On Monday's CBS This Morning, Cheesecake Factory CEO David
Overton spotlighted the looming economic impact of Obamacare's
implementation, especially on small enterprises: "For those businesses that don't cover their employees, they'll be in for a very expensive situation." Overton also warned that the cost of the law would be passed on to customers.
It's surprising that the liberal morning newscast would bring on a
critic of ObamaCare. The decision could be explained by anchor Charlie
Rose mentioning ex-Al Gore adviser Dr. Atul Gawande's compliment of The
Cheesecake Factory in a recent article in The New Yorker [1]. [audio clips available here [2]; video below]
Anchor Norah O'Donnell raised the issue of the still-controversial
health care law: "One of the things that's going to change, of course,
in the new year is ObamaCare, or the Affordable Care Act. How do you
implement that at Cheesecake Factory, and how will you pay for health
care for all of your employees?"
The restaurant chain executive pointed out that, unlike many businesses, The Cheesecake Factory is "already...paying a great deal in health care. So, we're not sure how much more it will be - or how much less - or what exactly we'll do. So, for us, it won't be as bad as it will be for others, which it will be very costly."
O'Donnell followed up by asking about the possibility increased prices for customers: "When you say it will be very costly, it will be passed on to who - the customers?" Overton confirmed that this would be the case: "Well, I believe most people will have to do that or cheapen their product."
Rose later rephrased his co-anchor's earlier question: "Are you worried about this - ObamaCare - and how you provide the health care?" The CEO replied by again pointing out the high cost to businesses:
DAVID OVERTON: Not worried yet - and, when I hear the numbers, I might be. But, again, because we spend millions and millions of dollars today on health care, we don't know exactly how much more we'll pay. For those businesses that don't cover their employees, they'll be in for a very expensive situation.
When Papa John's CEO John Schnatter sounded the same warning [3] earlier in 2012, liberals called for a boycott of the pizza chain. Conservatives responded by organizing a National Papa John's Appreciation Day [4] online. It shouldn't be a surprise if left-of-center activists target The Cheesecake Factory next.
The transcript of the relevant portion of the David Overton interview from Monday's CBS This Morning:
[CBS News Graphic: "Cheesecake Chat: CEO On 'Factory' Growth, Health Care Model"]
NORAH O'DONNELL: I have a really important question for you: one of the
things that's going to change, of course, in the new year is ObamaCare,
or the Affordable Care Act. How do you implement that at Cheesecake
Factory, and how will you pay for health care for all of your employees?
DAVID OVERTON, CHEESECAKE FACTORY CEO: Well, that – that's a big
question. We are working on that right now. We – we have been waiting to
see what people will do and what's really happening and what the – the
different requirements will be. However, we do cover everyone that works
over 25 hours today. So, unlike a lot of businesses, we already are
paying a great deal in health care. So, we're not sure how much more it
will be - or how much less - or what exactly we'll do. So, for us, it
won't be as bad as it will be for others, which it will be very costly.
O'DONNELL: But – but when you say it will be very costly, it will be passed on to who - the customers?
OVERTON: Well, I believe most people will have to do that or cheapen their product-
O'DONNELL: And how much do you think you will have to raise prices in order to pay for health care?
OVERTON: Well, as they say, we don't know what – we don't know what it
is right now. We don't know if what we're actually paying is very, very
close - and we won't have to raise prices. So, we'll see. I'd love to
answer that for you – maybe in a year, I could.
CHARLIE ROSE: Okay. And so, and that point, a year from now, what would
we be able to learn from you, you think, because The New Yorker
magazine wrote this article saying that you had a lot of things that you
could teach - from your experiences with health care.
OVERTON: I think – yeah - I think Doctor [Atul] Gawande. It's not that I
teach. He's looking at us as a model. He thinks we're the gold standard
of the restaurant business. We do so many things right. We train; we
innovate; we cut cost; and we – and we completely change the menu twice a
year. And he's never had a bad meal, and he says, how can we cook a
thousand meals a day and get consistency? Wouldn't that be a great model
for the health care industry? So, he's taking us and not linking us, as
much as saying, these guys know what they're doing. Over the years,
they've really built a model that works. Why can't we be more like them?
ROSE: Are you worried about this - ObamaCare - and how you provide the health care?
OVERTON: Not worried yet - and, when I hear the numbers, I might be.
But, again, because we spend millions and millions of dollars today on
health care, we don't know exactly how much more we'll pay. For those
businesses that don't cover their employees, they'll be in for a very
expensive situation.