Papa John's boycott threatened over CEO's Obamacare comments

Nov. 13, 2012 | by Alicia Kelso
Papa John's boycott threatened over CEO's Obamacare comments

This year's presidential election featured hot tempers on both sides, fueled by a record amount of money being poured into vitriolic campaign ads. And while some of that rage is dissipating, Papa John's is now finding itself in the middle of a continued, fiery debate.

The divide stems from CEO/founder John Schnatter's post-election comments reiterating the costs and consequences the Affordable Care Act — also known as Obamacare — will have on the company.

The day after President Obama's re-election — Nov. 7 — Schnatter told a crowd in Naples, Fla., that the law will increase his business costs and possibly result in a cut in employee hours. The law was upheld in the summer by the Supreme Court and, due to President Obama's re-election last week, is not likely to be further challenged.

The statement in Florida reiterated what Schnatter said during an early August earnings call:

From our point of view, Obamacare will cost about 11 to 14 cents per pizza, or 15 to 20 per order, from a corporate basis ... 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 ... If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect shareholders' best interest.

And, just as in August, another social media firestorm has erupted around the brand, with Facebook fans "unliking" the Papa John's page, promises of boycotts and memes-gone-viral.

One poster commented: "I recommend shopping at any other pizza retailer. If this company can't prioritize the quality of their employee's lives over their own business motives, then they are probably not prioritizing the quality of their pizza over their business motives either."

An op-ed in Opposing Views supported a boycott as well, writing: "Yes, 14 cents per pizza is the cost of health care for his employees so they can remain healthy and be more productive. This is nothing more than corporate greed at its worst ... These companies make millions in profits each year and its workforce is amongst the lowest paid and hardest working in the country. And they care so little about the health and welfare of their employees that they would rather cut their already few low-paying hours than make sure that they are taken care of."

However, the Louisville, Ky.-based company has also gained its share of supporters following Schnatter's comments.

One Facebook fan wrote: "I'll be supporting Papa John's and any other company who will have to make similar sacrifices. The government should not be allowed to tell you how to run your business. Insurance is a BENEFIT of working for a company and it should not be a requirement to the owner. But according to Obama, John S [Schnatter] didn't really build this company, so I suppose it isn't up to him to make these decisions ..."

Also, according to Fox News, a group called Rebooting America is proposing that Nov. 16 be a national day of appreciation for Papa John's, reminiscent of a similar day in support of Chick-fil-A this summer after controversy erupted over that company's CEO's comments against gay marriage. An event page created on Facebook for the day currently has about 11,500 people participating.

Schnatter, who held a fundraiser earlier this year for Republican candidate Mitt Romney, said he isn't personally "pro or against" Obamacare, but compared it to the U.S. Postal Service: "The worst entity in the world for running the thing is the government."

He estimates the law will cost Papa John's about $5 million to $8 million annually.

"The good news is 100 percent of the population is going to have health insurance. We're all going to pay for it," he told the Naples News.

One thing is certain: The company's entire social media conversation is about Schnatter's comments, not the new double bacon six cheese pizza deal, and not the current Taylor Swift or NFL promotions.

An Applebee's franchisee in New York is also experiencing a backlash for similar comments following the election, as are Jimmy John's, Olive Garden and Red Lobster.

Read more about operations management.

Topics: Financial Management, Insurance / Risk Management, Operations Management, Papa John's, Staffing & Training, Trends / Statistics

Alicia Kelso
Alicia has been a professional journalist for 15 years. Her work with, and has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, and Franchise Asia magazine. View Alicia Kelso's profile on LinkedIn

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