Papa John’s Founder/CEO John Schnatter came under fire and suffered through some bad PR, including a Facebook-driven boycott, and some barbs delivered by Jon Stewart, when he called out potential threats posed to his business by the Affordable Care Act, aka Obamacare.
In response to that, and at the urging of a PR firm specializing in crisis communications, he has come back to rebut what he calls the “inaccurate” reports by writing this blog post for Huffington Post.
At his PR firm’s suggestion no doubt, he now claims he never said anything about closing stores, firing employees or raising prices on his company’s pizzas due to regulations imposed by the law.
A little background. On August 1st, 2012, Schnatter made several statements in a conference call regarding the potential costs to the company that may arise as a result of Obamacare legislation. On August 7th, the political blog Politico published an article about the conference call titled “Papa John’s: ‘Obamacare’ will raise pizza prices.”
“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. 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 If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect our shareholders best interests.”
“If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect our shareholders best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.”
Following Obama’s re-election, several media outlets quoted Schnatter saying he may cut employee hours to avoid paying for employee health insurance under the new health care reform laws.
In the wake of all this negative media attention, Mashable reported that Papa John’s score on the YouGov Brand Index, which averages positive and negative reviews of a brand on the web, had dropped from 100 to 49.
Following Schnatter’s threats to cut employee hours, the hashtags #BoycottPapaJohn, #BoycottPapaJohns and #PapaDouche began circulating on Twitter.
Some people even posted aerial photos of Schnatter’s 40,000 square foot mansion in a gated community in Louisville, Kentucky, with captions such as “He Doesn’t Knead The Dough.” So it got personal.
Now, back to the HuffPo letter. It’s not long into the piece for the first discrepancy to appear. Papa John doesn’t say anything about the conference call or the initial Politico article when talking about how all this got started.
Instead, he says the remarks that generated the headlines were made during an entrepreneur class he was asked to speak to at a Florida college. He said he came to class to provide the students with real-life small business situations, and unbeknownst to him, until she identified herself, a reporter was there.
Reporter: “Do you think your — you know — franchise owners… are going to cut people hours back to make them part time instead of full time?”
Me: “Well, in Hawaii there is a form of the same kind of health insurance and that’s what you do, you find loopholes to get around it. That’s what they’re going to do.”
Reporter: “My understanding is that if you’re a full time employee, which is 35 hours or over, you’d be covered. Or if you’re part time then you wouldn’t be. So wouldn’t some business owners just cut people down like 34 hours a week so they wouldn’t have to pay for health insurance?”
Me: “It’s common sense. It’s what I call lose-lose.”
“Wouldn’t some business owners just cut people down like 34 hours a week so they wouldn’t have to pay for health insurance? It’s common sense. It’s what I call lose-lose.”
The reporter asked what I believed Papa John’s franchisees would do in response to Obamacare, not what Papa John’s would do. In fact, her question was “wouldn’t some business owners just cut people down like 34 hours a week so they wouldn’t have to pay for health insurance?”
My answer: “It’s common sense.”
So I guess he described the act of cutting employee hours to avoid paying additional insurance fees as “common sense,” but he never directly stated that Papa John’s planned on doing it. Got it?
In the HuffPo piece, Papa John claims he said some other things about the legislation that weren’t very widely reported.
- “The good news is 100% of the population (full-time workers) is going to get health insurance. I’m cool with that.”
- “We’re all going to pay for it. There’s nothing for free.”
- “And this way I get to provide health insurance and I’m not at a competitive disadvantage … our competitors are going to have to do the same thing.”
In closing Schnatter says, “Papa John’s, like most businesses, is still researching what the Affordable Care Act means to our operations. Regardless of the conclusion of our analysis, we will honor this law, as we do all laws, and continue to offer 100% of Papa John’s corporate employees and workers in company-owned stores health insurance as we have since the company was founded in 1984.”