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.
680Comments
Feb 27, 2013 6:48PM
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We were all better off with the health care system we had. At least we wouldn't have had a bunch of radical left ideologues writing the legislation or a waistful bloated government controlling it!

Feb 27, 2013 6:48PM
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Yeah, more of that transparency from the "most transparent administration ever."  There are costs everywhere in this Obamacare bill, and we all will pay for it in the end.  There is no "free lunch", even at Subway!
Feb 27, 2013 6:47PM
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I wish this would go away. There are changes that need to be made to healthcare but this is not the answer.
Feb 27, 2013 6:43PM
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The sky will not fall.Just like when the minimum wage is raised some moan that they will lay people off blah,blah and blah.Subway and their competitors will still flourish.
Feb 27, 2013 6:42PM
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Man..It looks like "half the people" that commented on this are morons or imbeciles...

 

No sense pointing them out or responding to idiotic statements..They wouldn't understand anyway.

Feb 27, 2013 6:40PM
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screw the whiners. Low income people deserve good medical coverage. The rich have raped this country long enough. Too many fat cats getting fatter as the poor suffer.
Feb 27, 2013 6:34PM
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Yes, critical comments can cost you dearly. Now if you made critical comments about GW Bush then that would be okay because the liberal government run media would approve and applaud. But, if you challenge the ideologue and his anti-american and anti-business treasonous policies, that would be totally unacceptable. That free speech thing goes totally against the grain of the pathetic parasite.
Feb 27, 2013 6:30PM
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Folks, insurance is very simple. It costs money. Who has through their employer FREE coverage? I and my wife are retired and on medicare. Our cost for medicare, supplemental and drug coverage in 2012 was $8,996.00. that amount was 21% of our total income. Eldest son, wife and 2 children with company coverage out of pocket including dental and eyewear was $12,422.00. That amount was 23% of their income. Our daughter, husband and one child with company coverage out of pocket including dental was $9,012.00. That amount was 18% of their income. Youngest son, wife and 2 children with company coverage out of pocket including dental and eyewear was $10,311.00. That was 20% of their income. Every company who provides health insurance, sick days, vacation days, education reimbursement, day care and other benefits passes these costs along to the consumer. If any of you don't know this, please be informed. Before retirement I was a cost controller for a major auto manufacturer. For your information and this is for all auto manufacturers the word profit is not a dirty word. The average markup from build to retail is pretty close to 66%. Simply put, a forty thousand dollar sticker cost a little over $13,000.00 to produce. Now do you think healthcare is expensive?
Feb 27, 2013 6:29PM
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No health care, no sick days and no minimum wage increases for employees'. That way when an employ gets sick and HAS TO go to work, we can all get sick and company profits would not be affected.... Brilliant GOP !!
Feb 27, 2013 6:29PM
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All the more reason for health care to be completely divorced from employment. They are totally separate issues.
Feb 27, 2013 6:26PM
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If they cut workers to part time, I'll be eating my subs somewhere else. So far, so good, we'll see what happens.
Feb 27, 2013 6:24PM
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It is global embarrasment that we are the riches most powerful nation in the world and we cannot even provide universal  health coverage for our citizens. Hell I pay almost $1000.00 a month for our family health, dental and vision insurance then I have a $3000.00 annual deductable. And this though my work.  In my eyes it cannot be much worse than that.. $15000.00 before i see a nickle of it in a return. But thank god I had it when my 13y.o. daughter came down with Type 1 diabetes.  I would have lost everything, so if I have to pay a .25 cents more for a sub and we have coverage for all. GREAT!!  Obama could of given the the Conservatives/Right Wringers the Perfect Bill and you would still bitch Because it vis from OBAMA.  The funny things is you right wingers do not have a plan. You are totally clueless but sure can bitch well.

 

Feb 27, 2013 6:23PM
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It's unfortunate that health insurance ever became a means of compensation from an employer.  We go down a slippery slope when the government goes beyond establishing minimum wage in how a company compensates its workers.  What's next?  The establishment of a maximum wage?  We wouldn't want people to get too rich, because that's unfair.  Is this the next step for America?  I worry.  What happened to the America where people pull themselves up by their bootstraps and make something of themselves?  My parents' generation would have sooner died than go on the dole.  Now we have a government that acts like a benevolent parent, shelling out allowances to the children, regardless of whether or not they did their chores.
Feb 27, 2013 6:13PM
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Well, I understand the cost thing but I also understand the safety and quality of life thing. Safety and quality is worth the cost. So I guess I'll enjoy more Subway in the future. This isn't hard since there's a subway on every other corner.

 

I don't need dunkin dough making me and mine worse off or a pizza chain damaging my over all quality of life. However, I like pj's pizza so I may still buy it but I may buy less since subway is closer to my home and heart that I live by.

Feb 27, 2013 6:12PM
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In Hawaii, small businesses that employ someone for over 20 hours are required to provide healthcare...as a result.everyone has two jobs because each job only provides 19 hours of work. Thanks Democrats. 
Feb 27, 2013 6:08PM
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No problem.  Here in the president's birth state we already have the SIX dollar 11 3/4 inch subway specials.  With Obamacare and a new minimum wage hike the "foot long" subs can be conveniently priced at an even TEN DOLLARS (plus tax)!
Feb 27, 2013 5:57PM
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I would rather pay a little more for my fast food than pay a lot more for my health insurance because of having to pay for those who go to the ER who are not insured.
Feb 27, 2013 5:52PM
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A lot of idiots out there obviously have health insurance. So I have to pay $0.05 more for a donut so someone can have health ins. so be it. I didn't realize there were so many selfish ill-informed people out there.
Feb 27, 2013 5:48PM
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 The idea of everyone from CEO down to minimum wage getting good healthcare is a noble idea and worth pursuing. However, the way I see this plan working out  for the average person is as follows:

 

(1) Fast food (any minimum wage type industry) raises prices to offset cost

(2) Middle income to low income stops eating out

(3) Fast food jobs disappear due to lack of demand

(4) More people on loose jobs

 

For the upper class - nothing changes- They are not going to own a company in the US just to provide jobs. They will invest outside the US and retain their level of income. This is true from the most liberal to the most conservative, from Obama to Romney

Feb 27, 2013 5:46PM
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Everything obongo and demorats attempt turns to crap and costs us more money. Typical liberal wingnut bull.  Tax and spend.
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