The backlash to Papa John’s chief executive blaming disappointing pizza sales on NFL players’ protests came swiftly on social media. Some called John Schnatter, the chain’s founder, a racist for scapegoating black football players protesting racial injustice. They made fun of the way his pizza tastes. They threatened to boycott.
“People get upset and the outrage lasts for a week. These kinds of things blow over,” said Lakshman Krishnamurthi, a marketing professor at Northwestern University’s Kellogg School of Management.
He cited the wave of protests in 2012 against Chick-fil-A president Dan Cathy’s opposition to same-sex marriage. The Georgia-based chain later expanded into liberal enclaves in the Northeast and the Pacific Northwest.
Americans come down on both sides of any social issue, Krishnamurthi noted. As much as gay rights activists had protested Cathy’s comments, conservatives rallied behind him, with former Arkansas Gov. Mike Huckabee calling for a “Chick-fil-A Appreciation Day.”
In Papa John’s case, conservatives were quick to defend Schnatter, who donated $1,000 to President Trump’s campaign. They echoed Trump’s call for the NFL to make players stand or fire them — a stance Schnatter did not explicitly take on the earnings call. They praised Schnatter for distancing the pizza brand from the NFL.
Mike Cernovich, a right wing firebrand and conspiracy theorist, dubbed Papa John’s “America’s pizza” in a tweet thanking the company. (It’s unclear for what, exactly.)
Schnatter, in the earnings call, blamed “poor” NFL leadership — not the players directly — for hurting Papa John’s shareholders because of the league’s failure to resolve “the current debacle to the player’s and owner’s satisfaction.”
“This should have been nipped in the bud a year and a half ago,” he said.
Former San Francisco 49ers quarterback Colin Kaepernick kicked off the protests against police brutality of black Americans more than a year ago by sitting, then kneeling, during the national anthem. He has since become a free agent and has been effectively blackballed from the league, an outcome that inspired many African American football fans to boycott the NFL this season.
More players began protesting in September, stoked by Trump’s comments to fire any “son of a bitch” player who does not stand during the national anthem. The subsequent wave of player protests prompted Trump to call upon his supporters to boycott the NFL as well.
Papa John’s is the highest profile sponsor to publicly pressure the NFL to resolve the protests, a move some experts say could pave the way for others to do the same. Most sponsors have remained silent on the issue, at least in public, or released statements supporting players’ free speech rights as well as touting their companies' respect for the flag.
“Papa John’s is not going to be the last company to threaten to pull out,” said Geraldine Henderson, a professor specializing in race in the marketplace at the Loyola University Chicago's Quinlan School of Business. “A collective effort of advertisers pulling out may force the NFL to come to some sort of closure sooner or later.”
She said she interpreted Schnatter's comments as an attempt to avoid antagonizing black players, football fans and customers. Henderson cited consumer survey data from spring 2016 showing blacks consume 1.2 times as much Papa John's pizza as whites, and slightly favor Papa John's over Domino's and Pizza Hut.
Peter Collins, a Papa John’s spokesman, told The Washington Post the company has not pulled back on its NFL advertising. It has distanced the brand from the league by removing the NFL shield or “official sponsor” designation on certain TV spots. The company also plans to focus more of its future advertising on digital media, he said, because more than 60 percent of its domestic sales come from digital channels.
The NFL declined to comment on Schnatter’s comments and sponsors’ pressure to end the protests. ESPN recently reported team owners voiced concern during a meeting in New York last month that sponsors, including Papa John’s, would leave the NFL.
Papa John’s stock fell 10 percent on Wednesday alone, after the Louisville-based company cut earnings and sale growth expectations for the year. But shares were up 1 percent by the close of business on Thursday.
While it may be a stretch to directly link lagging pizza sales to the protests, there is little doubt the company has been hurt by a decline in NFL television ratings, analysts say.
NFL ratings have declined 7.5 percent through the first six weeks of the season for multiple reasons, including the hurricanes and uneventful game play as well as controversy over player protests, according to an analysis of Papa John's last week by the financial services firm BTIG. The ratings decline follows an 8 percent drop last year, generally attributed to the presidential election, and BTIG has lowered its sales forecast for Papa John's for the second half of the year.
“This year, the ratings have gone backwards because of the controversy,” Schnatter said. “The controversy is polarizing the customer, polarizing the country.”
It’s worth noting, however, that the pizza chain also missed its revenue growth target in the second quarter. And the wave of NFL protests set off by Trump did not begin until Sept. 23, in the final days of the third quarter results that were discussed in the earnings call.
Papa John’s declined to make Schnatter available for an interview.
Other company officials said during the earnings call the NFL protests have hit Papa John’s harder than its competitors because of its close relationship with the league. Papa John’s began its partnership with the league in 2010. In addition to being the official pizza of the NFL, it has deals with 23 of the 32 teams.
“Clearly, if you’re the number one recognized partner with the NFL two years running, you’re going to have a more significant impact from a partnership association,” said Steve Ritchie, Papa John’s president and chief operating officer.
On Thursday, the chief executive of Pizza Hut’s parent company told investors the players’ protests haven’t hurt the company one bit.
“We’re not seeing impact from any of that on our business,” said Greg Creed, chief executive of Yum Brands.