Financing

A Warren Buffett experiment could cut Dairy Queen's costs

Dairy Queen and other restaurant ventures in Berkshire Hathaway’s portfolio could see labor costs decline under an experiment jointly announced today by the holding company and two other corporate giants, Amazon and JPMorgan Chase.

The leaders of the three blue chip operations said they plan to form an independent insurance company to provide healthcare coverage to the employees of their respective concerns. Because the third-party insurer would not be expected to generate a profit, rates would likely be lower than what conventional carriers charge, the parties said in a statement issued this morning.

It was jointly released by Berkshire Hathaway CEO Warren Buffett, Amazon CEO Jeff Bezos and JPMorgan Chase CEO Jamie Dimon.

The announcement said the partners will initially focus on technology as a means of providing “simplified, high-quality and transparent healthcare at a reasonable cost.” It did not provide details.

The pool formed by combining the health insurance outlays of the three companies would be considerable. Berkshire Hathaway is the nation’s second-largest corporation, as ranked by revenues. Amazon is 12th on the Fortune 500 list, and JPMorgan Chase is No. 21. Their combined annual revenues top $465 billion.

Berkshire is no stranger to the insurance industry. Among its holdings is Geico, one of the nation’s largest auto insurers.

Its other holdings include Dairy Queen, the 4,517-unit quick-service chain, most of which is franchised, and a minority stake in Pilot Travel Centers, the parent of the Pilot Flying J truck stop chain. Flying J operates a variety of full- and limited-service restaurants at its 750 roadside facilities, including franchised Denny’s units.

Berkshire is also a major shareholder of Restaurant Brands International, the parent company of Burger King, Tim Hortons and Popeyes.

The trio acknowledged that their plan for a joint insurance entity is in its early stages. They provided few particulars about their effort, other than to stress the need for “a fresh approach to these critical matters.”

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