Papa John's Ends NFL Sponsorship as Sales Suffer

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John Schnatter, left, previously stepped down as CEO of Papa John's.
John Schnatter, left, previously stepped down as CEO of Papa John's. Credit: Papa John's ad

Papa John's International is ending its sponsorship of the National Football League 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 CEO, who took the helm last month, and a new chief marketing officer, who joined the chain last year.

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 the NFL's official pizza sponsor since 2010 and had renewed the deal in 2016. The sponsorship gave the nation's 4th-largest pizza chain the ability to use NFL logos and trademarks in its marketing. Before last year, Papa John's and Schnatter himself embraced the ties to the sport, for example often showcasing Peyton Manning and J.J. Watt in ads. Manning and Schnatter even embraced on the field after the Denver Broncos won the Super Bowl in 2016. Last fall, the chain began airing ads that focused on the work done behind the scenes to prepare for NFL games, then pivoted to spots that were more focused on the chain itself.

The sponsorship's demise comes during a slump at the pizza chain. The company posted a 3.9 percent decline in fourth-quarter North American same-store sales. Papa John's pledged to reverse the decline by improving its media and creative partnerships, updating its loyalty program, and hiring a new public relations partner.

CMO Brandon Rhoten selected Laundry Service as the company's creative agency of record late last year. Papa John's is also now working with Olson Engage on public relations, following a PR agency review process, after working with Edelman.

"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," CEO Steve Ritchie said in a statement.

Ritchie, who became CEO on Jan. 1 after Schnatter left that role, added that the chain expects to see "marked improvements in sales later in 2018." It predicted North America same-store sales would be down 3 percent to flat this year, after rising just 0.1 percent in 2017 including the hefty downfall in the fourth quarter.

Delivery Competition

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 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.

The Louisville, Kentucky-based company earned 65 cents per share in the quarter, excluding some items, 2 cents short of the average estimate.

Papa John's shares fell as much as 8.5 percent to $51.55 in late trading.

-- Bloomberg News with Ad Age staff

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