Business as usual

Papa John’s CEO claims the increased cost to his company of Obamacare is going force him to cut hours. People across the country are threatening to boycott the company. Once again we have a case of a top corporate official saying something unpopular and the easily-offended taking it out on everyone but the intended target. You can read more on it here, but seriously. This sort of thing is getting old–from all angles.

This sort of thing is wrong on many levels. First of all, what CEO Schnatter said wasn’t all that controversial.

Schnatter, who supported Mitt Romney in the election, said all Americans having health insurance under ObamaCare is a good, but estimates the change will cost Papa John’s $5 million to $8 million annually.

Schnatter estimated that these rising costs could adversely affect his workers. Since only full-time employees working 30 hours or more must be covered under the new law, he said he expects franchise owners will be forced to cut employees’ hours because they can’t afford the costs of health insurance plans.

“That’s probably what’s going to happen,” he said according to “It’s common sense. That’s what I call lose-lose.”

What exactly is wrong with that? He’s stating the expected cost and predicting what the result will be. Do we run out and boycott the Congressional Budget Office every time they tell us what an expected policy change will cost? He simply said what the change will cost his company and what he expects franchisees will do to compensate. He didn’t invoke morality or God. He even said that he believes all Americans having health insurance is a good thing. What’s the problem here?

What most people are probably missing in this story is that Papa Johns is a franchise company. They do own some of the stores themselves (a few hundred out of the 3000+), but mostly they make their income by selling and supplying franchises. When he estimates $5-8 million, he’s likely just referring to what he has control over–Papa Johns Corporate, not the franchises, which is why he guessed at what the franchise owners would do. He doesn’t know. It’s not his call to make. You or I could become a franchiser and open a Papa Johns, but we would not really be part of Papa Johns. We would need to make our own arrangements for health care.

Chances are the franchise owners are not high-rolling fat cats. My company recently had an opportunity to buy out a competitor who was part of a franchise. What that store was making wasn’t even enough to support the family of just one of our partners, let alone all four of us. And that’s in the video game industry, which is supposedly making more money than the film industry.

I’m not sure how much insurance through the government is going to cost per person, but when I’ve had to buy insurance for myself it’s run anywhere from $500-1200 a month for a family of five. Let’s assume the average franchise has no more than two or three full-time employees (they’re probably already trying to keep hours down for other reasons), most likely managers and assistant managers. Adding in $1500 to $3600 of overhead for that store is not chump change. That’s the cost of adding an entire full time employee, and it may be more than the owner makes in profits from that store in a month.

Now it’s possible that individual franchises will be small enough the government won’t require them to supply health care. But where’s the cutoff? Typically the best bet for a franchise owner to make good money is to own several franchises. Would owning three or four Papa Johns restaurants put them over the threshold?

I don’t know. And part of my point is that chances are you don’t either. Chances are Schnatter is telling it like it is. Why is that worthy of punishment? Why go and try to put a bunch of minimum-wage pizza flippers out of work just to try to get at him? That 20-hour a week college student who delivers your pizza wasn’t going to get free health care anyway, but he sure could have used those five hours a week more he was getting before your boycott.

So why don’t we all just sit back, take a deep breath, and acknowledge that even well-intentioned laws have negative consequences as well as the positive, and there’s no reason to try to punish everyone just because they don’t always like everything that comes along. Please?

It wasn’t that long ago that we had a lot of liberals deeply offended by the backlash against their boycott of Chik-fil-A’s CEO. That backlash was by those deeply offended by the liberals’ boycott. In the end, did anyone win? If pegging the Gripe-O-Meter on Facebook is a sign of success, then I suppose so. But America didn’t. Nothing positive happened on either side.

Isn’t it supposed to be insanity to repeatedly do the same thing and expect different results?

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