After President Obama’s health care law takes full effect, Papa John’s CEO John Schnatter says that the new law will result in a $0.11 to $0.14 price increase per pizza, or $0.15 to $0.20 cents per order.
The company, which is the third-largest pizza takeout and delivery chain in the United States, will have to offer health care coverage to more of its16,500 total employees or pay a penalty to the government under Obamacare.
One Papa John’s franchise owner in Texas, Judy Nichols, says the law could interfere with her ability to open more restaurants.
“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,” she told Legal Newsline. Nichols added that the law may cost her between $20,000 to $30,000 extra in taxes. “Obamacare is making me think about cutting jobs instead,” she said.
With strong sales and more than 1,500 new retail locations planned in the near future, Schnatter doesn’t seem all that bothered, probably because he intends to pass those health care costs on to customers.
“We’re not supportive of Obamacare, like most businesses in our industry,” Schnatter was quoted as saying in Politico. “But our business model and unit economics are about as ideal as you can get for a food company to absorb Obamacare.”
McDonald’s also expects Obamacare to cost each of its 14,000 franchises between $10,000 and $30,000 annually, according to Businessweek. Like Schnatter, the company believes it is well placed to handle the extra costs.
Representatives from other restaurant chains may be less hopeful, however, including Burger King, Quiznos and Dunkin’ Donuts, all which have expressed concern the law may hurt business, according to the Wall Street Journal.