John Schnatter, Papa John’s CEO, and other corporations trying to skirt Obamacare
John Schnatter, the CEO of Papa John’s Pizza, has already become the target of a boycott and a funny internet meme because he said he will have to raise prices and eliminate full time workers because he won’t be able to afford providing health insurance as per the employer mandate in Obamacare, but there are other companies, mainly the in the food service industry, who have already doing this, or are planning to:
(RNN) - When Papa John’s CEO John Schnatter said his pizza chain would have to raise pizza prices and cut employees’ hours in order to deal with the Affordable Care Act, also known as Obamacare, many people online called for a boycott, claiming the millionaire pizza baron was just plain greedy.
It didn’t help that Schnatter has recently maintained a high-profile by giving away millions of pizzas for NFL promotions and hosting fundraisers at his castle-like mansion for former Republican presidential candidate Mitt Romney.
But despite what people might think of Schnatter’s political and economic views, he’s not alone in his management theory. Restaurant workers around the U.S. are among the least insured and least paid workforces in the country - no matter who they’re working for.
But Forbes did the math on Schnatter’s claim that Obamacare would force him to increase his per pizza price by about 15 cents and found it didn’t add up:
Checking Papa Schnatter’s Math
Last year, Papa John’s International captured $1.218 billion in revenue. Total operating expenses were $1.131 billion. So if Schnatter’s math is accurate (Obamacare will cost his company $5-8 million more annually), then new regulation translates into a .4% to .7% (yes, fractions of a percent) expense increase. It’s difficult to set that ratio against the proposed pie increase, given size and topping differentials, but many of their large specialty pizzas run for $16. Remarkably, a 10-14 cent increase on a $16 pizza falls in a comparable range: .6% to.9%. But the cost transference becomes less equitable if you’re looking at medium pizzas, which run closer to $12, meaning a .8% to 1.15% price increase.
For the sake of argument, let’s say that Papa John’s sells exactly half medium/half large specialty pizzas. Averaging the ranges for both sizes, then averaging that product yields a .86% price increase — well outside the range of what Schnatter says Obamacare will cost him.
So how much would prices go up, under these 50/50 conditions, if they were to fairly reflect the increased cost of doing business onset by Obamacare? Roughly 3.4 to 4.6 cents a pie.
Personally, I think this is bullshit. These corporate swine can actually afford to comply with Obamacare’s employer mandate and still make handsome profits, but they will do anything to protect the record profits they’ve been making in Obama years (all while calling him a socialist), including screwing their already underpaid and under appreciated employees even more.
It’s despicable, really.