Pizza Hut is the new official pizza of the NFL - and that should terrify Papa John's
- Pizza Hut has taken Papa John's spot as the new official pizza of the NFL.
- Papa John's faced backlash and slumping sales after its founder slammed the NFL for its response to players' national-anthem protests in November.
- Pizza Hut has a chance to use the deal to boost sales - and take business away from Papa John's.
The NFL has a new official pizza.
On Wednesday, Pizza Hut announced it had signed a multi-year agreement to serve as the NFL's official pizza sponsor. The announcement comes one day after Papa John's announced it had ended its NFL sponsorship deal.
Both Pizza Hut and Papa John's have struggled with intermittent sales slumps in recent years, as Domino's has dominated the industry.
Papa John's sparked controversy in November when founder and then-CEO John Schnatter slammed NFL leadership over players' kneeling during the national anthem to protest racial injustice and police brutality. The incident contributed to what Papa John's new CEO, Steve Ritchie, called "negative consumer sentiment" and the chain's sales slump.
However, Pizza Hut sees the deal as an opportunity - and for good reason. Here is why Pizza Hut can succeed where Papa John's failed.
Papa John's is weighed down by political baggage
Less than two years ago, Papa John's NFL deal was a bright point for the chain.
"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."
However, when the NFL got political, Papa John's wasn't able to stay above the fray.
"We are totally disappointed that the NFL and its leadership did not resolve the ongoing situation to the satisfaction of all parties long ago," Schnatter said in a call with investors last November. "This should have been nipped in the bud a year and a half ago."
Schnatter's statements dragged Papa John's into the middle of a polarizing debate, inspiring backlash on the left and support on the right. The Daily Stormer, a white-supremacist website, even posted an article asking whether Papa John's was the "official pizza of the alt-right." The chain responded that it did not want "hate groups" buying its pizza.
Other chains stayed out of the controversy. Pizza Hut, for example, said that declining NFL viewership did not impact sales.
But Schnatter - who stepped down as CEO in December - has a history of taking political stances.
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. Schnatter has also spoken on issues such as over-regulation and donated $1,000 to President Donald Trump's campaign, though he did not publicly voice support for the president.
Ultimately, Papa John's - especially under Schnatter's leadership - couldn't stay apolitical while continuing to serve as the official pizza of the NFL.
The deal splits up NFL fans, whose numbers are already dwindling
A slump in NFL viewership is a factor that could be lose-lose for both Papa John's and Pizza Hut.
Declining viewership isn't a new problem for the NFL. The league has struggled in recent years to attract viewers, with people blaming everything from the 2016 presidential election, to millennial cord-cutters, to excessive commercials.
Chains that make major investments in the NFL - including Papa John's and Buffalo Wild Wings - have blamed the league's viewership for declining sales in the past.
Now, Pizza Hut and Papa John's are both advertising to the same, dwindling crowd.
Papa John's will continue to advertise to football fans using its deals with individual players and 22 local teams.
Pizza Hut, meanwhile, will serve as the league's exclusive national pizza sponsor, which gives the chain the ability to advertise with all 32 individual teams. The deal has already resulted in a number of social-media shout-outs for Pizza Hut from various NFL stars.
Declining NFL viewership isn't a win for Pizza Hut - but it's definitely a loss for Papa John's.
Pizza Hut already has a football deal
Pizza Hut has experience using football as a marketing tool, with none of the controversy Papa John's has faced.
Papa John's NFL sponsorship was the pizza chain's first major deal with any sports league, beginning in 2010. The pizza chain later became the official sponsor of the MLB in 2016.
Pizza Hut, meanwhile, has been the official sponsor of the NCAA since 2016. That deal includes the college sports organization's football league.
This experience could help give Pizza Hut the edge in figuring out how to approach the NFL deal.
"It's very evident that Pizza Hut will run with this sponsorship and make the most of what the NFL offers in the way of reaching fans and customers, day in and day out, year after year," Shad Khan, owner of the Jacksonville Jaguars, said in a statement Wednesday.
Khan continued: "Having one of America's classic brands like Pizza Hut happily come aboard in an important sponsorship category is another reminder of the continued power of the NFL. Nothing compares."
Pizza Hut >Papa Johns- Terrance Knighton (@MisterRoast98) February 28, 2018
There's a new NFL pizza partner? I can get down with some @PizzaHut!- Carson Wentz (@cj_wentz) February 28, 2018
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