STUMP » Articles » Followup to an Obamacare Boycott » 11 December 2015, 06:29

Where Stu & MP spout off about everything.

Followup to an Obamacare Boycott  

by

11 December 2015, 06:29

I know I keep all my liberal/leftist friends on facebook for some purpose.

One linked to this story from three years ago:

It turns out that being a good corporate citizen is as important to selling pizzas as the thinness of the crust or the quality of the cheese.

If you don’t believe it, just ask Papa John CEO, John Schnatter.

As covered—and criticized—in this column in great detail, Mr. Schnatter decided to mix his politics with his pepperoni when suggesting that he would be cutting the work hours for Papa John employees in order to bring them below the 30 hour per week threshold that would require Schnatter to provide his employees with healthcare benefits.

It turns out, the pizza eating public did not approve.

Indeed, so serious was the reaction that Schnatter was forced to publish an op-ed piece where he sought to convince us that he never really intended to cut back worker hours but had simply been speculating on what he might do in response to the legislation.

According to YouGov BrandIndex, a leading marketing survey that measures brand perception in the marketplace (called “Buzz”), Papa John’s had good reason for concern as the pizza chain’s brand identity has plummeted from a high of 32 on election day, to a remarkably low score of 4 among adults who have eaten at causal dining restaurants during the past month.

Ooookay. Brand identity. Here’s the graph:

Squint hard enough and you’ll see that the three groups converged on about where the whole sector was.

But let’s pretend that sales were affected by this drop in brand identity.

It’s been three years. What has happened to the three groups named?

STOCK MARKET RESULTS

Papa John’s:

Denny’s:

Darden Restaurants:

Yeah, really looks like they’re hurting.

But let’s be fair. Let’s put them all on one graph, with percentage change since Dec 10, 2012, and match up against the S&P 500:

So it’s not been the same story for all three. Darden is struggling — barely keeping up with the S&P 500. The other two have outperformed.

My guess is that none of it has anything to do with their public statements re: Obamacare. Thought Obamacare’s effects on their operations may be pulling some down.

WHEN STORIES AREN’T ENDED

I guess we see why Rick Ungar didn’t follow up on his 2012 article:

Hopefully, other businesses seeking to avoid their responsibilities under the healthcare law—such as Walmart who intends to cut back employee hours in the effort to push workers onto Medicaid rolls rather than take responsibility for their employees’ health care—will get the message.

I like to revisit my stories, to find out what happened. It’s so pleasant to come up with just-so explanations, but one does want to know how it ends.

Sometimes how it ends doesn’t back up your original story idea.

I, too wondered, what happened with other restaurants. Not everybody’s restaurant is in the public eye, and maybe only Denny’s, Darden, and Papa John’s were the ones planning to cut hours in response to Obamacare. Maybe everybody else was just going to soak up the cost.

A STORY FROM TENNESSEE

Look what Lamar Alexander had to relate:

Some time ago I met with a large group of chief executive officers of restaurant companies in America. The service and hospitality industries are the largest employers in America. Restaurant companies are the largest employer of low-income, young, usually minority people.

In that meeting, the chief executive officer of Ruby Tuesday, Incorporated, which has about 800 restaurants, said to me — and he didn’t mind being quoted — that the cost to his company of implementing the new health care law would equal his entire profit for the company last year and that he wouldn’t build anymore new restaurants in the United States as a result of that.

Another, even larger restaurant company, said because of their analysis of the law, instead of operating their stores with 90 employees, they would try to offer it through stores with 70 employees. So that means fewer employees, and it means fewer employees receiving employer health care.

More recently, another family franchise business – which employs 550 people and operates under the name of a well-known brand—told me “we have already begun cutting the hours of our employees to get well below the 30 hour thresh hold, and all of our new job postings are for part time positions only. Adjusting the hours of our current employees has had a dramatic impact on the employee employer relationship, causing the loss of other fringe benefits such as loss [or] reduction of vacation eligibility, reduction [or] elimination of discretionary bonus programs, and an increase in the loss of eligibility [and] participation in 401(k) retirement programs. These are all unintended consequences of the decisions employers have had to make due to the mandate. … Without a change in the law, the costs of health care will exceed our net profit, regardless of whether we cover our employees or pay the penalty, and small businesses cannot absorb these costs.”

That was said about two weeks ago.

Seems like a great time to followup on your story, Ungar.


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