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.
"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.
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
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.
Obama, Biden, Pelosi & Reid said over and over ... Obamacare will not cost ANYONE a single dime.
Well .. it has cost over a trillion and still going and it hasnt even kicked in full speed yet much less all the related cost and damage it will do .... Obamacare will lead America into Failure and turns us completely into a socialist state of welfare and gov control over our entire lives
I knew I liked SUBWAY, it was because of the OWNER, keep up the good work.
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The S&P entered today's session with a week-to-date gain of 1.5% as investors expected reassuring words from today's Federal Open Market Committee Statement.
Stocks traded with slim losses until this afternoon's FOMC Statement and subsequent comments from Chairman Bernanke sent equities and Treasuries to their lows while also providing a significant boost to the dollar.
Today's Statement was ... More
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