Papa John's was the biggest loser of the NFL's anthem-protest controversy

Hollis JohnsonPapa John’s is no longer the official pizza of the NFL.
  • Papa John’s ended its NFL sponsorship deal on Tuesday, with Pizza Hut taking over as the official pizza of the league.
  • The chain’s reputation suffered after its founder and then-CEO blamed the NFL and players’ protests for subpar sales.
  • While President Donald Trump bashed players for protesting during the national anthem, Papa John’s dealt with some of the most brutal consequences of the president’s anti-NFL campaign.

As the dust settles on the NFL’s tumultuous 2017-2018 season, the most unexpected victim of President Donald Trump’s campaign against the league is a pizza chain.

On Tuesday, Papa John’s announced it had ended its sponsorship deal with the NFL after months of controversies and slumping sales. The next day, Pizza Hut announced that it was the new official pizza of the NFL.

The early cracks in the NFL’s relationship with Papa John’s emerged on November 1, during a Papa John’s investor call.

“Leadership starts at the top, and this is an example of poor leadership,” John Schnatter, the founder and then-CEO of Papa John’s, said of NFL players’ protests during the national anthem before games.

Colin Kaepernick, the quarterback then playing for the San Francisco 49ers, started kneeling during the anthem in 2016 to protest racial injustice and police brutality. Though Kaepernick did not play this past season, a handful of players maintained the protest, prompting Trump to tweet in September that players kneeling were “disrespecting our Flag & Country.” Many of the president’s supporters agreed, cancelling NFL TV bundles and burning merchandise.

While NFL viewership had been declining for years, Schnatter blamed subpar sales at his pizza chain on negative perception of the league and its declining ratings. In doing so, he dragged Papa John’s into a culture war it was not prepared to fight.

How to forfeit a culture war

Papa John'sHollis JohnsonPapa John’s.

Schnatter said the national-anthem protests were “polarising the customer, polarising the country.” And, the reaction to his statements proved how right he was.

Many on the right rallied to support Papa John’s following Schnatter’s comments and his announcement that the chain was cutting marketing that promoted its partnership with the NFL.

But some on the left vowed to boycott Papa John’s, pledging their loyalty to Pizza Hut or Little Caesars.

Things quickly escalated. The Daily Stormer, a white-supremacist website, even posted an article asking whether Papa John’s was the “official pizza of the alt-right.” Papa John’s was forced to respond that it did not want “hate groups” buying its pizza.

Other pizza brands and NFL advertisers began to get involved.Wingstop and Pizza Hut said the protests had not affected sales. The frozen-pizza brand DiGiorno took a more direct shot at Papa John’s, with a tweet implying the chain’s pizza tastes like “dog s—.”

More than a week after Schnatter’s statements, Papa John’s used Twitter to attempt to regain control of the narrative.

“We will work with the players and league to find a positive way forward,” the brand tweeted. “Open to ideas from all. Except neo-nazis – [middle finger emoji] those guys.”

In a call with investors this week, Papa John’s executives described the chain’s fourth quarter, when the controversy ensued, as a period plagued by “negative consumer sentiment.”On Tuesday, the company reported that comparable sales dropped 3.9% in North America in the quarter.

Papa John’s loses Papa John – and the NFL

Schnatter had a history of making political statements that sparked controversy.

He came under fire in 2012 for saying the Affordable Care Act, the healthcare law better known as Obamacare, would be a “lose-lose” for Papa John’s franchisees and employees. He has spoken out extensively against what he says is overregulation by the government.

Schnatter also donated $US1,000 to Trump’s presidential campaign, though he did not publicly express support for him.

“As far as the politics, I have no idea,” Schnatter told Business Insider before Trump’s inauguration. “I do think we ought to give the new administration at least a chance to either do better things or to botch it.”

Papa John’s announced in late December that Schnatter was stepping down as CEO and would be replaced by Steve Ritchie.

But his national-anthem comments continued to resonate, coming to a head Tuesday with the death of the NFL sponsorship deal.

The end of the deal represents a major pivot for Papa John’s, which previously viewed the NFL as one of its biggest advantages.

“Our partnership with the NFL, in particular, has been exceptional,” Robert Thompson, the senior vice president of marketing at Papa John’s, told Business Insider in 2016. “One of the reasons the NFL is such a strong marketing opportunity is because of the number of people that watch the games live, whether it be at home or in the stadium.”

‘It is not business as usual at Papa John’s’

NFL ratings certainly suffered again in the most recent season. Ratings for the Super Bowl were down 7%, with a UBS survey identifying the national-anthem protests as a significant factor.

But when it comes to which brands were most brutally dragged over the coals during the controversy, no other company was affected at the same level as Papa John’s.

The pizza chain was forced to backtrack and overhaul its strategies. In four months, the company lost its CEO and one of its biggest sponsorship deals. And a frozen-pizza competitor said the chain’s pizza “tasted like s—.”

With the end of the NFL deal, Papa John’s is hoping for a fresh start. The chain is “redirecting investments” toward new technology, as 60% of the chain’s sales are made through digital channels. The company will emphasise food quality in marketing, with “wholesale changes” designed to better win over customers, including hiring new public-relations and advertising firms.

Ritchie also said the chain had been “perceived to be too expensive” and would double down on value going forward. Papa John’s is planning to expand its menu, according to executives.

“It is not business as usual at Papa John’s,” Ritchie said.

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