Subway CEO says don't worry about Obamacare

He argues that while it will make his industry less competitive, at least all operators are facing the same problem.

By Jonathan Berr Feb 27, 2013 4:09PM
A Subway shop in New York City (© Ben Hider/Getty Images)Subway CEO Fred DeLuca, who founded the sandwich chain 47 years ago at the age of 17, has urged his franchisees not to "worry about" Obamacare, according to Nation's Restaurant News, a trade publication.

"It’s going to affect the food business and it’s going to make it less competitive, compared to eating at home, for instance," he said. "But probably every operator will have to deal with this. It will be an extra cost on the average hour that you have to pay for. And probably people will raise their prices and pass it on to the consumer."

Dunkin' Brands (DNKN) and other companies that depend on part-time workers are lobbying the Obama administration to relax requirements that they provide health insurance for people who work as little as 30 hours per week. Employers with 50 or more workers are required to offer what's known as "minimum essential" health insurance. Critics say the mandate would create onerous financial burdens on many businesses.

For Subway, Obamacare would apply to franchisees with multiple locations becaues the typical store has about 12 employees. The closely held Milton, Conn., company is taking a more measured tone toward Obamacare than others in the restaurant industry with good reason. As NBC News recently noted, Papa John's (PZZA), Denny's (DENN) and Applebee all saw their reputations suffer among consumers because of critical comments their executives made about the Affordable Care Act.

Speaking later on CNBC, Deluca said Obamacare was the "biggest concern of our franchiees because they don't have enough information" on its potential impact. Their unease understandable. A company spokesperson could not be immediately reached for further comment.

As my colleague Aimee Picchi recently noted, employers pay about $4,664 to insure a single worker and $11,329 for a family on a yearly basis, which is far more expensive than the $2,000 per worker penalty companies face for not following Obamacare starting next year. Many critics say business will find it financially sensible to pay the penalties rather than provide health insurance.

According to data from the Congressional Budget Office cited by the Heritage Foundation, a conservative think tank, Obamacare will result in 6 million fewer Americans enrolling in employer coverage by 2016. However, the nonpartisan FactCheck.org disputes the idea that Obamacare is a "job killer."

"As we’ve said before (a few times), experts project that the law will cause a small loss of low-wage jobs -- and also some gains in better-paid jobs in the health care and insurance industries," FactCheck says. "Furthermore, some small businesses with fewer than 25 employees are already getting tax credits under the new law to help defray the cost of providing worker coverage."

The debate over Obamcare's impact on the economy won't be over for a long time.

--Jonathan Berr doesn't own shares of the listed stocks. Follow him on Twitter @jdberr.
666Comments
Feb 27, 2013 5:41PM
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What the hell....we're all going to have to deal with this crappy bill.  It's equal for all of us...how nice.
Feb 27, 2013 5:39PM
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The CEO of Subway and Obama have something in common - neither one knows how to cut pork.
Feb 27, 2013 5:31PM
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Not to worry , they'll just make sure nobody gets more than 29.5 hrs. a week. Most every store is franchised and has less than 50 employees on average, so the operators just incorporate each store as a separate entity. There are so many ways out of having to go along with Obamacare.
Feb 27, 2013 5:31PM
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Obamacare was built on lies, false information and passed by being pushed through a democratic controlled majority.  They had a chance to do it right but failed.  Now we the taxpayer will take another

one for the unions, illegal's and brainwashed.

Feb 27, 2013 5:27PM
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Liberals don't get it it is simple physics every action has a reaction .If you make companies pay more to conduct business they  will pass it on to you .simple .
Feb 27, 2013 5:27PM
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Oh Bullsht...companies do not lose business because they speak their mind about Odumbo care. Worthless liberal media drone. Palinfreak you're an idiot. Who gives a rats azz where you eat.
Feb 27, 2013 5:24PM
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I'll happily pay more for goods and services so that more of my fellow Americans have access to health insurance.  Shame on you who say otherwise.
Feb 27, 2013 5:18PM
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We need single payer health care! Nothing less, I say all workers should stay home until we get it. Let Pappa john make his crappy pizzas, Let the owners of the car dealerships sell, wash and detail all the cars, Let the CEO's of the factories make the product, Why should we work if we cant afford to live?

Feb 27, 2013 5:15PM
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Obamacare is just wrong.  I want the people that make me a sandwhich or a Pizza or serve me at Applebees to be sick and untreated. That saves me money.



OK end of Sarcasm
Feb 27, 2013 5:12PM
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As the blossom of Obama care unfolds it's petals each new petal reveals gentle reminder that it is going to cost a little more here and a little more there. It is getting to the point that some are willing to pay a fine instead of buying insurance. Obama and his band of merry followers missed one little item on the cost of health care. IT COSTS TO MUCH.  Shush we would not want that tidbit of info to be common knowledge. One of my big clues was for a 24 hour hospital stay there was a $12,000 miscellaneous room charge.
Feb 27, 2013 5:12PM
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What else is going to blame on Obama? - Gas prices? Corn Prices? Carrot Prices, Prostitutes Prices?    Just like in my business, if the cost of raw material goes up, it get gets passes onto the consumer, it does not make me less completive. It's only business 101. 
Feb 27, 2013 5:06PM
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I will continue to buy from subway. I will never patronize Pappa johns, Dominoes pizza, Wendy's, Whole foods, dunkin doughnuts, Applebee's however. If you can not give your employees health care then you will never get another dime from me!  Pappa johns can give away 3 million Pizzas  but they cant give health care to their workers? The republicans are greedy, soulless azzholes.
Feb 27, 2013 5:00PM
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Sure companies are going to pay the $2,000 per worker penalty because it is a tax and deductible on the income taxes the company pays.
Feb 27, 2013 4:59PM
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Everyone, I mean every one of us, deserves decent basic healthcare that doesn't bankrupt us.  Boycott the whining businesses, like Denny's (with poor food anyway).  Pay 25 cents more for a Subway sandwich.  Reduce the defense budget and use it to support healthcare.
Feb 27, 2013 4:46PM
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The CEO of Subway is complaining about Obamacare and his company makes foot-long subs that aren't even 12 inches long?  What an idiot.

Feb 27, 2013 4:39PM
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Obamacare and Subway have something in common.... they misrepresent themselves.

 

$5.00 ... $5.00   11" sandwich.......... $5.00... $5.00  11" sandwich

 

There I fixed it for you..... It's a penality baby....... I mean it's a tax baby... won't cost a dime.

Feb 27, 2013 4:34PM
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Anything Obama touches turns to dust!!!
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