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 7:11PM
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The interesting part about this whole debate that no one talks about are the multitude of  tests that people are needlessly runthrough daily by some doctors.  I was employed by a major medical device manufacturer for a time and saw patients being run through eye scans in basically an assembly line of various tests.  Most people under 50 would not have the need to be examined for tests on this equipment.  One test taking less than 5 min cost approximately $450.  There must have been 20 people waiting to be tested on this equipment and not one of them was over 45 in my estimation.

 

I have been for eye exams many times and over the years and inevitably they put me on equipment for various tests despite the fact that the causes of glaucoma have not been scientifically defined.  And despite the fact that glaucoma in healthy people under 50 years of age is quite rare.  Health care is broken but simply because of the rampant profiteering by health care providers. 

Feb 27, 2013 7:10PM
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When are we going to acknowledge that these companies are making record profits?  The owners and CEO'S could afford to take a little less to keep their employees healthy and keep their customers happy and coming back.  If you think that uninsured people do not increase costs for the rest of us, you have been living under a rock! 
Feb 27, 2013 7:10PM
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You knew that once this baboon got in there he would take money via taxes from the working class people, 95% of which are white and directly hand feed the non-working loafers (95% colored) free food stamps, medical coverage, education-what a joke that is and perpetual unemployment. This Osamacare is the beginning of the end for White America. Drive thru Philly, Wilmington, Camden every day of the week and the animals are standing around like the losers they are. Getting a check, now gonna get free insurance. All the while we will be paying through the nose for our now expensive crappy coverage.
Feb 27, 2013 7:09PM
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So, basically, the CEO of Subway just said that he is just going to pass the Obamacare cost on to the consumer...no big deal!  What is going to happen when his "$5 footlong" becomes $7.50 footlong?  Does he think consumers (who will have to pay for their own health insurance on top of paying for Subway's employee's insurance) are going to be trampling down his door for sandwiches that are no where near what they are advertised to be???  Or is he just going to cut that meat a little thinner and the cheese a little thinner and give you less toppings?? 
Feb 27, 2013 7:08PM
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New jingle: 12...12 dollar...12 dollar footllloonnnngggg.

We'll call it a math lesson for the masses. 

Between this and the new minimum wage eating at home will be suddenly much more appealing. Should cause a shift to groceries. Oh wait they have both Obamacare and min wage issues too. Milk and bananas just went up. Crap, everything is going up. 

Those of you who think Obama won you these things or they will be given to you at no cost please pay attention to cause and effect this time around.  
Feb 27, 2013 7:08PM
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YOUR DISLIKE OF THE PREZ MAKE YOU NOT UNDERSTAND THE PROBLEM. NUMBER ONE YOU PAY FOR THOSE THAT DO NOT HAVE HEALTH INSURANCE IT IS CALLED EMERGENCY ROOM WHICH YOU PAY RATHER YOU LIKE IT OR NOT EVEN IF YOU NEVER GO YOU PAY FOR IT YOU PAY FOR THOSE AMBULANCE DRIVERS THAT YOU SEE SITTING SOMEWHERE YOU PAY FOR ILLEGALS THAT GIVE BIRTH AND EVERYTIME THEY GO TO THE EMERGENCY ROOM YOU PAY FOR THEIR KIDS THAT GO TO THE EMERGENCY ROOM SO YOU ARE PAYING SO WHAT IS WRONG WITH MAKING PEOPLE PAY  FOR THEIR OWN HEALTH CARE.IS THAT WHAT THE REPUBICANS ARE ALWAYS PREACHING NO FREE RIDE SO WHAT IS THE PROBLEM.
Feb 27, 2013 7:08PM
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Of course the consumer will pay the cost of it all.  That is what he is for.
Feb 27, 2013 7:07PM
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if obama care is so good why doesn't he have it?
Feb 27, 2013 7:07PM
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just some Commie inflation and some extra "taxes" to cover this new burden. It will create a huge bureaucracy  and make the rest of the government look efficient. Thanks Comrade
Feb 27, 2013 7:06PM
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much ado about nothing. 50 employees before they even have to deal with this just means they incorporate into smaller units instead of under just 1. Then they are exempt and life goes on for the million dollar owners.  Yes if they own 5 Subways they have a million dollar business for those who do not know what a franchise costs.
Feb 27, 2013 7:06PM
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Sure am glad our lawmakers are exempt!
Feb 27, 2013 7:05PM
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Don't worry about Obama Care. Are you kidding? Who is this moron? PS  Your food sucks also.

Feb 27, 2013 7:03PM
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Obamaville - home of the Fightless Lemmings
Feb 27, 2013 7:01PM
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Leave it to MSN to try and put lipstick on a pig.
Feb 27, 2013 7:00PM
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We have to pass the before  you can see whats in.it. Yeah,  that  was pelosey, Ried, and Bo.. Like those  3,  know what s best for everyone.  
Feb 27, 2013 6:58PM
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MSN couldn't tell the truth if someone put an assault weapon to their heads. 
Feb 27, 2013 6:57PM
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Protests will just bring single payer insurance, eventually. Getting rid of the middle-man (insurance companies) will, hugely, bring the cost of coverage down.
Feb 27, 2013 6:57PM
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....The cost of living has and will continue to go ...UP...under B H Obama.....

Feb 27, 2013 6:52PM
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Gee, you think the title to the story on MSN's homepage was a little misleading?
They made it appear that Obamacare was no problem for a CEO. When in fact, the CEO was not endorsing it at all. he was pointing to the fact that the "problem" will be felt by everyone....
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!

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