Papa John’s Pizza: CEO John Schnatter Says Prices Rise Due to Obamacare, Company Might Cut Jobs as a Result?
Aug 08, 2012 11:25 AM EDT
(Photo : Reuters )
On Wednesday, CEO of Papa John's Pizza, John Schnatter, says that customers will have to pay more for a slice of pizza because of Obama's healthcare plan. According to trade reporter, Dennis K Berman (@dkberman via Twitter.), the price of a slice of pizza is likely to increase by 11 to 14 cents, which amounts to an increase between 15 to 20 cents more per order.
According to the popular pizza franchise, Obama's Affordable Health Care Act, which will go into effect from 2014 (www.healthcare.gov) requires a company which staffs more than 50 employees to offer health care coverage or pay a fine, which starts at $2,000.
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Schnatter told the Huffington Post, "We're not supportive of Obamacare, like most businesses in our industry...But our business model and unit economics are about as ideal as you can get for a food company to absorb Obamacare." According to one Papa John's franchise owner in Texas, Judy Nichols, the new healthcare plan might cost her as much as $20,000 to $30,000 per annum in taxes.
Nichols told LegalNewsline.com that "I have two options, I can stop offering coverage and pay the $2,000 fine, or I could keep my number of staff under 50 so the mandate doesn't apply. Obamacare is making me think about cutting jobs instead."
However, CEO Schnatter says the company will be adequately covered with the extra expenses by increasing its prices.
The major pizza take-out chain is not the only restaurant chain having cost increases due to the Affordable Health Care. Earlier this month, according to an article in the Wall Street Journal many other food chains will be facing a similar fate. The article listed that the law will add an annual cost between $10,000-$30,000 for the McDonalds franchise. Others such as Burger King, Quiznos, Dunkin Donuts, will also face an increase in their annual expenses as a result of the healthcare mandate.
Papa John's Pizza is the third largest delivery chain, with 3,973 restaurants in all 50 states in the US and 33 other countries. In June the company released its Quarterly finances which revealed that the company's revenue increased by 8.5 percent from 2011 amounting to $318.6 million.
In June, The Supreme Court ruled upheld the Affordable Healthcare Act aka Obama care in a 5-4 vote as being within the constitutional authority of the federal government to impose taxes.