November 3, 2017 10:52:06 AM
NEW YORK -- The CEO of Papa John's slammed the NFL's leadership and blamed protests by football players for pizza sales going cold. A day later, rival Pizza Hut said it saw no such impact. So what's going on?
Papa John's is closely associated with the NFL, due to its sponsorship of the league. But experts say it is also facing more competition as other fast-food chains start to deliver burgers and fried chicken, taking a bite out of pizza sales. And there may be other issues in play: More people are cooking at home, and Papa John's may have been too dependent on TV ads at a time when more people are spending time online.
The NFL also has fewer viewers than it used to. The average game this season has attracted 14.8 million viewers, down from 15.6 million at the same point last year.
Former San Francisco 49ers quarterback Colin Kaepernick kneeled during the national anthem to protest what he said was police mistreatment of black males. More players started to kneel after President Donald Trump said in September that team owners should get rid of those who protest during the anthem.
Papa John's said customers now have a negative view of the chain's association with the NFL. "The controversy is polarizing the customer, polarizing the country," CEO John Schnatter said Wednesday after the company had released softer sales figures.
"NFL leadership has hurt Papa John's shareholders," he added. "This should have been nipped in the bud a year and a half ago."
Pizza Hut said the opposite: "We're not seeing any impact from any of that on our business," said Greg Creed, who is CEO of Pizza Hut owner Yum Brands Inc.
Commissioner Roger Goodell and several owners said at the league's fall meetings last month that they did not discuss altering the anthem policy language from "should stand" to "must stand." A representative for the NFL didn't respond to a request for comment this week.
Restaurant analyst John Gordon says he is skeptical of the NFL's impact. There was a time when pizza chains were the only ones able to deliver food quickly, but that's changing rapidly, says Gordon, the founder and CEO of Pacific Management Consulting Group.
McDonald's Corp., for example, expects to expand delivery of its burgers, nuggets and fries from 5,000 of its nearly 14,000 U.S. locations by the end of the year. And KFC, which like Pizza Hut is owned by Yum Brands, hopes to double delivery sales at the fried chicken chain to $2 billion by 2020.
Pizza Hut has also been working to up its delivery game and catch up with the more tech-savvy Domino's Pizza Inc., which makes it easy for customers to order pizza pies through apps, social media posts or even text messages. Pizza Hut said Thursday that sales rose 1 percent at its established locations worldwide and were flat in the United States, an improvement from past quarters.
Domino's, though, said sales rose 8.4 percent at established U.S. stores during the third quarter. That's down from the 13 percent growth it reported in the same period the year before. "Nothing we reported in the quarter included commentary about the NFL because we saw no reason to call it out," a Domino's spokeswoman said Thursday.
As for Papa John's, it reported this week that third-quarter sales rose 1 percent at established locations in North America, which it said was below what it had expected. In the same period a year ago, sales rose 5.5 percent at established locations.
"We believe the reason for the sales decline is more complicated than fewer people are watching NFL games," analysts at Stifel said. The analysts said it appears that Papa John's puts more money to advertise on NFL games and has "has fewer advertising dollars to allocate to other consumer segments."
Papa John's said this week it hired a new creative agency that will help it create more digital ads
"We're an e-commerce brand -- it's time we stop thinking in TV scripts," Chief Marketing Officer Brandon Rhoten said in a statement.
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