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Papa John’s Misguided Blame on the NFL

Despite its slew of Peyton Manning-starring commercials, the official pizza of the NFL — Papa John’s — isn’t scoring any points with customers. According to Forbes, the net-worth of their CEO John Schnatter plummeted 70 million dollars in just 24 hours following the release of quarterly reports. This report was of course was less than golden; same-stores increased an abysmal one percent.

Schnatter was quick to blame Papa John’s biggest, cross-promotional ally for the downturn. More specifically, he blamed a “lack of leadership” on the NFL’s part to resolve kneeling protests by players during games. “This should have been nipped in the bud a year and a half ago,” he claimed.

Schnatter’s comments raise interesting questions for restaurants and bars on the value of cross-promotional endeavors and how much one party will suffer if the other appears to be performing poorly. Is it worth to bet profit on another company’s success, or does it not matter in the long run? This can be especially difficult for smaller franchises, who might not have the finances to back up a failed marketing campaign.

It’s true that NFL viewership has been much lower than usual; last year it fell 12 percent among the adults 18 – 49, a key demographic, with all major networks (FOX, CBS, etc) taking hits. But no one can seem to decide what is affecting these dips in viewership. The network and others have blamed natural disasters, the election, increased awareness of brain damage, quality of play, evolving ways we view TV (ie. streaming services), among other things for the downturn, with no data pointing to a single cause.

This reality muddies Schnatter’s fiery comments, as does the success of similar franchises. DiGiorno quickly clapped back on Twitter, saying “Better Pizza. Better Sales.” Pizza Hut’s CEO Greg Creed told investors that their sales were steady, and in fact had experienced growth as a result of live sports viewership.

Another factor Schnatter seemed to ignore was that Papa John’s sales have been suffering long before widespread protests. They’ve missed their revenue mark since the beginning of the year, the stock dropping 30 percent.

Ultimately, it seems Papa John’s found an easy scapegoat for their declining profit, one that has enraged many critics who believe they are “dog whistling” toward conservative audiences who will be fast to accept the protests as a cause. Jemele Hill, an ESPN analysts who was recently suspended for defending the protests, tweeted, “Sorry racial injustice couldn’t be ended as easily as adding an extra topping and a side of ranch.”

Even if this was not an accurate assessment of sales, Schnatter’s commentary has real results for Papa John’s. Investors responded to the downturn and Schnatter’s explanation by sending shares down 11 percent. The company has not stopped advertising with the league, but has removed their logo and “official sponsorship” from commercials.

How these changes will improve their sales, time will tell, but they will likely serve as a public bandaid for larger problems within the company. If the restaurant industry can learn anything about cross-promotion from Papa John’s, it’s that blaming a false cause will not solve a sales slump or stagnation. 

 

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