Papa John's CEO Says 'Obamacare' Will Up Pizza Price
Papa John's says it'll up pizza prices, but few pie makers could gain insurance.
August 9, 2012 -- The CEO and founder of Papa John's pizza wants investors to know that when the president's health care law takes effect, the price of pizza is going up with it.
According to "Papa" John Schnatter, the cost of providing health insurance for all of his pizza chain's uninsured, full-time employees comes out to about 14 cents on a large pizza. That's less than adding an extra topping and a third the price of an extra pepperoncini. If you want that piping hot pie delivered, the $2 delivery fee will cost you 14 times as much as that health insurance price hike.
"We're not supportive of Obamacare, like most businesses in our industry," Schnatter said on a conference call with shareholders last week, as reported by Politico. "If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect our shareholders' best interests."
The pizza place's Facebook page was soon littered with outraged pizza lovers proclaiming they would be "happy" to pay an extra 11 to 14 cents so Papa John's employees could have health insurance.
"I lose more than that in a week under my sofa cushion," one Facebook commenter wrote. "I'd gladly pay 20 cents for a child to go to a doctor when they've got a cold, rather than have them show up at the ER."
Another said she's taking her money to another pizza restaurant, "one that doesn't begrudge their employees the ability to seek a doctor when they're ill."
The company sought to clarify Schattner's comments on Wednesday, telling ABC News in a statement that Schnatter's remarks were in direct response to a question about the costs of complying with President Obama's health care law.
"We certainly understand the importance of healthcare to our customers, our employees, small business owners and their employees," the company said.
But despite the pizza price increase, many of Papa John's employees may still go without employer-provided health insurance after the law takes effect in 2014. The company would not say how many of its employees are uninsured, but in 2010 the service industry had one of the lowest rates of insured employees, with 33 percent of the workforce uninsured, according to the Kaiser Family Foundation.
Large businesses, those with more than 50 employees, are the only ones on the hook for providing health insurance under the health reform law. While Papa John's as a whole employs 16,500 people, 80 percent of the company's restaurants are independently owned franchises. As long as a franchise owner does not employ more than 50 people, he or she does not have to pay for employee health insurance.
The Affordable Care Act only requires employers to offer health insurance to full-time employees, almost 90 percent of whom at large businesses like Papa John's corporate offices are already covered, according to a Treasury Department official.
If the pizza company decides not to cover any full-time employees who are not currently insured, it will be hit with a $2,000 fine for each employee beyond the first 30 workers.
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