFFER: I will take more.

(LAUGHTER)

CAVUTO: Jon Taffer, thank you very, very much.

You know, he`s right about that, right? To deceive is to deceive.

All right, thank you, Jon.

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