The new health care bill passed by Congress and signed into law this week will single-handedly destroy billions of dollars of value for restaurant owners.
One may ask how? Well, the value of any business is the income it generates, period. When the income gets reduced, the value declines. The restaurant industry is one that generally doesn't provide health care to employees simply because the margins in the business tend to be low due to fierce competition - plenty of them with all sorts of foods.
So when the Health Care Bill takes effect requiring restaurant owners with 20 employees or more to pay for employees medical insurance either the cost will be past to the consumer in the form of higher prices or the restaurant owner will eat all the costs or the most likely scenario is a combination of both will occur.
In any event, the profits of the restaurant will go down; hence the value will also go down as well. Simple economics folks. This is an example of transferring wealth in this great nation of ours. It goes from the ones that create the wealth through hard work and taking risks to the ones who decided not to take risk.
At some point, people will stop taking the risk and we all will lose.
Mel Jones is one of the premier restaurant brokers in the nation having published hundreds of articles on buying and selling a restaurant and bar business, selling thousands of restaurants in CA., WA and AZ and building one of the most copied business models in the brokerage industry. Mel started SellingRestaurants in 2004 with the one simple concept, give the buyers the information they need to make intelligent buying decisions without being pestered by a broker or hiding information, prepare the business for market by researching key details that make or break deals and educate the buyer on the buying process to create an intelligent buyer. Prior to SellingRestaurants, Mel was a Chief Financial Officer for Universal Music Group, the largest music company in the world. There he participated in more than $11.5 billion of merger and acquisition transactions. He also work for top companies such as Nestle Foods, USA. He hold a Bachelors in Business Administration Finance as well as attened Law School at Gonzaga University. Give Mel a call at 480.274.7000 or e-mail him at [email protected] if you have any questions.