Papa John's splits with the NFL

The chain ends its sponsorship after weak ratings are blamed for poor sales.

Papa John’s is ending its sponsorship of the NFL, months after the chain’s founder publicly blamed the league for poor ratings and therefore the chain’s weak same-store sales.

The Louisville, Ky.-based company and the league sent a joint announcement on Tuesday, saying they have made “a mutual decision to shift from their official league sponsorship to focus on partnerships with 22 local NFL teams, presence in broadcast and digital media and key personalities in the sport.”

Papa John's executives confirmed the decision to end its marketing deal on an earnings call Tuesday. 

The end of the NFL sponsorship came as the pizza chain said its same-store sales declined 3.9% in the fourth quarter ended Dec. 31.

In November, company founder John Schnatter blamed NFL player protests for the league’s weak television ratings and was critical of the league for failing to deal with the protests earlier. The comments ignited a firestorm on the internet and social media, alienating customers on both sides of the political aisle.

Schnatter stepped down as CEO in December, handing over the reins to company President Steve Ritchie.

Papa John’s stock fell 6% in after-hours trading on Tuesday.

“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,” Ritchie said in a statement. “Actions are underway to improve our brand proposition, how we connect with customers and how we operate at the unit level.”

Papa John’s has been a longtime NFL sponsor, and Schnatter himself has routinely appeared in the chain’s ads alongside players such as former Indianapolis Colts and Denver Broncos quarterback Peyton Manning.

Jerry Jones, owner of the Dallas Cowboys, owns more than 100 Papa John’s. Some NFL owners believe he encouraged Schnatter to make the comments, according to reports.

It’s uncertain what the end of the NFL sponsorship will mean for Papa John’s marketing, but Ritchie said that the company’s revitalization efforts include “a fresh perspective around marketing driven by new media and creative partnerships.”

Papa John’s sales challenges ended a long run of consistent performance at the chain, a rival to Domino’s Pizza, Pizza Hut and Little Caesars.

Net income at Papa John’s declined 12.6%, to $28.5 million, or 81 cents per share, from $32.6 million, or 88 cents. But revenues increased 6.4% to $467.6 million. The company operates about 5,200 locations worldwide.

Ritchie said that the company has a new public relations firm and has changed the engine behind its loyalty program.

He said the efforts will lead to “marked improvements in sales later in 2018.”

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