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http://www.newsnet5.com/dpp/money/papa-j...hours-to-be-cut

NAPLES, Fla. - Just after Barack Obama earned a second term in the White House, Papa John's founder and CEO John Schnatter said the president's signature health-care reform law would increase his business costs and possibly result in employees' hours being cut.

Schnatter, a part-time Naples, Fla., resident, made the comments Wednesday night inside a small auditorium at Edison State College's Collier County campus. In August, he made national headlines after telling shareholders the Affordable Care Act -- commonly known as Obamacare -- would result in a 10- to 14-cent increase for customers buying a pizza.

"I got in a bunch of trouble for this," he told the students. "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."

Schnatter, a Mitt Romney supporter and fundraiser, said he was not "pro or against" the reform law but likened the government's involvement in health care to its operation of the U.S. Postal Service, saying "the worst entity in the world for running the thing is the government."

About a third of Papa John's employees are covered by the company's health insurance plan, although Schnatter said he has always wanted 100 percent of them on the plan. The rising costs of health insurance, he said, have been a deterrent.

"The good news is 100 percent of the population is going to have health insurance. We're all going to pay for it," he said, estimating the new law would cost the business $5 million to $8 million annually.

Under the Affordable Care Act, full-time employees -- those working 30 hours or more per week -- would have to be provided with insurance at companies with more than 50 workers. Schnatter said it was likely that some franchise owners would reduce employees' hours in order to avoid having to cover them.

"That's probably what's going to happen," he said. "It's common sense. That's what I call lose-lose."

Other than his comments on health care, Schnatter largely steered clear of politics. The 50-year-old said future entrepreneurs need to marry talent and passion in their endeavors, his being business-savvy and a love of pizza.

"I don't consider this work," he said. "I wake up thinking about Papa John's and I go to bed thinking about Papa John's."

He credited the business' success to having a strong team of people and a quality product, repeating his commercial's catchphrase -- "Better ingredients, better pizza, Papa John's" -- several times.

Schnatter answered questions for about 45 minutes before leaving to participate in a telethon with the University of Kentucky basketball team to raise money for Hurricane Sandy victims. He told students he hopes to present the American Red Cross with a $1 million check.


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likened the government's involvement in health care to its operation of the U.S. Postal Service, saying "the worst entity in the world for running the thing is the government."






So true.


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I can't believe PJ and PH have been able to hold onto these $10 pizza prices for so long. Three years ago, you couldn't get a large pizza for $10 anywhere except a Tombstone or maybe Little Caesar's. Competition is great for consumers, but these guys have really been going at each other. They're going to cut hours for employees over $0.10 - $0.14 per pizza when their pizza is discounted $3 - $6 each because they've run themselves into this $10 / pizza paradigm. That's a bummer.

*edit* meanwhile, he's giving away two million free pizzas.

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I can't believe PJ and PH have been able to hold onto these $10 pizza prices for so long. Three years ago, you couldn't get a large pizza for $10 anywhere except a Tombstone or maybe Little Caesar's. Competition is great for consumers, but these guys have really been going at each other. They're going to cut hours for employees over $0.10 - $0.14 per pizza when their pizza is discounted $3 - $6 each because they've run themselves into this $10 / pizza paradigm. That's a bummer.

*edit* meanwhile, he's giving away two million free pizzas.



If the drivers and pizza cooks would just unionize then we could pay $35 for a pizza with no cheese on it and everything would be great.


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Why would they want to unionize if they had health care and weren't getting their hours cut? If us fatties didn't mind paying $10.20 for a pizza, it wouldn't be an issue.

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I can't believe PJ and PH have been able to hold onto these $10 pizza prices for so long. Three years ago, you couldn't get a large pizza for $10 anywhere except a Tombstone or maybe Little Caesar's. Competition is great for consumers, but these guys have really been going at each other. They're going to cut hours for employees over $0.10 - $0.14 per pizza when their pizza is discounted $3 - $6 each because they've run themselves into this $10 / pizza paradigm. That's a bummer.

*edit* meanwhile, he's giving away two million free pizzas.



If the drivers and pizza cooks would just unionize then we could pay $35 for a pizza with no cheese on it and everything would be great.




Then the Chinese would import pizzas for $15 and put local shops outta business.


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Am I the only one that pronounces hyperbole "Hyper-bowl" instead of "hy-per-bo-le"?
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It's all Peyton Mannings fault. He only wanted to give away one million pizzas. Peyton forced him to give away two and do you remember what he said at the end? "Wait till you see what we do next." Well here you go, Peyton's plan to take away healthcare to Papa John's workers.

Peyton is evil I tell you.


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"The good news is 100 percent of the population is going to have health insurance. We're all going to pay for it," he said, estimating the new law would cost the business $5 million to $8 million annually.




Is it just me - or does that not seem like a ton of money?

Here, Papa Johns Reports sales (2010) of $1.13 billion and a net income of $51.9 million

http://ir.papajohns.com/releasedetail.cfm?releaseid=551800

I realize costs will go up some - and this will lead to lower sales (and then require increasing costs some more) - but we're talking maybe 0.10 - 0.50 a pizza.

Last edited by Lyuokdea; 11/12/12 12:59 PM.

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It's all Peyton Mannings fault. He only wanted to give away one million pizzas. Peyton forced him to give away two and do you remember what he said at the end? "Wait till you see what we do next." Well here you go, Peyton's plan to take away healthcare to Papa John's workers.

Peyton is evil I tell you.






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I have already gone over the number on this .... but I'll do it again ......

The average fast food type restaurant in this area does roughly between $25000-$45000 per month in sales. Some do more, but this is about the average based on my experience, and people I know in the business.

At the high end, a good restaurant might make roughly a 20% profit. Most restaurants run a 20-25% labor cost, a 20-30% food cost, and then rent/mortgage, utilities, insurances, payroll taxes, and so on. 20% profit is pretty damn good.

Let's say that this restaurant, at the high end, is doing $45,000 per week, and making a 20% profit. That means that they are making an annual profit for their owners of $108,000. If they have 20 full time employees (not unheard of, when openers, lunch people who typically are adult employees, and closers are taken into account) then they now have an additional annual expense of 20x$2500. (the fine if you don't cover your employees with insurance) This is a new annual cost of $50,000. This business, making a $108,000 total annual profit, has just seen their profit margin cut in half.

Are the owners going to just say "Oh well, that's life"?

I doubt it.

They are going to cut full time employment to the bone, and raise prices accordingly. They will have full time managers, but those managers almost certainly already receiver insurance.

However, when I went on COBRA, my cost per month was slightly over $300 (it was $321, the full cost of my employer sponsored insurance for a single employee) ...... so that's $3852/year ....... and the business can pay a $2500 fine and throw their employees into the exchanges ...... and while that won't happen with all, or maybe even most businesses ...... many will. Why not? They can cut costs and save a "little" money for the business.

You will see restaurants and retail establishments cutting full time employment for non management personnel to the bone. People will not be able to go get a lower end job that they can live on. Right now there are many restaurant/retail jobs that pay $9-$10/hour. Employers will look at cutting those wages as well if their costs increase elsewhere. Right now a couple can both work a full time job of this nature and make a combined $36,000. Maybe they'll never get rich, but they can live a decent life. The average household income in the US is around $51,000 .... so such a person would not be rich, but they wouldn't be out on the street either.

However, these people will struggle to hold onto their full time employment into the future. Maybe they each have to work 2 part time jobs ... struggling to make the hours match up on a weekly basis just so they can hold onto what they had.

The Obamacare law was one with great intentions, but a plethora of hidden perils. Businesses will cut full time employment. They will cut wages. Prices will increase. When one cost of business increases, others get cut, or prices increase. The only other option is for profits to fall, or disappear entirely. If profits fall too much, businesses go out of business.

I can tell you for certain that my former restaurant will not be able to afford full time employees once this law is fully implemented. That store was not a huge profit store, and in fact never made a profit until I got there. If it wasn't for franchise agreements that required the franchisee to buy the property that restaurant sat on from the company, that store probably would have closed long ago. It was bleeding money on a monthly basis, but the expense of paying the mortgage and not having any income was worse. It may not be worse heading into the future. Many marginally performing businesses that employ people right now may not survive into the future because of increased costs.

Unemployment may come down, but it will be because people are working part time jobs in many cases. That will be the new normal for a lot of people. The law of unintended consequences will cause a lot of people to be hurt by Obamacare.


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YT, yes you have repeatedly relayed your experience with fast food, and it is interesting to hear someone who has had access to relevant numbers, but big papa himself gave the cost as 0.10-0.14 per pizzafor his business, with the median pizza price of $10 assumed.

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I don't know what his structure is, how many full time employees he has per location, how many items other than pizzas he sells (higher profit items like wings, breadsticks, etc) and so on.

The Ohio minimum wage law has already turned "dollar menus" into "value menus", with most items that hold the $1 price being downgraded, and other items increasing in price increases to as much as1.5 times their original price.


Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.

John 14:19 Jesus said: Because I live, you also will live.
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YT, yes you have repeatedly relayed your experience with fast food, and it is interesting to hear someone who has had access to relevant numbers, but big papa himself gave the cost as 0.10-0.14 per pizza for his business, with the median pizza price of $10 assumed.




And researched has shown that the average consumer see's a hugh difference between 9.99 and 10.00 phsycologically.


.10-.14 per pizza isn't much but to many it's more than a competitor.

And what a lot of people who are jumping his case don't realize is the majority of Papa Johns are franchises, in which he has no say in the hiring practices of the franchisee. And as YTwon has shown above, the franchise owner is not rolling in cash like John Schattner is who is getting rich from the fee's the frachise owners pay, not from making pizza's daily.

It's like blaming Ray Croc that your can't get a .99 Big mac at your local McDs.


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For dollar menus, I believe most of the price increase comes from the cost of fuel - this has greatly increased the market price of getting meat to your store (both in the shipping cost itself, and also in the cost to get livestock feed to cows, etc.)


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Your 100% right, and 50.6% will not understand why they will be cutting hours and employees or even believe what you say is true.

Layoff's are coming, big-time. Part-time workers will be the employee base for most lower income jobs. As you said, Lower income Americans will have to have two or more jobs to support themselves. Since this change will put many new workers out in the street looking for work. Companies will find it easy to hire workers at a much lower wage and only at part-time weekly hours. The part-time employee will have to pay for his own healthcare, as it is the LAW. (Boy are they going to be surprised and really PO'ed, since they think Obamacare is free)

My Fear: When the economy takes a downturn these people will riot, and go after innocent people.


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My Fear: When the economy takes a downturn these people will riot, and go after innocent people.






Be as prepared as you can. Have food and weapons on hand and get out of the city if you can. I know some on here will say "that is a horrible way to live your life thinking about this." I don't think about this much anymore as I am 100% prepared. I go about my day just as I have since I started working at age 16 - working hard and trying to build my business. I just want to have an out should things go south - I'm not a doomsday prepper, but I am ready to face adversity should the angry mob show up when their "free" stuff turns out to be not so free or worse, the country can't pay it's bills and that mob turns into a angry,hungry mob.


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I just have a funny feeling that there will be major adjustments to Obamacare.

Obama wants some things from the Republicans. he's going to have to give to get.

For instance, I think the Bush Era tax cuts stand for his term, but in return, the Republicans agree to tax people that make more than 300K a year a couple of percent more. (I know, Obama wants it to be 250K or more, but he'll give in to 300)

What's really funny about all this is that if you go into almost any resturant, chain or Mom and Pop place, you are going to see that most of the employees are part time and receive no benefits anyway. Most of them are either high school or college students. So what are they gonna do, cut the part timers to part timers?

If they work 30 hours a week now, to get under the ceiling, he's gotta be at what, 28 hours?

If GM, Ford, Chrysler, GE, Boeing, HP, Dell, etc etc.. tell me they are cutting all their employees to part time, that would get my attention. But Pizza Hut, Papa Johns, Olive Garden, McDonalds, Burger King.. Sorry, that don't worry me much.

What's more likely to happen is the big companies will pay the fine per employee of whatever it is (I think it's $2,000) and drop coverage.

Then they'd have to go out on their own and find insurance at competitive rates. That actually could work. Not sure it will, but it could.

It could end up being a boon to insurance companies. I mean, no pre-existing conditions... and people that had insurance through their employer would now have to buy it else where opening up the market to millions of potential customers.

I think some will do it that way,, others will stay the course because it's no skin off their backs, they already pay for the insurance and deduct some portion from the employee as it stands.

But in the end, I think they'll be some bartering. A deal will get hashed out.

We'll see.


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Fuel plays a part, but the minimum wage going from $5.05 to $7/hour had a bigger part to play.

All increases in costs affect prices. Increased payroll costs increase prices. Increased food costs increase prices. Increased utility costs increase prices. Increased insurance costs increase prices.

For quite a while, though, fast food restaurants did everything they could to hold the line on their dollars menus, because they are immensely popular. Wendy's used to offer a 99 cent chili. Last time I was there it was $1.69. The Jr Bacon Cheeseburger used to be 99 cents. It's now $1.79. McDonald's used to offer a 99 cent value size order of fries. IIRC, it's now $1.49.

That kind of increase is not only from fuel. Fuel was $4 gallon for a while 4 years ago. Prices did not hit this level.


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My girlfriend had her hours cut to under 30 at the country club she works at as the concierge/marketing assistant because of this disaster. The plan sucks and it is going to pull us into the sinkhole faster. What in the previous 4 years makes you think these to sides can work together? The definition of insanity is trying the same thing over and over, getting the same results....


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Quote:

Fuel plays a part, but the minimum wage going from $5.05 to $7/hour had a bigger part to play.

All increases in costs affect prices. Increased payroll costs increase prices. Increased food costs increase prices. Increased utility costs increase prices. Increased insurance costs increase prices.

For quite a while, though, fast food restaurants did everything they could to hold the line on their dollars menus, because they are immensely popular. Wendy's used to offer a 99 cent chili. Last time I was there it was $1.69. The Jr Bacon Cheeseburger used to be 99 cents. It's now $1.79. McDonald's used to offer a 99 cent value size order of fries. IIRC, it's now $1.49.

That kind of increase is not only from fuel. Fuel was $4 gallon for a while 4 years ago. Prices did not hit this level.




I deal with shipping all of the time. The biggest increase we had was $400 increase on a shipment from Chandler, AZ to Akron, OH.

For companies like McDonalds the truck isn't traveling across country, they use their own trucks and buy fuel in bulk so they have some of the lowest costs. Let's say it was a $200 increase in fuel costs divided by 10,000 sellable items on the truck that's just a $0.02 increase on each end item.

The minimum wage obviously has the larger impact on the end item cost.
$2 increase times 30 hour average work week = $60/week/employee. Times 10 employees = $600/week increase.


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Did nobody else catch that he was speaking of franchises doing this?

As in, HE doesn't own/operate those stores... they are franchises, and the independent franchise owner/operators will be the ones that will likely reduce hours to reduce the number of people they legally have to provide health care for.

Eh, people will still fail to see it and blame him anyway - hell, somebody that fails to understand things already took the time to make a meme image (above)


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FloridaFan wrote:
And what a lot of people who are jumping his case don't realize is the majority of Papa Johns are franchises, in which he has no say in the hiring practices of the franchisee. And as YTwon has shown above, the franchise owner is not rolling in cash like John Schattner is who is getting rich from the fee's the frachise owners pay, not from making pizza's daily.




I'm with ya.


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I deal with shipping all of the time. The biggest increase we had was $400 increase on a shipment from Chandler, AZ to Akron, OH.

For companies like McDonalds the truck isn't traveling across country, they use their own trucks and buy fuel in bulk so they have some of the lowest costs. Let's say it was a $200 increase in fuel costs divided by 10,000 sellable items on the truck that's just a $0.02 increase on each end item.

The minimum wage obviously has the larger impact on the end item cost.
$2 increase times 30 hour average work week = $60/week/employee. Times 10 employees = $600/week increase.



Fuel is a lot more than just shipping a truck from point A to point B though. Fuel costs affect what it costs to harvest a potato, drive cattle to be slaughtered, manufacture paper bags and paper cups... it's a lot deeper than just shipping finished products to the store.

I think the reason fuel costs haven't had the immediate and severe impact that wages have is that these places will absorb some of the fuel costs because they view them as temporary, they will go up and down... so they make a little more when they are down and a little less when they are up, they aren't going to change their prices every week to adjust for fuel... but when wages go up, they generally have gone up for good, so they adjust...


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Complains about Papa John's giving away free pizzas.......Does not understand the concept of giving away free pizzas as an advertising gimmick.

They are not handing out free pizzas out of their own free will, but rather to get more people to buy their pizzas.


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Further than that ..... it's not a matter of "basic" healthcare ...... it is the healthcare insurance package that the government mandates.


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For whatever its worth, I won one of the free pizzas and it was good. One was not enough though, so we bought 2 to go with our free one. I guess it works.

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Or we could give away 2 million pizzas and then complain about healthcare costs.



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Or we could give away 2 million pizzas and then complain about healthcare costs.





Or they could stop running promotions, raise their prices, give everybody great benefits and lose market share and go out of business... that would help.


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The average fast food type restaurant in this area does roughly between $25000-$45000 per month in sales. Some do more, but this is about the average based on my experience, and people I know in the business.






That's very hard to believe. I've worked in the food industry for 15 years, and I don't know any one that wasn't bringing in at least 9-10k a week. 25k per month isn't even 6k per week. There's no way a chain like wendy's, burger king, mcdonald's is bringing in that type of revenue, and still open. I just helped my company shut down a store a few months ago, and they were bringing in 40 to 50k per month. If your volume is that low anyhow, you're probably looking at no more than 3-5 full time workers, maybe 10-14 workers all together...

Currently, I manage a 1.3 million store that has about 7-8 full time workers, 20-25 as a staff. I know I read an article a while back, that the average Mcdonald's brings in 2.5 million a year.. Those types of numbers are tremendous for a sit down restaurant, let alone a fast food establishment..

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FloridaFan wrote:
And what a lot of people who are jumping his case don't realize is the majority of Papa Johns are franchises, in which he has no say in the hiring practices of the franchisee. And as YTwon has shown above, the franchise owner is not rolling in cash like John Schattner is who is getting rich from the fee's the frachise owners pay, not from making pizza's daily.




I'm with ya.






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I beleieve you'll find that he suggested the price of a pizza would go up between 11-14 cents.



I know that 14 cents would surely drive me away from buying a pizza!



And secondly, Pappa Johns are franchises and rarely will you find most anyone owning enough of those franchises t employ over 50 people.

So from a factual basis, it would impact a very slim margin of franchise places at all. So the cost increase would be zero in the vast majority of instances. I think Peyton Manning abought quite a few franchises so you may have to pay 14 more cents at his Pappa Johns.



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I don't know too many pizza places that employee many full-time people to begin with.


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I can't believe PJ and PH have been able to hold onto these $10 pizza prices for so long. Three years ago, you couldn't get a large pizza for $10 anywhere except a Tombstone or maybe Little Caesar's. Competition is great for consumers, but these guys have really been going at each other. They're going to cut hours for employees over $0.10 - $0.14 per pizza when their pizza is discounted $3 - $6 each because they've run themselves into this $10 / pizza paradigm. That's a bummer.

*edit* meanwhile, he's giving away two million free pizzas.




Don't forget they charge $3.49 to deliver a pizza, Dominos is $2.25, PH is $2.99. Not sure about others, as I rarely get pizza any more.

Also, carry out pizza is getting super cheap as well - I don't recall who, but I remember seeing something for $5.99 or $7.99/pizza.

Not that I agree with the law, but adding $0.25 to a pizza to cover these expenses isn't going to stop me from ordering one.

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I don't know too many pizza places that employee many full-time people to begin with.




That's why I don't understand his comments at all on that part of it.

I mean you may have a manager and a couple of asst. managers as full time employees. But you would have to own a lot of Pappa Johns franchises to have 50 full time employees.

And for you to be required to have health insurance or Obamacare, 50 full time employees are the minimum requirement.

I think in this case, it's much a do about nothing.....


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I believe Little Ceaser's started all that with their $5 pizzas. Most of the national chains, you could get a large for $10. I know Pizza Hut was smart when they decided to get rid of the dining rooms, and go to the smaller Wing Street buildings. They have to be saving a ton on that alone.

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I beleieve you'll find that he suggested the price of a pizza would go up between 11-14 cents.



I thought he suggested that the cost would go up by that much.

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I know that 14 cents would surely drive me away from buying a pizza!



You aren't a college kid who looks at saving $.50 as a big deal. If I'm a college kid and one is $9.99 from Dominoes and the other is $10.50 from Papa Johns.... all things being equal, I'll order the cheaper one. While you laugh and scoff at $.15-.20.. it's an extremely price competitive market in most places... and these guys work for years trying to figure out economies that will save them that much per pizza... and do you know why? To sell more product and make more money... I know, evil thought right?


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Does that mean he won't be kicking off the 2013 season with 3 million free Papa John's pizzas?


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There's an add at the bottom of the page that says Dominas has large 2 topping for $5.99. Soon that will be $6.13, funny it's only 14 cents, but it looks like more just because of the change of the whole dollar amount. Hence why most things are 5.99 not 6.00 or 9.99 vs 10.00.

For me it wouldn't make much difference, I typically don't even ask what the price is, just ask for a total on my order. But I'm not living paycheck to paycheck and having to strecth every penny, but many are and do, and like DC said, that .50 coupon is huge to some.

But some marketing guy will figure out they can raise the pizza to $6.99, offer a .75 coupon, and people only see they are saving .25 more than before and buy the pizza, while the pizza place will ultimately make .25 more cents then before.


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But some marketing guy will figure out they can raise the pizza to $6.99, offer a .75 coupon, and people only see they are saving .25 more than before and buy the pizza, while the pizza place will ultimately make .25 more cents then before.



Then Dominoes will realize Papa Johns is making more money and raise their own prices and the poor will have to pay more for a pizza...


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