Papa John Schnatter's Obamacare Math gets an F

[obamanut2012]

(Note this is Forbes, not exactly some Lefty publication.)


"Papa John Schnatter is no fan of Obamacare. The CEO of Papa John’s International has occasionally railed against the reform for months. Leading up to the election, he was a Mitt Romney supporter and fundraiser. Now that the election is over, he’s doubling down on his claim that the health care reform will force his company to increase pizza prices by 10-14 cents a pie. He estimates that Obamacare will end up costing his company $5-8 million annually.

The issue: the Affordable Care Act dictates that full-time employees (30 hours or more per week) at companies with more than 50 workers need to be provided health insurance. Schnatter has further claimed that some employers will cut employee hours to avoid providing them with healthcare.

<snip>

Meanwhile, shares in Papa John’s International have been tumbling since last Thursday, falling from $51.70 at market close Wednesday to $49.22 on Monday, a 4.2% drop. 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.

<snip>

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.

http://www.forbes.com/sites/calebmelby/2012/11/12/breaking-down-centi-millionaire-papa-john-schnatters-obamacare-math/

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Read the rest -- very interesting, and this is FORBES, remember.

[1StrongBlackMan]

1. But ...

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.

That does not include the pure profit that he intends to garner by raising the price and blaming it on ObamaCare, rather than his greed.

[obamanut2012]

4. This exactly!

So he can have a 25-car garage instead of a 22-car garage.

[leftstreet]

2. Healthcare should NOT be tied to employment n/t

[rustydog]

3. We need nationalized healthcare

Now!

[1StrongBlackMan]

6. Agreed ...

I have worked in the HR industry for the past 25+ years ... a profession that, at its upper reaches, tends to be extremely conservative. I have always asked, as a strategic matter, why HR professional don't advocate to CEOs to sever the tie since the cost savings would go directly to the bottomline.

The unanswered answer: Keeping healthcare Insurance, employer based, serves as a handcuff for most workers. How many workers do you know remain on a job they hate because they need the benefits? Secondly, while providing benefits is a capital outlay, it also is a business expense that is recouped at tax time ... so it really doesn't "cost" business anything.

[riderinthestorm]

5. This is a great article. Big K&R nt