Let’s face it, Papa John’s serves a subpar pizza, but they’re not the only ones. Their pizza is on the same level as Domino’s, Pizza Hut, and other cardboard crust and sawdust cheese products. So are their disappointing sales the result of the NFL or a more substantial issue within the company?
Papa John’s disappointed earning $.60 instead of their expected $.61 earnings per share for its 2017 Q3. Q3 does not include much of the results from this year’s NFL season. The bigger picture shows that in the last 12 months Papa John’s shares have fallen 17.35%. Its direct competitors YUM! Brands and Domino’s have seen the opposite return. Compared to its competitors, Papa John’s has lower margins and is less ambitious in its expansion.
Furthermore, other players, from Uber to BWW, are jumping into the delivery game taking away a historically dominant industry advantage. Many restaurants are changing with the times as Americans are raising their standards in favor of higher quality food. McDonald’s is a well documented case study of a low quality restaurant trying to adjust to the times.
Papa John’s can blame the NFL for its shortcomings, and to many, this comes off as a scapegoat. However, Papa John’s also has a history of crediting its relationship with the NFL for its success.
“The NFL has hurt us by not resolving the current debacle to the players’ and owners’ satisfaction,” Schnatter, who serves as the pizza chain’s chairman and chief executive officer, said on a conference call. “NFL leadership has hurt Papa John’s shareholders.”
It’s hard to quantify the connection between the NFL and pizza sales, but Papa John’s did post disappointing results in the latest quarter. Its shares fell as much as 13 percent on Wednesday — the most in two years — after same-store sales missed analysts’ estimates. The Louisville, Kentucky-based company also trimmed its revenue and profit forecasts for the year.
Schnatter has appeared frequently in advertisements during NFL games, including alongside star quarterback Peyton Manning, a franchisee of the chain’s restaurants in Colorado. Back in 2014, when Papa John’s posted a nearly 10 percent gain in North American same-store sales, the company credited its close relationship with the NFL and Manning for driving its business in the U.S.
“This should have been nipped in the bud a year and a half ago,” Schnatter said on the call. “Like many sponsors, we’re in touch with the NFL. Once the issue is resolved, we’re optimistic the NFL’s best years are ahead.”
One major NFL sponsor has started to get crusty about the impact of the national-anthem controversy on their business, delivering a piping-hot shot at the league’s big cheese. John Schnatter, familiar to fans as Peyton Manning’s foil in Papa John’s commercials, blamed disappointing third-quarter results on NFL commissioner Roger Goodell in an investor call. Shares in the pizza maker fell 13 percent at one point today, and Papa ain’t happy.
It’s a direct hit on Goodell and his leadership team, and it comes at a bad time. The owners are working on a five-year contract extension for the commissioner on the basis of his negotiating prowess in TV contracts and collective bargaining agreements. Jerry Jones is spearheading an effort among owners to stop the extension
Why are Liberals pretending like Papa Johns is making it up? All he did was further confirm what we already see in the ratings. Deal with it
— Righteous⚡️Crusader (@Craftmastah) November 1, 2017
Papa Johns pizza tastes like scapegoat cheese with ketchup on a crust of stale excuses.
— Eugene Gu, MD (@eugenegu) November 1, 2017
Papa Johns is the Cleveland Browns of pizza.
— Just Dave ⛏ ✭ (@El_Daverino) November 1, 2017
Papa Johns is 100% correct. The lack of leadership from the NFL on these protests is disgusting. They deserve to lose all their advertisers.
— RD (@real_defender) November 1, 2017
Hey, Ford is your company as patriotic as Papa Johns? Show us!#BoycottNFL
— Jan Garber (@congamanJan) November 1, 2017
Garbage fast food is having a tougher time than in years past. With so many local pizza shops that make a better pie, getting Papa John’s, Domino’s, or Pizza Hut is the wrong choice every time unless you’re feeding the masses of misbehaved screaming children. Football season is only five months of the year. The NFL cannot conceivably be at fault for the other disappointing seven months (using stock price as metric). There are other factors requiring additional articles as to why several chain restaurants are struggling to keep up. In keeping with the times, Papa John’s has continued riding the NFL tide. Yet with ratings down, Papa John’s has fewer people watching their high dollar advertisements. Less effective advertisements means fewer people ordering pizzas (in season).
With the five months of football season, Papa John’s expects its expensive relationship with the NFL to pay dividends. They are smart to see that the NFL is handling the protest situation poorly and weaken ties. The marketing dollars could be used in a more effective avenue. John Schnatter might be pointing fingers at a convenient target, but this target is not innocent.