Forbes: Papa John's ACA cost, 5 cents

Nov. 14, 2012 at 7:50 PM
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NEW YORK, Nov. 14 (UPI) -- The head of Papa John's says it would cost 10-14 cents a pizza to buy health insurance for the chain's U.S. workers but a Forbes study says it would be 5 cents.

Papa John's International Chief Executive Officer John Schnatter -- a supporter of GOP presidential nominee Mitt Romney and opponent of the Affordable Care Act -- said he estimated compliance with the healthcare reform law would cost his company about $5 to 8 million annually.

The company made $1.2 billion in revenue last yer, with total operating expenses of $1.131 billion and a gross profit of $87 million.

Using Schnatter's estimate that healthcare reform would cost his company $5 to 8 million more annually, Forbes magazine said providing healthcare translated into a .4 percent to .7 percent increase in the price of a pizza.

"For the sake of argument, let's say that Papa John's sells exactly half medium/half large specialty pizzas. Averaging the ranges for both sizes, then averaging that product yields a .86 percent price increase -- less than 1 percent -- well outside the range of what Schnatter said health insurance would cost," Forbes magazine said. "So how much would prices go up, under these 50/50 conditions of large and medium pizzas if they were to fairly reflect the increased cost of doing business onset by Obamacare? Roughly 3.4 to 4.6 cents a pie," about one-third of Schnatter's estimate, Forbes said.

Schnatter owns 6,094,409 shares, or nearly one fourth of Papa John's shares as part of a family limited partnership and had a compensation package last year of $2,745,219, the annual report said.

Speaking to students at Edison State College in Napier County, Fla., last week, Schnatter said the cost of compliance might force Papa John's to cut back on employees hours.

An Applebee's restaurant franchisee, Zane Tankel, told Fox Business Network he would freeze hiring and may cut employees' hours because of the cost of complying with the law, Advertising Age reported.

Darden Restaurants, which owns restaurant chains including Olive Garden and Red Lobster, said last month it was putting more employees on a part-time schedule in some states to control healthcare-related costs.

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