Opinion: Papa John’s is Losing Money Due to Owner’s Controversial Comments
Papa John’s is losing dough—and not because sales are up.
Founder and CEO of the pizza chain restaurant John Schnatter raised eyebrows Nov. 1 in a conference call with investors after blaming recent losses on the NFL national anthem protests and the organization’s leadership, which allowed the protests to persist.
“The NFL has hurt us by not resolving the current debacle to the players’ and owners’ satisfaction,” said Schnatter, who claims his company is one of the biggest NFL sponsors. “NFL leadership has hurt Papa John’s shareholders.”
The ripple effects of his comments have been nothing short of spectacular.
Many accused Schnatter of being racist for condemning the protests of police brutality against African Americans in the first place.
The Daily Stormer, an American neo-Nazi and white supremacist news website, added fuel to the fire after naming Papa John’s the official pizza of the alt-right—an act that forced the pizza chain to clarify that they did not, in fact, want the business of racists.
The business also found itself in a Twitter war with frozen-pizza brand DiGiorno’s, which poked fun at Schnatter’s whining in a series of mocking tweets. In response, Papa John’s changed their Twitter bio to “Frozen pizza = the equivalent of a participation trophy.”
Stock price took an 8.5 percent tumble the day of Schnatter’s conference call, ultimately declining 12.5 percent by the end of last week.
All this sparking from a claim that, in my opinion, is nothing short of ridiculous.
It is true that national football ratings are declining in the same way they did in 2016, and fewer viewers means less exposure for advertisers, which could cut into how many people pick up a side of Papa’s Chicken Poppers on their way home from work.
But it is impossible to pinpoint an exact reason why that is. Fingers have been pointed at a myriad of culprits behind the ratings dip. A Sept. 20 Business Insider article listed 21 contributing factors ranging from hurricanes to excessive commercials to unfavorable matchups.
And yes, some Americans have indeed changed the channel on Sunday nights because of the protest San Francisco 49ers’ Colin Kaepernick started by refusing to stand for the national anthem and the eventual flank of football players that joined him.
According to a J.D. Powers poll released in July, 24 percent of those who claimed to have watched fewer games cited the protest as the reason they did so.
But that is only a quarter of the 12 percent who curbed their football viewing. That is just 3 percent, of the 9,200 polled—89 percent of which said they either watched the same amount of football or more football games than last season.
And even if the small number Schnatter claims to be behind losses was a little more intimidating, it is still not possible to confirm his claim. In fact, last season, when NFL ratings were spiraling because of what many believed to be a heightened interest in the presidential election, Papa John’s business increased.
The only thing everyone can agree on is that Papa John’s business is in freefall and has been since long before the protest controversy happened.
Data compiled by IHS Markit shows that Papa John’s short interest—the measure of wagers that bet stock price will drop—has been steadily increasing since 2014, hitting multiyear highs in March and July before skyrocketing again after Schnatter’s comments two weeks ago.
Again, the exact reason behind this is difficult to point out.
IHS Markit analyst Simon Colvin in Business Insider said it could be because delivery apps are allowing local pizzerias to retake the market.
It could also be Schnatter’s prior record of sparking controversy—in 2012, Schnatter’s criticism of former President Barack Obama’s health care law led to a Papa John’s boycott that put a small dent in their business. He also made waves after donating $1,000 to the presidential campaign of Donald Trump. (Ironically, Trump has frequently told football fans to boycott the NFL for the protests.)
Or it could just be because Papa John’s does not make the best pizza. The controversy has inspired most on social media to point out that the problem with sales is in the product, and it is easy for me to find some truth in American film producer Tariq Nasheed’s statement that Papa John’s pizzas “taste like Sarah Sander’s flip flops,” though being raised on New Jersey pizza has no doubt biased my opinion.
Schnatter’s whining has ultimately done more harm than good. At the end of the day, the only thing worse than running what eater.com calls “the pizzeria equivalent of the shrug emoji” is doing so while playing the world’s tiniest violin and openly criticizing the industry of football that exposed Papa John’s lackluster pizza to 264 million people a week in 2016.
That is what I call skating on thin crust, no matter how you slice it.