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Papa John's Obamacare Price Hike Cheered By Ian's Pizza In Wisconsin
by _Kissy_
November 19, 2012 at 11:16 PM

Papa John's CEO John Schnatter’s recent statement that the Affordable Care Act will force the pizza chain to raise prices came as good news to Nick Martin.

Martin, a part owner of Ian’s Pizza, a pizza shop with four locations in Wisconsin, said his business has offered full heath care coverage to its 50 full-time employees for years, making it all the more difficult to compete with national chains like Papa John's that pay workers low wages without health benefits.

"This may level the playing field for us,” Martin said of the Papa John's price hike. “If they have to pay for benefits, and that pushes their prices up closer to ours, it will justify what we’ve been paying for and what we’ve been fighting to do the past few years.” (Ian's knows a bit about fighting, having fed demonstrators free slices during last year's protests in Madison.)

Like many of the 60 percent of small businesses that pay employees health benefits, Ian's Pizza has struggled to compete with national chains that enter local markets and undercut existing prices. But Obamacare may give local businesses some breathing room as national chains lose the advantage they once wielded through not providing health insurance, according to Jonathan Gruber, a professor of economics at the Massachusetts Institute of Technology.

Obamacare mandates that businesses with more than 50 workers offer an approved insurance plan or pay a penalty of $2,000 for each full-time worker over 30. “Evidence suggests that when health insurance costs go up, worker wages fall, rather than prices going up,” Gruber said. “If firms are forced to give their workers health insurance, they generally react by paying workers less in wages; they don’t raise the price of goods."

However, in the case of Papa John's, a portion of its employees are already paid at minimum wage, Gruber pointed out. "So you can’t reduce wages for those employees, and the firm may have to increase prices a little bit,” he said.

But Gruber emphasized that such price hikes will likely be small, meaning local business owners shouldn’t expect their prices to become that much more competitive compared to the big guys.

"A lot of what drives statements like those of Papa John’s CEO are politics, not economics," Gruber said.

Schnatter, a Romney supporter who held a fundraiser for the former Republican nominee, said in August that Obamacare would cost the company between 11 and 14 cents per pizzaSubsequent analysis by Caleb Melby of Forbes found that the price increase would actually be closer 3.4 to 3.6 cents per pie.

“It’s not going to have much of an effect on the gap in prices between Papa John's and smaller competitors,” Gruber said. “That gap is much more about the efficiencies that come from being a large operator, being able to buy in bulk and things like that.”

Still, small business owners who already offer employees health insurance reported feeling a sense of vindication upon hearing that large restaurant chains are now being forced to consider a cost that they’ve shouldered for years.

“I’d tell Papa John's' CEO, ‘Welcome to the club,’” Martin said. “We’ve battled the whole way giving health insurance to employees ever since we could afford to do it 9 years ago, as a two-year-old business.”

Replies

  • _Kissy_
    by _Kissy_
    November 20, 2012 at 8:55 AM


    In a conference call, Schnatter told investors:

    “Our best estimate is that the Obamacare will cost 11 to 14 cents per pizza. 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."


    Read more: http://www.digitaljournal.com/article/337002#ixzz2CmLf0Zub
  • jadedcynic
    November 20, 2012 at 9:21 AM

    That's why I actively support small business owners over chains whenever I can. The local pizza place around the corner from me makes great pizza and has been recognized by celebrities around the world.

  • JakeandEmmasMom
    November 20, 2012 at 9:25 AM

     Nobody is even going to notice an 11 to 14 cent price increase.

  • BoysManDog
    November 20, 2012 at 9:29 AM


    Quoting jadedcynic:

    That's why I actively support small business owners over chains whenever I can. The local pizza place around the corner from me makes great pizza and has been recognized by celebrities around the world.

    Oh, well .. if CELEBRITIES recognize it, it must be good.  Because celebrities are just so awesome and smart and everything. 

  • jadedcynic
    November 20, 2012 at 9:34 AM

    No, but when someone comes to a tiny hole in the wall pizza place from out of town because of a recommendation from a celebrity, it does help the business. Not a lot of out of towners come to this side of town. This side of town is only one step above the ghetto. So to have a pizza place recognized by someone who normally wouldn't even step foot in this area is an accomplishment.

    Quoting BoysManDog:


    Quoting jadedcynic:

    That's why I actively support small business owners over chains whenever I can. The local pizza place around the corner from me makes great pizza and has been recognized by celebrities around the world.

    Oh, well .. if CELEBRITIES recognize it, it must be good.  Because celebrities are just so awesome and smart and everything. 


  • BoysManDog
    November 20, 2012 at 9:49 AM

     

    John Schnatter started making pizzza, himself, in the broom closet of his dad's bar.  That really was a tiny hole in the wall.  That his business grew and that his corporation now employs over 16,000 people is not a bad thing.

    A quick look at Ian's Pizza website shows that it offers a lot more pricey items than Papa John's.  For example, they have feta cheese, blue cheese, artichokes, eggplant, etc. Also, they seem to be targeting the vegan crowd.  This place IS a "chain" with four locations in Wisconsin, and I am quite sure the owner wants more business, not less.  But to blame his higher costs on benefits is disingenuous when he very obviously offers more expensive products and a different model (pizza by the slice). 

    Further, it seems to be the MO of many journalists to find ONE Obama supporter in whatever field and offer him as the expert and representative for all. 

      

     

    Quoting jadedcynic:

    No, but when someone comes to a tiny hole in the wall pizza place from out of town because of a recommendation from a celebrity, it does help the business. Not a lot of out of towners come to this side of town. This side of town is only one step above the ghetto. So to have a pizza place recognized by someone who normally wouldn't even step foot in this area is an accomplishment.

    Quoting BoysManDog:

     

    Quoting jadedcynic:

    That's why I actively support small business owners over chains whenever I can. The local pizza place around the corner from me makes great pizza and has been recognized by celebrities around the world.

    Oh, well .. if CELEBRITIES recognize it, it must be good.  Because celebrities are just so awesome and smart and everything. 


     

  • NancSBRN
    November 20, 2012 at 9:50 AM

    Good for local Pizza companies. 

  • MsDenuninani
    November 20, 2012 at 10:34 AM


    Quoting JakeandEmmasMom:

     Nobody is even going to notice an 11 to 14 cent price increase.

    Exactly.  Not only that, pizza prices already fluctuate by that amount seasonally, depending on the price of ingredients or fuel. 

  • nb34
    by nb34
    November 20, 2012 at 10:39 AM

    We buy from our local Pizza shop. Great Pizza. I never buy Papa John's pizza and never will. Screw that shit.

  • Canvas_says
    November 20, 2012 at 10:40 AM

    I'd buy Papa Johns if they were closer to us, instead we're stuck with Little Caesars or Hungry Howies, so we just don't eat it. My biggest preference is Palermo's but again way too far to go for an overpriced pizza. 

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