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Play or Pay

  • By Mark Gordon
  • | 10:40 a.m. February 8, 2013
  • | 2 Free Articles Remaining!
  • Strategies
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Company: Tijuana Flats

Executive: Steve Martin, who owns 10 Tijuana Flats locations on the Gulf Coast through a joint venture partnership with the Maitland-based corporate office.

Industry: Quick-casual restaurants, hospitality

Number of Employees: 250 in Martin's 10 stores, which are located in Manatee, Pinellas and Sarasota counties.

Health insurance challenge: The now well-publicized move Orlando-based Darden Restaurants made to cut the hours of full-time employees, a response to the health care law, resonated with Steve Martin.

That's because Martin, a longtime hospitality industry entrepreneur, is in a similar position to Darden executives — albeit on a smaller scale. Darden has thousands of full-time employees who work at the company's Olive Gardens, Red Lobsters and LongHorn Steakhouses. Those employees, at least the ones who work an average of 30 hours a week, will subject the company to the so-called play-or-pay provision of the health care law.

That means companies like Darden, and potentially Tijuana Flats, will have to either provide coverage (play) or pay a fine (pay) of up to $2,000 per employee who works more than 30 hours a week. Darden was both lauded and criticized for the move when it announced it, on an experimental basis, last fall.

Martin says he and top executives at Tijuana Flats are watching what other companies do with health care insurance changes. They are also in constant contact with attorneys, accountants and health insurance consultants. “It's a lot to understand,” says Martin. “We are trying to figure out how to move forward.”

Martin says one thing he and the Tijuana Flats corporate executives have already figured out is their costs are likely to go up, no matter what they decide. That, in turn, could lead to a price increase for customers — at Tijuana Flats and many other restaurants that face the same quandary.

“The consumer will pay,” says Martin, speaking on the restaurant industry in general. “Overall prices will go up to cover costs if a business has to pay more in expenses.”


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