When companies are forced to absorb higher costs due to misguided legislation, and when those companies are legally obliged to maximize shareholder profits, they inevitably pass those costs on to the consumer. That is why Papa John’s CEO John Schnatter outlined the adverse effects of the legislation to a call with shareholders:
“Our best estimate is that the Obamacare will cost 11 to 14 cents per pizza, or 15 to 20 cents per order from a corporate basis,” Schnatter said.
“We’re not supportive of Obamacare, like most businesses in our industry. But our business model and unit economics are about as ideal as you can get for a food company to absorb Obamacare,” 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“If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect our shareholders best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 vowed.
This isn’t Schnatter blowing smoke. McDonald’s has also postulated that they may have to pass on cost increases to consumers to cover the cost of compliance. When companies are accountable to their franchisees and shareholders, they have no other option. We’ll be paying for Obamacare in more ways than at the doctor’s office.