Papa John's was one of the biggest victims of Trump's anti-NFL campaign
- 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' national-anthem protests for subpar sales.
- While President Donald Trump bashed players for protesting during the 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 that criticized national-anthem protests.
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-Papa John's relationship emerged on November 1, during a Papa John's investor call.
"Leadership starts at the top, and this is an example of poor leadership," Papa John's founder and then-CEO John Schnatter said of NFL players' protests during the national anthem.
Former San Francisco 49ers quarterback Colin Kaepernick started kneeling during the anthem in 2016 to protest racial injustice and police brutality.
The controversy over the protests was renewed in September 2017 after Trump tweeted that players kneeling were "disrespecting our Flag & Country." Many of the president's supporters agreed, canceling NFL TV bundles and burning merchandise.
While NFL viewership had been declining for years, Schnatter blamed subpar sales on negative perception of the league and its declining ratings. In doing so, he dragged Papa John's directly into a culture war that it was not prepared to fight.
How to forfeit a culture war
Schnatter said controversy over national-anthem protests were "polarizing the customer, polarizing 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.
Meanwhile, those 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 that the protests had not impacted sales. 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 took to 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."
All of this occurred during Papa John's most recent quarter - a period plagued by "negative consumer sentiment," executives said in a call with investors this week. On Tuesday, the company reported that comparable sales dropped 3.9% in North America in the fourth quarter.
Papa John's loses Papa John - and the NFL
Papa John's announced in late December that Schnatter was stepping down as CEO and would be replaced by Steve Ritchie.
Schnatter has a history of making political statements that spark controversy. In 2018, in the wake of the NFL controversy, that history made him a poor fit as Papa John's CEO.
Schnatter 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 over-regulation.
Schnatter also donated $1,000 to Trump's presidential campaign, though he did not publicly voice 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."
Then, on Tuesday came the final straw - the death of Papa John's NFL sponsorship deal.
The end of the deal represents a major pivot for Papa John's. Prior to the controversy over players' protests, the NFL was one of the pizza chain's biggest advantages.
"Our partnership with the NFL, in particular, has been exceptional," Robert Thompson, 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%, due in large part to viewers' problems with the national-anthem protests, according to UBS research.
However, when it comes to which brands were most brutally dragged over the coals during the controversy, no other company was impacted at the same level as Papa John's.
The pizza chain was forced to backtrack and completely overhaul its strategies. In four months, the company lost its CEO and one of its biggest sponsorship deals. Even worse, a frozen-pizza competitor said the chain's pizza "tasted like s---".
Papa John's is hoping for a fresh start with the end of its NFL sponsorship deal. The league and declining viewership was certainly not its only problem - just its most visible one.
With the end of the NFL deal, Papa John's is "redirecting investments" towards new technology, as 60% of the chain's sales are made through digital channels. The company will emphasize food quality in marketing, with "wholesale changes" to better win over customers, including hiring new PR and advertising firms.
Ritchie also said that the chain has been "perceived to be too expensive" and will 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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