Papa John’s to raise pizza prices if ‘Obamacare’ survives: CEO
Get ready to pay more for your Papa John’s pizza if “Obamacare” goes into full effect … a whopping 15 to 20 cents more.
John Schnatter, chief executive of the pizza chain, is bashing President Obama’s healthcare reform law as a policy that will force the company to choose between its customers and its investors.
And if the Patient Protection and Affordable Care Act rolls out as planned in 2014, Schnatter’s strategy is “of course … to pass that cost on the consumer in order to protect our shareholders’ best interest,” he said in a recent conference call.
Schnatter estimates that the legislation will cost Papa John’s about 11 cents to 14 cents per pizza, which equates to 15 cents to 20 cents per order. An average delivery charge runs $1.75 to $2.50.
“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,” Schnatter said. “Ergo, we have a high ticket average with extremely high frequency of order counts, millions of pizzas per year.”
On Twitter, reactions were mostly negative.
“*switches to Pizza Hut*,” wrote one user. “*calls Dominoes*,” wrote another.
“I really wish businesses would stay out of politics,” tweeted user mikedavis824.
Papa John’s has nearly 4,000 restaurants in its system operating in every state and in 33 countries. Net income for the second quarter, which ended June 24, rose 22.3% to $14.8 million, or 61 cents a share, from $12.1 million, or 47 cents a share a year earlier. Same-store sales soared 5.7% in North America.
The National Restaurant Assn. has criticized the healthcare legislation for having a chilling effect on expansion and hiring in the industry, which tends to be labor-intensive and burdened with thin margins.
Chains such as White Castle and Burger King have predicted surging costs due to the new regulations, which require businesses with 50 or more full-time employees to offer healthcare to such workers and their dependents.
Unsurprisingly, Papa John’s chief is a big fan of Mitt Romney. Schnatter recently even hosted a private fundraiser for the Republican presidential candidate at his mansion in Anchorage, Ky.
Romney was dazzled by the grounds, declaring to guests:
“Who would’ve imagined pizza could build this. This is really something. Don’t you love this country? What a home this is, what grounds these are, the pool, the golf course…. This is a real tribute to America, to entrepreneurship.”