The Goat Pen

I'm doubting this bankruptcy is due to unions, really. The more I read, it seems they had a role, but this narrative is just too convenient. Looks like a private equity land grab (in the form of yield and salaries) and then letting it go under because there was no time to turn around the operational inefficiencies with the company.

The unions are just the bogeyman.

I think this kind of narrative is to be expected with more to come.

Papa John's talks about having to raise pizza prices and cut back on employee salaries due to Obamacare on the heels of them giving away 2 million pizzas

Denny's plans on adding a surcharge to their meals

I don't doubt that there are going to be cost increases but I have to believe its going to be primarily to the companies that were operating on the assumption that the government was going to provide their employees healthcare anyways - just not at their expense.

Papa Johns didn't give away 2 million pizzas for the hell of it or becuz PeyPey said so. It was to sell even more pizzas and cover that cost. 2 million pizzas probably cost like $1 each excluding labor.

aTm wrote:Papa Johns didn't give away 2 million pizzas for the hell of it or becuz PeyPey said so. It was to sell even more pizzas and cover that cost. 2 million pizzas probably cost like $1 each excluding labor.

thanks for econ 101 - but I'm pretty sure I grasped that when I wrote it.

the point I was making is he is crying cost overruns on Obamacare while doing "loss leader" promotions as an approach to sell more pizzas. Those cost overruns by his own admission is .11 per pizza.

Don't you just hate it when companies become sustainable....stay off the dole...and pay, gasp, dividends....

I fail to see how running loss leader promotions is at all relevant.

aTm wrote:I fail to see how running loss leader promotions is at all relevant.

Between variations in sales taxes, fluctuations in ingredient costs especially during a time of record drought, and place-to-place differences in rents,etc., the 11 cents per pizza is nothing. If he is capable of running a gamble on a loss leader promotion to promote pizza sales, then I don't think see where he should be taking steps to avert the costs for healthcare.

I'm not for it but it just sounds like bullshit when these guys talk about passing the cost to the consumer or making the employee bear the brunt of this.

one study also concluded

Melby’s analysis shows that Obamacare would increase Papa John’s expenses by only a fraction of a percent, and his proposed increase would not only cover said expense — but it might even result in an increase in revenue. For example, if Papa John’s were to sell exactly 50 percent large pizzas and 50 percent medium pizzas, Melby explains, prices would only have to increase 3.4 to 4.6 cents a pie to cover Obamacare costs. Melby notes that although Schnatter may have other reasons to increase prices, ”attributing all price increases to Obamacare would be disingenuous.”

Looks like Obamacare may be a revenue producer for an adept CEO that passes the cost to the customers.

In San Francisco which enacted health care laws before Obamacare, they found that some surcharges added to bills were in fact going directly into the pockets of owners because a combination of tax credits and other incentives.

We've heard this for years from business owners regarding the minimum wage, yet seldom do we see noticeable price increases in the cost of the product passed to consumers.

11 cents is nothing. Yes, I understand that and can see your argument, but it still doesn't follow that their marketing strategy is in any way connected (or even that its a gamble) with this except as a heartstring tug to people who will misinterpret it. Papa Johns gave away pizzas because their analysis was that doing so would actually make them more money on pizzas.

Better Sass. Better forums. The Goat Pen.

29-24

A Pizza Hut ad just showed up on my "View Unread Posts" page...

Do those numbers have relevance to pizzas?

I remember when all Hostess stuff was wrapped in tin foil. Hell, we collected them and made a ball as kids growing up. Digging through my moms basement last week I found the ball. Fuck you. I'm old. Why she still kept it in the downstairs freezer all these years I'm not gonna ask at this point.

"The Ho-Ho's are Twinkies must flow!!"

I'm hoping that's a deliberate Dune reference, but even if it is, it leaves on in a quandary as to associate BRM with Duke Harkonnen or one of the actual worms. A quandary indeed, b/c both comparisons are equally apt...

Harkonnen was a baron not a duke!!!

"Papa Johns gave away pizzas because their analysis was that doing so would actually make them more money on pizzas."

I thought it was for customer appreciation...

;-(

aTm wrote:Harkonnen was a baron not a duke!!!

WTF?!

hedge wrote:"The Ho-Ho's are Twinkies must flow!!"

I'm hoping that's a deliberate Dune reference, but even if it is, it leaves on in a quandary as to associate BRM with Duke Harkonnen or one of the actual worms. A quandary indeed, b/c both comparisons are equally apt...

Yes. Yes it was.

Twinkies are the mind-killer.