Operators blast lawmakers; charge Clinton, 'big government' with threatening industry's profits

Nation's Restaurant News, Oct 4, 1993 by Richard Martin

LOS ANGELES - Fearful that President Clinton's demand for employer-paid health benefits will annihilate restaurant profits, industry leaders present at the four-day Multi-Unit Foodservice Operators conference repeatedly shifted focus from customer service issues to assail "big government."

Throughout the slate of briefing and seminars addressing the "Making the Customer Count" theme of the 34th annual MUFSO meeting, irate and apprehensive foodservice executives railed against funding provisions of Crinton's universal health-care initiative.

Striding angrily to a general-assembly microphone during questioning of television's "McLaughlin Group," former Pizza Hut president Arthur G. Gunther asserted that "the world is upside down" when politicians who have "never made a payroll" plot to saddle restaurateurs with 80 percent of the cost of their employees' medical insurance.

Under the Clinton proposal, Gunther said, his company - a three-unit Pizzeria Uno franchise that would not qualify for the plan's small-business subsidy - would have to pay $600,000 in premiums to cover its 200 employees despite having a profit margin of only $200,000.

"The problem with the Clinton plan is it's "huge injection of government," responded Fred Barnes, senior editor of the New Republic and a veteran McLaughlin Group commentator.

For its part, Gunther Restaurant Group of Scotts Valley, Calif., would be forced to cease operations if the Clinton prescription as drafted were enacted, Gunther said bitterly.

His impassioned comments infused the Nation's Restaurant News-sponsored conference with drama and characterized the government-bashing sentiments of many attendees opposed to elements of the Clinton plan and such things as Congress' recent 50-percent cap on the tax deductibility of business meals.

But MUFSO's emotional high point was the triumphant return of Brinker International chairman and chief executive Norman Brinker to moderate the convention's annual presidents' panel for a 10th consecutive year following his almost-fatal polo accident and weeks in a coma.

Just minutes after a long, standing ovation for the clearly moved trinker subsided, the celebrated chain impresario was attacking the Clinton plan from the dais in a Century Plaza Hotel ballroom filled with some 1,200 of his colleagues.

Proffering a strategy for combating aspects of the health-care legislation in Congress, Brinker cited leverage that the foodservice industry - as the largest retail employer - could exert to influence lawmakers.

"The one thing they seem to be sensitive to is jobs and job opportunities," said Brinker, referring to the probability of widespread staff cutbacks if mandated 80-percent employer funding for workers' medical insurance were a provision of the final legislative remedy for the nation's health-care ills.

Substantiation for those anticipated cutbacks was provided in the form of estimates quoted by two MUFSO speakers. Dr. William C. Mohlenbrock, a physician whose company develops clinical systems to monitor and control health costs, cited statistics indicating that the restaurant industry faces a potential 16-percent increase in labor costs under the Clinton plan and could be hardest hit of all industries.

However, John McLaughlin, creator, producer and host of the televised public-affairs debate program that bears his name, questioned whether one restaurant industry lobbyist's estimate of jobs that would be lost because of employer obligations under the plan was "excessive."

"It's going to cost jobs and slow business; it's as simple as that," answered Barnes, who suggested that the nation's current health-care system is "best" - a notion that prompted McLaughlin Group colleague Eleanor Clift, White House correspondent for Newsweek, to retort that Barnes' "best" system is inordinately costly because it forces the poor to use "the most expensive" mode of health care - emergency rooms.

In response to Gunther's criticisms, Clift predicted, "Congress isn't going to pass legislation that is going to drive that gentleman and hundreds of others out of business."

Nevertheless, "if we don't take on the government we're all going to be big losers," president's panel speaker Lawrence Levy, chairman of Chicago-based Levy Restaurants, said later.

Fellow panelist Chris Sullivan, chairman and chief executive of the Outback Steakhouse chain, urged foodservice leaders to forge a "coalition" of allied industries and lobbying groups to battle harmful aspects of the Clinton plan.

"We just have to get the message out about how important this industry is to the economy of this country," Sullivan implored.

After several years of economic doldrums, "the consumer is used to having price increases flat," Brinker said, "and we're talking about a 6 or 7-percent increase" in menu tariffs in order to cover the anticipated costs of the Clinton proposals.

According to one panelist, the industry's best customers may be those who are most put off by government's force-fed diet of food inflation. Because of unacceptable menu-price hikes that would stem directly from government regulations, "you're going to see [dining-out frequency] down to two or three times a week" among patrons who currently eat out five or six times weekly, predicted Abe J. Gustin Jr., president and chairman of Applebee's International.