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article imagePapa John's faces boycott after plans to cut hours for Obamacare

By JohnThomas Didymus     Nov 12, 2012 in Business
Papa John's CEO John Schnatter says that with Obama having won the election, and with no hope of repeal of his health care reform, employees may have to pay the cost with reduced hours. Twitter and Facebook users have threatened to boycott Papa John's.
According to Naples News, Schnatter says Papa John's may cut employee hours to pay for the Obamacare mandate. He told Naples News: “I got in a bunch of trouble for this. That’s what you do, is you pass on costs. Unfortunately, I don’t think people know what they’re going to pay for this.”
John Schnatter made the comments while addressing a group at Edison State College's Collier County campus the day after the election.
Schnatter has taken care to avoid criticism of Obama's health care reform. He has only presented his case from the business perspective of its cost implications. Fox News reports that although Schnatter supported Romney in the election, he said the "good news is 100 percent of the population is going to have health insurance." But he added that the cost to Papa John's would be $5 million to $8 million a year, and that could force franchise owners to cut hours to pay for the extra cost.
He said: "That's probably what's going to happen. It's common sense. That's what I call lose-lose."
The Huffington Post reports that other business owners have responded more dramatically to the added cost of health care insurance. Applebee's franchisee owner Zane Tankel, said his company would stop hiring. A business owner in Georgia said he laid off employees whom he thought voted for Obama.
Digital Journal reported in August that Schnatter said Obamacare will force an increase in the price of pizza. After the Supreme Court approval of the health care law, the National Restaurant Association said it may have adverse effect on restaurants' ability to makes profits because it will require companies with more than 50 employees to provide affordable heath insurance.
But at the time, Schnatter indicated that his company would pass the cost to customers. Digital Journal reported 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"If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect our shareholders’ best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 may have decided that passing the cost directly to customers would be risky. Now he says Papa John's will pass the cost to workers by cutting their hours.
The Huffiington Post reports that under the Obama administration's healthcare mandate, only employees working more than 30 hours a week are covered.
Boycott of Papa John's?
The Examiner reports that "progressives" are mobilizing for a boycott of Papa John's after Schnatter's threat to cut employee hours because of Obamacare. Schnatter's comments sparked a controversy and many Twitter and Facebook users are promising to boycott the pizza chain.
But Schnatter is not the only chain restaurant CEO who has said employee hours may be reduced under Obamacare. Darden restaurants, the parent company of Olive Garden and Red Lobster, also said they are reducing employee hours.
The Examiner notes that in spite of Schnatter's threats over the cost of implementation of the health care plan for employees, the program provides tax credits and deductions to help firms offset the cost of health care insurance.
The Examiner comments:
"Papa John’s earned $1.22 billion in revenue in 2011, and had an income of $451.13 million. That is hardly the kind of revenue generated from a “mom and pop” small business store. Schnatter alone made a salary of $2.75 million in 2011, and is estimated to be worth over $260 million given the stock he owns in the company. Schnatter estimated that the Obamacare would cost Papa John’s $5 million to $8 million annually. Rather than pay for those new costs by cutting the profit margin or the executive salaries at his company, or even by raising pizza prices by two dimes, Schnatter is instead trying to avoid the law by cutting hours for the lowest paid workers at the company."
The Examiner also reports that some Twitter users have noted that Schnatter has promised to give away 2 million pizzas but he is unwilling to pay for employee health insurance.
Papa John's Facebook page was inundated with comments that expressed outrage about Schnatter's comments.
More about Papa john, Obama, reelected, Obamacare, schnatter
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