Running a grocery store is no easy task. You have employees to pay, inventory to maintain, perishables to sell before they expire, and tons of health and safety regulations to keep up on. Not to mention the fact that you have to try to keep your prices low enough to stay competitive, yet high enough to turn a profit. That doesn’t even take into account the cost of operating florescent lights, massive A/C units, and refrigeration units – all of which run 24 hours a day. When I try to piece all of this together, it’s a wonder that any grocery chain can manage to stay in business.
So we’ve established that in order to run a grocery store, you have to play a constant game of tug-of-war in order to maintain a balance between meeting your overhead costs and keeping your prices reasonable so that you’re not shut down by the competition. Can we all agree that it’s no easy task?
Now let’s throw a little government
interference intervention in the mix and see what happens….
So there we are, minding our business, trying to stay afloat in a roller coaster economy, when our friendly neighborhood Department of Agriculture representative walks in the door and says “I’m from the government and I’m here to help”. He tells us about this horrible problem we have with starving people in the United States and promises that he’s going to do everything he can to make sure that nobody goes to bed hungry. Everyone is going to pitch in a little bit to a make sure our brothers and sisters are fed. Sounds like a noble idea right? Sure.
This kind representative informs us of this nifty little thing called an EBT card. He explains that less fortunate and struggling people are going to be issued these cards to buy their groceries with. Now what does that mean for us? Well, not much…..yet. We simply run it like a credit card and the money is transferred to our account. The only stipulation is that the people using it will be limited to what they can buy, since it’s supposed to only cover necessities. It doesn’t really matter to us, because we are getting paid and we gained a bunch of new customers. Right?
This “EBT” thing really starts to catch on. More and more people are signing up for the program and our customer base keeps growing. As a matter of fact, nearly half of our customers are using EBT cards. There’s only one problem: The people using it don’t feel like they are being treated fairly. They can’t help but feel discriminated against when they see everyone else buying what they want. Enough of them get upset to the point where our friend from the Department of Agriculture comes back and informs us that his agency is going to “tweak” the program just a little bit. They decided that the people using EBT cards will no longer have limits on what items or how much they can buy. However, since they really can’t afford to just extend everyone an open tab, they are going to have to cut back what they reimburse just just a little bit. They tell us not to worry about it. Since the customers will get to buy whatever they want, we’ll make that money up in the larger quantities of items that we are selling.
This new program really starts to take off. People are loading up their carts to the point where we have had to hire more employees and start placing much larger orders to keep up with the demand. The downside is, the government is having problems making good on the bills so they decide to decrease our reimbursement even more. Now we are starting to see a more noticeable decrease in profit. However, we are still bringing in a decent profit, so we don’t do anything about it. After all, these people now make up the majority of our customer base, so we really can’t afford to turn them away.
As more time goes by, the bills get larger and the government keeps running out of money. Another problem that rises up, is the masses of people that aren’t covered by the EBT program are now getting upset because they can’t afford the groceries and they think it’s unfair that they don’t have access to the food that everyone else is getting. To fix this, the government now mandates that you must provide groceries to everybody, regardless of their ability to pay. Your profit margin disappears and it is no longer possible to sustain business with your current prices. To fix this, you increase your prices to make up for the huge losses you are taking on the non-payers. To top this off, the government has continued to decrease your reimbursement on EBT payments to the point where you are getting paid less than what it actually costs to purchase the products. You are losing money every time someone swipes their EBT card. However, you continue to accept the form of payment, because it’s the only payment you are going to get from these people.
Even with the massive decrease in reimbursement, the program continues to run out of money. To fix this, the Department of Agriculture starts imposing confusing guidelines that make it difficult to get any reimbursement at all. So now you have to hire a team of billing experts to learn the guidelines and keep up with all the changing policies to make sure that you can receive what little reimbursement you can get from the EBT purchases. In the mean time, the amount of EBT and non-paying customers continues to increase, causing you to continually raise your prices. Unfortunately, as your prices continue to rise, fewer and fewer people are able to afford to shop at your store, so they either have to join the EBT program, or they just stop paying. Sure, you can go after them and try to collect what they owe you, but you are absolutely swamped with people refusing to pay, so you wind up settling for pennies on the dollar. As all of this snowballs, you fight to stay in business. You plead with officials to bring reimbursement back up to where it needs to be. You even try to promote programs that encourage customers to consume less food in a feeble attempt to decrease your losses.
While all of this is going on, reporters are appearing on national TV, magazines and newspapers criticizing you because you charge $36.00 for a gallon of milk that only costs you $2.00. They accuse you of being greedy and robbing the middle class. Now the government – the same ones that sold you on the program to begin with – have jumped on the band wagon and are trying to pass bills to reform the food industry. Now they want to set caps on how high you can set your prices and penalize you for people that overuse your services. Some are even proposing that they just take over the food industry all together.
Eventually the entire system becomes unsustainable and we can only imagine what comes next……
THIS, my friends, is exactly what we are doing to our healthcare system right now.
While this may have been a hypothetical situation, is it that crazy to think that we could do this to our food industry? After all, it is essential to our survival. Doesn’t everyone deserve to eat?