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 Papa John's Obamacare Costs Less Than Free Pizza

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The Propagandist
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Join date : 2011-06-20
Location : Tuscaloosa, Alabama

PostSubject: Papa John's Obamacare Costs Less Than Free Pizza   Wed Nov 14, 2012 9:25 am

I'm sure good old John already knows all these facts. It's time those who come out in support of him in face of the boycott be given the facts so they realize what they are supporting.

Papa John's Obamacare Costs Are Far Less Than Price Of Free Pizza Giveaway

News flash to Papa John’s CEO John Schnatter: Obamacare isn’t the only thing costing your business money.

The pizza chain head has made his views on the Affordable Care Act clear in recent months, claiming the new health care law will cost his business about $5 to $8 million per year. To compensate Schnatter's said he will likely raise pizza prices and cut back some workers’ hours so he doesn’t have to insure them.

Caleb Melby of Forbes has graciously done the math on Obamacare’s cost to Papa John’s and according to his analysis, to cover the cost of Obamacare, the pizza chain would have to raise prices by 3.4 to 4.6 cents per pie -- way less than the 11 to 14 cents Schnatter claims he needs.
(Read Melby's full analysis) http://www.forbes.com/sites/calebmelby/2012/11/12/breaking-down-centi-millionaire-papa-john-schnatters-obamacare-math/

And there are other changes the chain could make to save some money, Melby notes, like not giving away 2 million pizzas for free at a cost of between $24 and $32 million to the company, for example.



We're guessing Obamacare won't impact life at Schnatter's lavish home, a 40,000 square-foot mansion in a tony suburb of Louisville, Kentucky, that features several swimming pools, a private golf course and a 22-car garage among other amenities, according to CelebrityNetworth. http://www.celebritynetworth.com/articles/celebrity-homes/papa-john-schnatters-600-million-fortune-bought-insane-mansion/


Read all about it:
http://www.huffingtonpost.com/2012/11/13/papa-johns-obamacare_n_2123207.html
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lmm
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PostSubject: Re: Papa John's Obamacare Costs Less Than Free Pizza   Wed Nov 14, 2012 4:01 pm

Updates as of 9:15 p.m. EST.

1. First of all, I’m really enjoying the spirited conversation on this post.

2. With regard to the pizza giveaways. These are not “lost revenue.” They are a marketing tactic designed by the company to bring more consumers to Papa John’s, with the end goal of selling more pizzas and generating more revenue. It is a strategic investment. Further, the cost of giving away a pizza is not equal to the market value of that pizza. I apologize if that was not made clear above.

3. Some seem to think my analysis suggests I don’t appreciate a business’s duty to shareholders to maximize value. That is not in dispute. But (given the parameters I set up), using Schnatter’s figures, the costs his company will incur due to Obamacare are not equal to the pie increases he mentions. Those pie increases would more than make up for damage done to the company’s net income through increases to operational expenses. Of course, if he thinks it won’t harm the bottom line, he is absolutely allowed to increase prices further. Given inflation and expansion, his other expenses will obviously increase in the following years too. But attributing all price increases to Obamacare would be disingenuous.

4. In introducing the piece, I mentioned fledgling internet efforts to boycott Papa John’s. Now, counter-efforts are underway. Google “National Papa John’s Appreciation Day” to learn more.

5. Finally, I get the impression that Schnatter is attempting to communicate that there is no such thing as a free lunch, which is true. In the comments, many have mentioned that other companies will most likely need to increase prices in response to Obamacare. That is also true. The question that can’t be answered right now is: How will Schnatter’s open communication and politicization of price increases ultimately impact his company? Variables to consider: boycotts, counter-boycotts and shareholder perceptions of all the above. Previous case study: Chik-Fil-A.

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