Pizza Hut owner counters Papa John’s claim of NFL hurting pizza sales – By Daniel Roberts (yahoo.com) / Nov 2 2017
Papa John is blaming NFL player protests for a dip in pizza sales, but Pizza Hut says otherwise.
Such are the extensive ripple effects that an NFL season full of political controversy is having on all sorts of adjacent businesses.
On Wednesday, Papa John’s International reported disappointing third-quarter earnings: its sales rose, but only by 1%—less than analyst expectations. Sales rose 5.5% in the same quarter last year.
CEO John Schnatter said the reason is the NFL. “The NFL has hurt us by not resolving the current debacle to the players’ and owners’ satisfaction… NFL leadership has hurt Papa John’s shareholders,” he said on the earnings call.
But one day later, Greg Creed, CEO of Yum Brands, which owns Pizza Hut, Taco Bell, and KFC, was asked to comment on the claim.
“We’re not seeing any impact from any of that,” Creed said on Yum’s earnings call.
Any truth to Papa John’s claim?
John Schnatter mentioned the NFL 44 times on his company’s earnings call, Bloomberg counted. Papa John’s is an official NFL sponsor, and Schnatter pointed to “significant negative consumer sentiment of our association with the league.” He suggested Papa John’s may pull back on its NFL advertising. (Amidst all the political controversy this season, NFL sponsors are “nervous,” ad execs tell Yahoo Finance.)
Among other digs at NFL leadership, Schnatter said player protests “should have been nipped in the bud” by the NFL last season when they first began. In making that argument, Schnatter joins President Donald Trump, as well as NFL team owners Jerry Jones and Dan Snyder. (Some even believe, since Jerry Jones is a Papa John’s franchisee, that Jones is behind Schnatter’s comments.)
Schnatter did not raise the possibility that people are boycotting Papa John’s because it is an NFL sponsor. He did not say the word “boycott” at all. He focused on television ratings: “Look at exactly how the ratings are going backwards,” Schnatter said. “Last year, the ratings for the NFL went backwards because of the elections. This year, the ratings have gone backwards because of the controversy. And so the controversy is polarizing the customer, polarizing the country, and that’s the big difference here.”
Indeed, NFL ratings are down an average 5% through the first half of the season, but it is unclear how much of the reason is outrage over seeing some players protest. Many media execs, including 21st Century Fox CEO James Murdoch, blame an excess of football games.
Michael Halen, a Bloomberg analyst, did not dismiss Schnatter’s claim. “I’m not blaming them for citing it,” he said.
Yum Brand beat the street and its stock spiked, but Pizza Hut sales only rose by 1% in the quarter, the same result as Papa John’s. So both chains saw a slowdown in sales, but only one blamed the NFL, which casts doubt on Schnatter’s narrative.
Papa John’s stock (PZZA) vs Yum Brands (YUM) in 2017 so far.
Of course, just like the many contributing factors to the NFL’s ratings decline, Papa John’s slowdown in sales could be due in part to NFL ratings and in part to additional factors, like people choosing to eat healthier.
Papa John’s could be missing out on its usual exposure because its two most prominent NFL endorsers, Peyton Manning and JJ Watt, aren’t playing: one retired and the other is injured. Or Schnatter could be right that his company’s association with the NFL is hurting its brand image, but wrong that the player protests have anything to do with it.
Or perhaps Pizza Hut pizza is just tastier.
PB/TK – OK so 1% increase in sales ain’t much to brag about or throw shade on the competition’s lose claim, but when YUM Brand says all three brands haven’t seen a dip but a steady climb it does cast doubt.
