`

Papa John's to end NFL deal as new CEO confronts sluggish sales

February 27, 2018

 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, who took the helm last month.

The pizza chain has had a long promotional relationship with the Indianapolis Colts and with former Colts quarterback Peyton Manning, who is an owner of numerous Papa John's franchises and a frequent commercial spokesman for the chain.

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, which has 36 stores in the nine-county area, including 19 in Indianapolis. 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-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 analyst estimate.

ADVERTISEMENT

Recent Articles by Bloomberg News

Comments powered by Disqus