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Simul Parikh

Papa John's Owner, John Schnatter, Blames Sagging Earnings on the NFL, Not Wretched Pizza

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Are you kidding me?

You're blaming football on an 11% drop in your share price? Has nothing to do with pizza quality (piss poor)? Has nothing to do with so many more fast casual options? 

If, as a fast food company, your business model is dependent on a pro sports league's popularity, you probably need to develop a new business model.  

Wow.

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Matt got their "steak and cheese" pizza- this alone deserved to tank the company- so gross.  He had some other specialty pizza that was gross in the past six months too.  He only orders pizza from here when I am not home, but then I come home and am lured into a bite by the smell and then I remember how gross it is...

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These are the owners' political views masquerading as a rationale for poor performance.  If this were really the cause of their same store sales decline (which is what drove the stock down), you would have seen it elsewhere.  Domino's same store sales were up more than 8% year over year in the same quarter, suggesting that bad pizza may not be the issue either.

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10 hours ago, zgast said:

These are the owners' political views masquerading as a rationale for poor performance.  If this were really the cause of their same store sales decline (which is what drove the stock down), you would have seen it elsewhere.  Domino's same store sales were up more than 8% year over year in the same quarter, suggesting that bad pizza may not be the issue either.

Although, in my opinion, Dominos pizza has improved somewhat, but Papa John's has always been nasty. 

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I think the anthem protests do have a part in the sales slump.  Given what this WSJ article says, it's safe to say Papa John's NFL sponsorship has hit its zenith.  The head honcho's political views and the quality of the pizza aside, they can't continue as a major advertiser/sponsor for the NFL. 

Polling shows that for people who have quit watching the NFL this season, the protests have been the reason or one of the reasons they did so.  For some, it was strictly the protests.  For others, they were hanging on to their NFL viewing for various reasons and this was the straw that broke the camel's back.  

As to why other pizza chains haven't seen the same problem?  Some of these people who quit watching are also boycotting the advertisers (or at least doing their best to).  Earlier this season lists of advertisers were circulating around the internet and people were being encouraged to stop patronizing them.  Anhauser-Busch even set up a dedicated complaint phone number as a result.

So you end up with people who have quit watching football and also have quit ordering pizza on game days because it's not needed anymore.  Or they have changed from Papa John's to another chain like Dominos whenever they want to order pizza.  It's easier to decide to change your pizza delivery source than it is to decide to change, for example, your phone/internet/TV company (Verizon is another NFL advertiser).  I would be interested in seeing how much of a drop in store sales there has been on Sundays, Mondays, and Thursdays, but I'm guessing they won't make that publicly known.

As for the timing of his complaint, it definitely wasn't good. 

I'm not typing this to defend the guy, but just wanted to point out that it's possible that at least some of the people who have quit the NFL have also quit Papa John's because they're a sponsor.

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On 11/2/2017 at 9:19 PM, zgast said:

These are the owners' political views masquerading as a rationale for poor performance.  If this were really the cause of their same store sales decline (which is what drove the stock down), you would have seen it elsewhere.  Domino's same store sales were up more than 8% year over year in the same quarter, suggesting that bad pizza may not be the issue either.

For publicly owned retail Same store sales (SSS) going up or down are typically always a reason for stock price changes.  

SSS are not going well for PJ.  

I agree with everything stated above.

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22 minutes ago, DaveO said:

Oh my:  American Nazi’s Support Papa John’s owner’s claims

...and with that no more papa john’s for me.

Now let’s hear from the PJ ceo on this fucked up crap

A website that most people have never heard of (I hadn't until you linked it) hosted by a small-minded person who doesn't deserve any notice. 

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2 minutes ago, lovehockey said:

A website that most people have never heard of (I hadn't until you linked it) hosted by a small-minded person who doesn't deserve any notice. 

I’m glad you think this person or persons doesn’t deserve notice

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Would someone please spell out for me why John Schnatter is a villain in this situation? I know nothing about the man, and all I see is that he's telling neo-Nazis not to buy their pizzas. 

No doubt there's more to the story than this, so someone please direct me to a web page that spells out what he has done wrong, other than peddling a horrific product?

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3 hours ago, DonRocks said:

Would someone please spell out for me why John Schnatter is a villain in this situation? I know nothing about the man, and all I see is that he's telling neo-Nazis not to buy their pizzas. 

No doubt there's more to the story than this, so someone please direct me to a web page that spells out what he has done wrong, other than peddling a horrific product?

He was quite outspoken on Obamacare several years ago, arguing that it was going to destroy the economy (and increase the cost of pizza).  He's also made some university donations in concert with the Koch brothers that were later revealed to have conditions that essentially granted the donors the right to approve faculty appointments.  I'm sure others are better informed on this than I am, though.

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On 11/7/2017 at 10:39 PM, DonRocks said:

Would someone please spell out for me why John Schnatter is a villain in this situation? I know nothing about the man, and all I see is that he's telling neo-Nazis not to buy their pizzas. 

No doubt there's more to the story than this, so someone please direct me to a web page that spells out what he has done wrong, other than peddling a horrific product?

Well, as the original poster, I don't think I called him a villain. I just said it's ludicrous to say your business is failing because the NFL is failing. If you have to tie your business to another one, and if your ship doesn't sail if their's doesn't, then I don't think of you as a particualarly astute businessman, especially if you're not a direct supplier (Michelin -> GM). I just meant it coming in from an economics angle. Dominos is doing okay. McDonalds crushing it. They just aren't good. Not NFL's fault.  I'm not a sportsball fan.

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The NFL is failing. Papa John's is looking at all of their stats and they need to pull pack from the NFL. The Koch brothers? Most of America doesn't know about them.

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6 hours ago, Simul Parikh said:

Well, as the original poster, I don't think I called him a villain. I just said it's ludicrous to say your business is failing because the NFL is failing. If you have to tie your business to another one, and if your ship doesn't sail if their's doesn't, then I don't think of you as a particualarly astute businessman, especially if you're not a direct supplier (Michelin -> GM). I just meant it coming in from an economics angle. Dominos is doing okay. McDonalds crushing it. They just aren't good. Not NFL's fault.  I'm not a sportsball fan.

Wow, Don. Re read the whole thread. Nobody called him a villain. Was it your own internal feelings that makes you say that? I don't think that one poster said anything all that negative about him as a person. 

We are, in fact, saying that he is peddling a horrible product, and that's the problem. Not the NFL. Please correct and delete if you see fit. 

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Villain is not a word I would have used either.  Prior to the OP I didn’t recognize his name, knew anything of his politics, anything about Papa John’s stock price or followed their corporate marketing strategy that evidently includes strongly tying the brand to major league sports.  

I view tha above as a string of events.  I do agree with what @zgast wrote above

On 11/2/2017 at 9:19 PM, zgast said:

These are the owners' political views masquerading as a rationale for poor performance.  If this were really the cause of their same store sales decline (which is what drove the stock down), you would have seen it elsewhere.  Domino's same store sales were up more than 8% year over year in the same quarter, suggesting that bad pizza may not be the issue either.

The PJ owner/ceo merged his political leanings with the company’s performance and laid the blame on the NFL protesters while aligning himself w/those that decry the protests.

The nazi’s liked his comments enough to show support. Then Papa John’s corporate immediately disconnected from the Nazi’s.  Action- reaction and completely unexpected consequences.

Same store sales (sss)results are the financial analyses that seem to drive stock prices. Zgast would know that better than I.  These days their ups and downs might impact retail stock prices by a greater degree than in the past (just a guess) as the retail corporate world is reeling.

PJ’s stock soared over several yrs but has taken a hit over the last yr.  That last yr drop is always associated w/ underperforming against sss results and expectations.  PJ’s started to express concerns abt its sports marketing at least 3/4’s ago as SSS stagnated and the stock price began to falter.

The CEO put his personal perspective and politics into the comments that @Simul Parikh flagged. That set off the subsequent reactions.  

Not a villain, in my book, but a guy whose “big mouth” got him in trouble, or at the very least caused a reaction that he neither wanted or expected.

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12 hours ago, lovehockey said:

The Koch brothers? Most of America doesn't know about them.

Well, the sentient Americans do.

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I have to add something. It’s relat d to this drama but is also related to other “corporate announcements”.  It is a take on whether one believes what a corporate entity "reports" or not.

My first real grown up job was as a financial analyst for a subsidiary of a Fortune 500 company.  One of my tasks was to fairly regularly report to the parent about financial results.  It included financial analyses and  a verbal analysis that is similar to the descriptions in quarterly reports:  sort of a summary of how we did and why the results were what they were.

That is similar to PJ’s quarterly reports and specifically the discussions and analyses, which over the last year have blamed pro sports issues and a decline in their following.   Maybe- maybe not.

Here is what used to occur when I was responsible for similar types of reports:

After analyses that were comprehensive and were exploring ever more elements- we had no freaking idea why we were doing better or worse than previous year or plan.  Sometimes we did, but most of the time we had no freaking idea. Nothing we could quantify.  While I did all the work and wrote the verbal part they were reviewed all the way to the internal top by the subsidiary CFO.  

After a while our reasons for doing better would cite factors C, D, E, and F.  Then our verbal description for why we did worse would cite C, D, E, and F.  We freaking didn’t know.

Finally the parent corporate honchos saw we were giving them gibberish logic.  They called us on it and we had a series of meetings.  They finally acknowledged we couldn’t come up with logic that suited their desires and a description that would equate to what one sees in a corporate quarterly statement about doing better or worse.

Move back to Papa John’s.  Are same store Sales stagnating because of declining sports viewership or b/c the pizza sucks , or some other reasons or some combination of the above.  I don’t know and they may or may not either.  But the quarterly reports require they write something.

Believe them at your own risk

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9 hours ago, DaveO said:

I have to add something. It’s relat d to this drama but is also related to other “corporate announcements”.  It is a take on whether one believes what a corporate entity "reports" or not.

My first real grown up job was as a financial analyst for a subsidiary of a Fortune 500 company.  One of my tasks was to fairly regularly report to the parent about financial results.  It included financial analyses and  a verbal analysis that is similar to the descriptions in quarterly reports:  sort of a summary of how we did and why the results were what they were.

That is similar to PJ’s quarterly reports and specifically the discussions and analyses, which over the last year have blamed pro sports issues and a decline in their following.   Maybe- maybe not.

Here is what used to occur when I was responsible for similar types of reports:

After analyses that were comprehensive and were exploring ever more elements- we had no freaking idea why we were doing better or worse than previous year or plan.  Sometimes we did, but most of the time we had no freaking idea. Nothing we could quantify.  While I did all the work and wrote the verbal part they were reviewed all the way to the internal top by the subsidiary CFO.  

After a while our reasons for doing better would cite factors C, D, E, and F.  Then our verbal description for why we did worse would cite C, D, E, and F.  We freaking didn’t know.

Finally the parent corporate honchos saw we were giving them gibberish logic.  They called us on it and we had a series of meetings.  They finally acknowledged we couldn’t come up with logic that suited their desires and a description that would equate to what one sees in a corporate quarterly statement about doing better or worse.

Move back to Papa John’s.  Are same store Sales stagnating because of declining sports viewership or b/c the pizza sucks , or some other reasons or some combination of the above.  I don’t know and they may or may not either.  But the quarterly reports require they write something.

Believe them at your own risk

This seems to be everywhere. My last job did weekly inventory. Because everything these days is a phone app, they run what's called a theoretical inventory that gets compared to the actual inventory. Every Friday would be a blizzard of emails questioning every count (You are missing 305 tea bags!!), missing 1/8 of a keg. Truly a waste of time.  

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