John Schnatter, founder of and head honcho at “Papa John’s Pizza,” apparently has no clue of the law of supply and demand. In a recent conference call, he told shareholders that if the Affordable Care Act (Obamacare) goes into effect, he will raise the prices of his pizzas.
“Our best estimate is that the Obamacare will cost 11 to 14 cents per pizza, or 15 to 20 cents per order from a corporate basis,” Schnatter said.
“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,” he said.
“If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect our shareholders best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,” Schnatter vowed.
Schnatter, a Romney supporter, is forgetting the most basic law of business. People are only going to pay what they are going to pay. No one is being forced to buy his mediocre pizza. If people want to stop buying because the price goes up, his shareholders will lose. If people stop buying because of his political beliefs, his shareholders will lose.
I already won’t buy his product because it is mass-produced pizza at its worst. Tasteless, dry cardboard-like crust, less than prime ingredients, and it doesn’t rise to level of actually being considered as pizza, in my opinion.
Papa John’s, like most pizza places, is not known for providing benefits for their employees. If Shnatter already provided health insurance to his employees (some do qualify, but not most), the Affordable Care Act would likely cost him nothing. In fact there’s a good chance that his company premiums would go down. But he, like most restauranteurs, cares nothing or little for the needs and livelihoods of the low-level employees who do all of the actual work that makes the owners and shareholders rich.
But in spite of his rant against the Affordable Care Act, “Papa John’s” is planning on more than 1,500 new retail locations in the near future. Given that information, Schnatter doesn’t seem all that bothered by the law reaching full implementation. Perhaps because he intends to pass those health care costs on to customers, and so those minimal costs will not factor into his long-term growth analysis.
I’m not sure if Schnattner’s a stupid man or not, but he should certainly know that retail costs are not determined by the cost of manufacturing. If that were true, someone forgot to tell many retailers and manufacturers. As a country, we willingly pay $2.00 – $4.00 for a fancy bottle of tap water. We pay ridiculous markups on clothing, cosmetics and movie theater concessions. When we order a pizza, we either order for taste, convenience or price. If the taste is only so-so and it’s no more convenient than any of the other pizza delivery places, you bet we’ll call the one that didn’t raise the price, simply because Obama was reelected.
Besides making your pizzas cost more at “Papa John’s,” here’s some of what Obamacare will do for you:
You Will Not Be Denied Over A Pre-existing Condition
Health insurance companies won’t be allowed to deny coverage to Americans in frail health.
Your Child’s Policy Will Not Exclude Coverage For Any Illness
Insurance companies won’t be permitted to write child health care policies that exclude coverage for certain illnesses by 2014.
Some Will Be Taxed For Not Buying Health Insurance
Americans who do not purchase health insurance and are financially able to do so will be subject to a $695 penalty starting in 2014, instead of getting a free ride for which the rest of us pay in higher medical costs, insurance premiums, and taxes.
Your Insurance Plan Will Offer More Free Preventative Care
All new health insurance plans since 2010 have been required to include free preventative care, according to CNN. This includes mammograms, vaccinations, colonoscopies, physical examinations and other forms of care. All plans need to provide these free services by 2018.
Seniors Will Pay Less For Prescriptions
Before some provisions of the health care law went into effect, seniors were required to pay the full cost of prescription medications once they reached a limit on prescription drug spending. Obamacare is on track to close the gap by 2020, according to the Centers for Medicare and Medicaid Services.
Insurance Policies Will Not Cap Your Coverage
Because of health care reform, health insurance companies will no longer be able to impose annual caps on coverage by 2014.
Insurance Companies Can’t Drop You When You Get Sick
As a result of health care reform, health insurance companies will not be allowed to end your coverage once you are sick.
Young People Can Remain On Their Parents’ Plan Until Age 26
As a result of health care reform, children can remain on their parents’ insurance plan until they reach the age of 26.