About Health Care

We at the Lucques Group believe that Americans should have affordable health care and insurance. We thought long and hard before adding this charge and we would like to further explain it.

The restaurant business is based on an unusual financial model, one that operates on a very small profit potential. In fact, of every dollar that restaurants bring in, an average of at least 95 cents goes right out the door in the first 30 days to pay for all of the costs involved in running the business.  Quote often even the most popular and busy restaurants can actually be running at a loss—the profit margin is that slim.  Restaurants require an unusually high ratio of labor to revenue, which means that we have a higher number of employees than other businesses with similar revenues. As a result, we have more full-time employees to cover per dollar of revenue when compared to other types of businesses that can operate with far fewer staff members.  Many of us who run restaurants have been struggling with the question of how to provide health insurance to all our full-time employees.

Until the implementation of our Healthy LA surcharge, we at The Lucques Group were only able to offer fully covered health insurance to our managers in the front and the back of the house. Unlike most restaurants we had also been providing access to health insurance to our full-time employees, providing only a small portion of the premium. Unfortunately, we had a very low rate of participation in this scenario because many employees did not feel they could afford to pay the rest of the premium and instead chose to go without health care. With the current healthcare mandates, we are required to cover an even higher percentage of all full-time employees’ premiums, which our current pricing structure simply cannot support.  

The question we get most frequently is “why not just bury the cost in the pricing?” While we could have hidden this new large expense in significantly higher menu costs, when we looked at the numbers we felt that this would have burdened our customers more than necessary.  You see, many of the costs associated with running the restaurant are based on our revenues.  Rent at some of our locations is calculated a percent of our gross sales.  Other expenses, like our liability and other insurance policies, tourism taxes and other fees are calculated this way as well.  So not only would we need to increase our prices to cover the insurance, we would need to add on an even steeper increase to cover these associated cost increases.  The pricing increase passed along to our customers would have been much higher than the percentage we are charging in this surcharge. We would have needed to increase our prices by upwards of 25%. We decided this would be bad for us and bad for our guests.

By creating a separate surcharge for the health care, we are able to keep this expense out of our revenue calculations and immune to these associated costs. The separate line-item results in a lower price increase to our guests and fully funded health insurance for our employees. Additionally, we can accurately track this surcharge income to ensure that we are adequately covering the healthcare expense and not over-collecting so as to be sure that the money goes only towards the expense of healthcare.

I hope this helps explain this surcharge more completely and clarifies our reasoning behind implementing it. We understand that it may not make sense to everyone but we are sincere in saying that we are trying very hard to do the right thing for all involved—our staff and our guests. If you have any questions, please feel free to reach out to me.

Yours Sincerely,
Caroline Styne

The Lucques Group