John Schnatter, CEO of Papa John’s Pizza, has announced that he is going to have to raise prices on average about $.20 per order in order to compensate for the increased cost to his business to implement the Affordable Care Act (Obamacare). Schnatter joins a slew of CEO’s who say that the price of Obamacare is going to increase the cost of doing business.
Under one of the mandates of Obamacare Papa John’s, the third largest pizza delivery service in the country, is going to have to offer its 165,000 employees health care benefits or pay the government a penalty.
This mandate applies to all businesses with more than 50 employees. The National Restaurant Association has warned that the mandate can be devastating to the restaurant industry’s already slim profit margins.
Judy Nichols, a Papa John’s Franchisee says that the law is going to limit her ability to open more restaurants.
She told Legal Newsline,
“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,”
Schnatter is not so worried about the mandate because his business has shown strong sales and anticipates growth over the next few years. He also knows that any additional cost burden is going to be passed on to the customers.
Schnatter told Politico,
“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.”
McDonald’s has also told various publications it expects the additional costs of $10,000 to $30,000 dollars that will be added to each franchise will be able to be absorbed successfully.
Burger King, Quiznos and Dunkin Donuts have all expressed concerns that the mandate will hurt business.