Maybe John Schnatter, the CEO of pizza chain Papa John's, was embracing transparency when he said the Affordable Care Act will force his company to raise prices – or maybe he was making an overt political statement.
Either way, his comments did little good for his company, other than making it the latest fast-food chain to take a side in the country's polarized political climate.
Schnatter said that the healthcare law, which will go into effect in 2014, will “cost 11 to 14 cents per pizza, or 15 to 20 cents per order from a corporate basis.” Yet Papa John's “business model and unit economics are about as ideal as you can get for a food company to absorb Obama-care,” he explained.
PR Play rating:
3. On the right track
Many business leaders have said that the Affordable Care Act will cost them on some level, and surely most are not happy about that. However, Schnatter inadvertently raised the question of why his employees don't have healthcare in the first place?
If his intent was to make a statement that the healthcare law isn't business-friendly, as is his right, his allusion to higher prices probably didn't make any fiscal conservatives happy either. Even worse, Schnatter opened up his company to jokes that fast-food chains are actually one of the biggest reasons that consumers need healthcare in the first place. The statements also hurt consumer perception of the brand online as discussion of Papa John's went negative quickly, said analytics firm NetBase.
Of course, Schnatter, like any business leader, has to adjust his plans for changing costs. However, his comments made it seem he was avoiding giving his employees basic healthcare services until his hand was forced – and then begrudgingly. And by taking a side on a lightning-rod issue such as the Affordable Care Act, he was sure to make some large percentage of his customer base unhappy. Fast-food chains, like any other businesses, are popular on both sides of the political spectrum. They should work to keep their message friendly to both red states and blue states.