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Old Nov 11, 2012, 03:36 AM   #1
east85
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Papa Johns reduces worker hours in response to Obamacare.

Article:
http://www.huffingtonpost.com/2012/1...n_2104202.html

The sad part is that he's whining about how it would force them to raise each pizza's price by 15 cents to cover insurance for his employees. If it only costs 15 cents more per pizza to cover all of your employees, why the hell haven't you done that before now?! That's a rather insignificant price, and I would very gladly pay 15 cents more per pizza if your employees got health insurance.

So, basically, he's whining about how horrible the economy and Obama's policies are, cutting his employee's hours, refusing to give them healthcare, and living here: http://i.imgur.com/AeEbi.jpg

They've pretty much lost my business.

Backlash on their Facebook page:
http://facebook.com/papajohns
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Old Nov 11, 2012, 03:43 AM   #2
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I think the only times I've eaten their pizza have been tied to alcohol consumption. Now I won't even buy it then. I will say that food related businesses have an odd balance. The margins aren't always that great relative to other industries, and those ovens must cost a lot to run. My biggest issue with GOP opposition to Obamacare was their lack of alternative solutions.
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Old Nov 11, 2012, 04:12 AM   #3
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Certainly nice of them to let everyone know who to boycott.

Their profit margins are around 40%, on a revenue of about a billion dollars a month, they can afford to pay for healthcare they just don't want to.

Last edited by Mord; Nov 11, 2012 at 04:19 AM.
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Old Nov 11, 2012, 04:21 AM   #4
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OMG, that house is ridiculous. It looks like there's some kind of underground entrance on that bridge.

I never liked their pizzas, but I've eaten there when friends go there. Now I'll be sure to not buy anything from them.
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Old Nov 11, 2012, 05:27 AM   #5
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Originally Posted by Mord View Post
Certainly nice of them to let everyone know who to boycott.

Their profit margins are around 40%, on a revenue of about a billion dollars a month, they can afford to pay for healthcare they just don't want to.
No way their margins are 40% per pizza. This isn't apple.
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Old Nov 11, 2012, 05:56 AM   #6
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No way their margins are 40% per pizza. This isn't apple.
http://ycharts.com/companies/PZZA/gross_profit_margin
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Old Nov 11, 2012, 06:20 AM   #7
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Certainly nice of them to let everyone know who to boycott.

Their profit margins are around 40%, on a revenue of about a billion dollars a month, they can afford to pay for healthcare they just don't want to.
This seems to be true with just about every company who's announced layoff's and cut backs due to Obamacare.

They can easily afford it but refuse to pay it - pathetic.

Middle class needs to take back America, thankfully since Romney lost at least they have a chance.
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Old Nov 11, 2012, 06:38 AM   #8
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No way their margins are 40% per pizza. This isn't apple.
Pizza has a huge, huge, HUGE margin on materials alone. Just counting the ingredients (not the cost to deliver the materials, the employees to make it, ect), it costs about $2.50 to make a large supreme pizza that sells for at least $10.00. That's a 400% return.
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Old Nov 11, 2012, 06:50 AM   #9
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This is why i love the NHS

Good old blighty does it again
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Old Nov 11, 2012, 06:58 AM   #10
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That's not per pizza. The article talks about price increases per pizza. Their margin is more like 5%.

http://www.forbes.com/sites/ycharts/...he-government/

Last edited by balamw; Nov 11, 2012 at 08:28 AM. Reason: link clickable
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Old Nov 11, 2012, 08:23 AM   #11
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Why is it so hard to fathom that increased costs to a business is going to result in one of two things? Either less employees or costs passed onto a customer.

Businesses can't keep raising prices all the time or people will simply stop buying their product which is what I did with Starbucks. When my daily latte went from costing under 4 bucks to just slightly over 4 bucks a couple of years ago I cut that cord.
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Old Nov 11, 2012, 09:07 AM   #12
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Originally Posted by Zombie Acorn View Post
That's not per pizza. The article talks about price increases per pizza. Their margin is more like 5%.

http://www.forbes.com/sites/ycharts/...he-government/
You are comparing gross vs. net margins.

The 40% gross profit margin holds, by their own reporting. http://finance.yahoo.com/q/is?s=PZZA

They eat up most of that gross profit in "Selling G & A" i.e Marketing, Promotions, ... This would typically include overhead (including the CEO and other management salary).

Lets assume a $10/pizza average and a $0.15/pizza increase. In the most recent reported quarter they had revenue of $325M, so they sold ~3.25M pizzas/quarter so the "cost of Obamacare" would be ~$0.5M/quarter. Their SG&A number is $128M/quarter. Are you seriously saying they can't trim their SG&A expenses by 0.4% to simply absorb this? They can't work with their suppliers and workers to trim even part of this from their COGS?

It's all about they choices they make.

FWIW every week in the NFL season they are giving away 120,000 pizzas or using their COGS number ~$0.6M, so this promotion is costing them more PER WEEK than one quarter of Obamacare.

B
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Old Nov 11, 2012, 09:22 AM   #13
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Originally Posted by glocke12 View Post
Why is it so hard to fathom that increased costs to a business is going to result in one of two things? Either less employees or costs passed onto a customer.
Why is it so hard to fathom that we, the public, are already paying for many Papa Johns employees healthcare?

Why is it so hard to fathom that vast numbers of people are already working two parttime jobs instead of one fulltime job because of employer benefit avoidance?

The current healthcare system in the U.S. creates a huge market distortion, creates a competitive advantage for companies that base manufacturing outside the U.S. in countries that have nationalized healthcare.
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Old Nov 11, 2012, 09:36 AM   #14
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Originally Posted by glocke12 View Post
Why is it so hard to fathom that increased costs to a business is going to result in one of two things? Either less employees or costs passed onto a customer.

Businesses can't keep raising prices all the time or people will simply stop buying their product which is what I did with Starbucks. When my daily latte went from costing under 4 bucks to just slightly over 4 bucks a couple of years ago I cut that cord.
Well, it's interesting...according to this quarterly earnings statement, Papa John's has had an increase in income of almost 25% this year. Would Obamacare add 25% to their costs? Doubtful. So this is just more of the same: "I'm making more money, but that doesn't apply to my costs, only to my shareholder benefit" or some other nonsense.

They want everything done to help them make more money, but if anything gets in the way, causing them to make less-more money, then suddenly it's a travesty. "Well, crap, we only made $5 billion this year instead of $5.2 billion! We must close up shop!"

He could have easily spun this into a positive thing that could have brought him extra business: "In light of new healthcare regulations, I will be raising the cost of my pizzas by 15 cents, which will help me provide healthcare to all my employees. Having a happy, healthy workforce is a priority to me." But no. Instead, he has to be a capitalist douche-nozzle and complain about how everyone is out to get him.

My wife and I have been Papa John's devotees for nearly a decade, always trying to find them when we want pizza delivered (even when traveling, which was often). I think now, I might something different.

I don't think business should have to provide healthcare to employees at all, but that simply is not an option until we have universal healthcare or much higher wages in this country.

Quote:
Originally Posted by balamw View Post
Lets assume a $10/pizza average and a $0.15/pizza increase. In the most recent reported quarter they had revenue of $325M, so they sold ~3.25M pizzas/quarter so the "cost of Obamacare" would be ~$0.5M/quarter. Their SG&A number is $128M/quarter. Are you seriously saying they can't trim their SG&A expenses by 0.4% to simply absorb this? They can't work with their suppliers and workers to trim even part of this from their COGS?

It's all about they choices they make.

FWIW every week in the NFL season they are giving away 120,000 pizzas or using their COGS number ~$0.6M, so this promotion is costing them more PER WEEK than one quarter of Obamacare.
Oh yeah, and this, too!

It's not that they can't afford it, or that it would hurt their business in any way. it's that they simply don't want to.
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Last edited by samiwas; Nov 11, 2012 at 09:41 AM.
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Old Nov 11, 2012, 09:40 AM   #15
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When we're done guessing at Papa John's math, add any restaurant chain owned by Darden (Olive Garden, Red Lobster, etc) to the boycott list. I linked a while back to an article that they were testing (in FL IIRC) cutting employee's hours to the magic under 30 mark so they wouldn't have to pay benefits, in response to ObamaCare.

Oddly enough, the CEO Of Darden is an Obama supporter and donor. Go figure.
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Old Nov 11, 2012, 09:44 AM   #16
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Wow, talk about a failure to your shareholders. As said, this could have been turned into a marketing campaign that would have likely seen their sales soar.

Let's say that a rise of $0.15 in wholesale cost translates into $0.50 (very high estimate) at retail. Is the demand elasticity such that people would stop buying or buy fewer pizzas? Give me a break.
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Old Nov 11, 2012, 09:48 AM   #17
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This is why i love the NHS
I'd also prefer that business gets taken out of the healthcare equation altogether.

But that would require a leap that conservatives are loathe to take ... one to government-managed universal healthcare.

Is there a conservative member here who would support something like NHS here in the U.S.?
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Old Nov 11, 2012, 09:53 AM   #18
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I'd also prefer that business gets taken out of the healthcare equation altogether.

But that would require a leap that conservatives are loathe to take ... one to government-managed universal healthcare.

Is there a conservative member here who would support something like NHS here in the U.S.?
NOPE, saw it in the navy, loss of functionality in my left hand waiting for a board to review my case. After numerous diagnosis the result was the same. Dragged their feet long enough the injury resulted in nerve damage.

In the civilian would with insurance, I had a broken foot from hockey, 3 days after seeing the doctor I was on the table, 8 days foot back in a skate, 11 days back on the ice.
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Old Nov 11, 2012, 09:55 AM   #19
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NOPE, saw it in the navy, loss of functionality in my left hand waiting for a board to review my case. After numerous diagnosis the result was the same. Dragged their feet long enough the injury resulted in nerve damage.

In the civilian would with insurance, I had a broken foot from hockey, 3 days after seeing the doctor I was on the table, 8 days foot back in a skate, 11 days back on the ice.
In the UK you can choose private health insurance too, though the NHS can also respond very quickly when necessary. Your experience of naval bureaucracy does not invalidate the model.
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Old Nov 11, 2012, 09:57 AM   #20
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NOPE, saw it in the navy ...
So one vote against NHS.

Do you have preferred model to follow?

Would you like to keep businesses involved, or do you prefer another method?
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Old Nov 11, 2012, 10:07 AM   #21
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NOPE, saw it in the navy, loss of functionality in my left hand waiting for a board to review my case. After numerous diagnosis the result was the same. Dragged their feet long enough the injury resulted in nerve damage.

In the civilian would with insurance, I had a broken foot from hockey, 3 days after seeing the doctor I was on the table, 8 days foot back in a skate, 11 days back on the ice.
That's why most of us would prefer a universal healthcare system, with a private insurance market running alongside it. If you want to pay extra for extra service, then that is your choice. Hell, maybe even give and extremely small tax break to those who choose extra private insurance.
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Old Nov 11, 2012, 10:24 AM   #22
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OMG, that house is ridiculous. It looks like there's some kind of underground entrance on that bridge.
He lives on a golf course???

Who the **** does he think he is, Auric Goldfinger?????
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Old Nov 11, 2012, 10:25 AM   #23
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So one vote against NHS.

Do you have preferred model to follow?

Would you like to keep businesses involved, or do you prefer another method?
I like what I have now, so keeping business involved suits my needs.

I think there should be a choice for companies and the person.
Obviously medical coverage is a huge expense to any company large or small.

If a person is on Unemployment there should be coverage. Cobra costs big $.

Companies that hire part time should be taxed if benefits are not provided. this tax is tax deductible.

The employee should also be expected to contribute as well. which is also tax deductible. Set a % like medicare and taxes. All workers get tax and if they are fully covered by private insurance they get that deduction back when they file taxes.

Private insurance companies become more active in pooling small business in bringing larger number of members to them to drive down rates. Group negotiations like large companies. Tax incentives for removing the burden from the government and tax payer.
Obama has increased the tax deductions for medical coverages. Continue it.

My company contributes quite a bit, hence trying to get in for 3+ years and 67 applications and 5 interviews 3 rounds a piece. I pay less than $300 a month for medical, dental and eye for the family.

Those needing the coverage need to kick in as well, not make it a free ride, not looking to break them, just contribute.

Let's be honest a $2000 fine per employee isn't incentive for a business to play nice.

The other side of it is; I am more in favor of private insurance as it doesn't solely depend on tax dollars to operate.

There isn't a perfect solution but I think more cooperation between the private sector and laws need to be looked into.
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Old Nov 11, 2012, 10:27 AM   #24
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Hell, maybe even give and extremely small tax break to those who choose extra private insurance.
I'm not even sure why that tax break would be necessary. If you want more, then pay for it.

But the model of a baseline UHS system supplemented by private insurance is the way to go in my book as well.

Now if we could just convince our conservative friends, we could free business from the burden of providing health insurance altogether.

Make Papa Johns a moot point.
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Old Nov 11, 2012, 10:29 AM   #25
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Democrat voters now finding out what it means to have universal health care?

There is a reason that here in the UK we have an additional income tax called national insurance that runs at about 12% - this is in addition to income tax, which ranges from 20% to 50%. We also have 20% VAT on almost every product bought.

Seems like there was a desire for this healthcare, but when it comes down to paying for it people have had other ideas.
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