Don’t Be Like Papa John
I’ve never met Papa John’s founder John Schnatter, but his recent decisions as CEO have exposed the company and its shareholders to needless ire. There are a lot of valid external reasons that could be blamed for lowering future sales projections, but pointing to something as divisive as NFL players taking a knee is absurd—and other leaders should never put their brands in a similar position.
Whether it’s right or wrong, American consumers speaking with their wallets in response to corporations making political statements is the unofficial law of the land. Now, as Papa John’s is being raked across the coals on social media channels, it’s hard to find a silver lining in Schnatter's statements during the Q3 earnings call that sent shares plummeting and, according to Forbes, slashed his own net worth by more than $70 million.
I’ve heard the bad weather excuse plenty of times in response to poor earnings figures, and there are plenty of instances where that makes a lot of sense. By saying “the NFL has hurt us by not resolving the current debacle,” one of several NFL references in the call, Schnatter has alienated millions of customers and damaged his own leadership as the head of a major public company.
There’s truth in his words that NFL ratings are down, but there are several potential reasons for this outside of politics. And, even if player protests were the most significant factor in cooling TV ratings, it seems somewhat crazy for the pizza CEO to willingly expose the company and its shareholders to the backlash that just about anybody could have predicted.
But there are also many reasons why Papa John’s isn’t performing as well as its competitors, which undoubtedly have a more material impact on the brand’s quarterly performance. Domino’s is still knocking it out of the park with smart marketing and massive investments in future-looking technologies. Pizza Hut is aggressively playing catch up, and there is so much new competition in the category from fast-casual pizza concepts and regional pizza brands that are fighting for a seat with the big boys.
And then of course there’s the brutal comparison many have shared on Twitter about Little Caesars late founder Mike Ilitch paying Rosa Parks’ rent in downtown Detroit for more than a decade. Again, brutal optics for Papa John’s.
Just about everything is politicized in this era, and that can unfairly impact companies that get swept up in the national conversation. There’s no indication this is changing anytime soon. Whether your company is public or private, there are employees, suppliers, their families and customers whose livelihoods are attached to any brand’s fortunes. Consider their interests carefully before risking so much to make a personal political statement—especially during an earnings call.