Nobody seriously believes that Papa John's sales decline is related to its NFL sponsorship. But now that it's former CEO — who clearly loved being on screen — is gone under odd circumstances, the brand is free to move on from the costly deal.
— Jason Clampet
Papa John’s International Inc., a longtime sponsor of the National Football League, is ending the partnership after a decline in TV ratings and a controversy over player protests.
Rather than serving as the league’s official pizza, the company said on Tuesday that it will focus on doing marketing with 22 specific NFL teams. The move is part of an attempt to overhaul Papa John’s marketing under a new chief executive officer, who took the helm last month.
The NFL partnership has been strained since Papa John’s founder John Schnatter slammed the league in November, saying that declining ratings had hurt sales. He also said that Commissioner Roger Goodell mishandled a controversy over NFL players kneeling during the national anthem. Papa John’s had been with the league since 2010.
The sponsorship’s demise comes during a slump at the pizza chain. The company posted a 3.9 percent decline in North American same-store sales last quarter, sending the shares tumbling in extended trading on Tuesday. Papa John’s pledged to reverse the decline by improving its loyalty program, hiring a new public relations partner and revamping its marketing.
“We know our potential is so much greater than our results, and we are taking significant steps to reinvigorate our record of profitable growth and value creation,” new CEO Steve Ritchie said in a statement.
After years of pizza chains dominating the food-delivery business, they’re suddenly facing a lot more competition. Companies like McDonald’s Corp. are ramping up delivery options, and they’re courting customers with promotions and discounts.
Papa John’s shares fell as much as 8.5 percent to $51.55 in late trading.
The Louisville, Kentucky-based company also partly blamed wage pressure for forcing some stores to close. Pay inflation has been strong on the East and West coasts, Papa John’s said.
Fourth-quarter earnings amounted to 65 cents, excluding some items, 2 cents short of the average estimate.
©2018 Bloomberg L.P.
This article was written by Leslie Patton and Jonathan Roeder from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to email@example.com.
Read Skift Table for Essential News on the Business of Restaurants
Subscribe to our daily newsletter to follow industry trends, creativity, and innovation as we help define the future of dining out.
Quick Service Chains Win Big With Millennial Parents
2 hours ago
Quick service restaurants strategically invest heavily in TV and digital advertising, in efforts to push cheaper value meals than competitors and new menu items. It's safe to say, given NPD Group's data, that the strategy has worked. The question is how much lower can prices go before companies start shooting themselves in the foot?