Papa John’s International Inc. PZZA -1.59% will no longer be the official pizza of the National Football League, the pizza chain and the league said Tuesday.
“While the NFL remains an important channel for us, we have determined that there are better ways to reach and activate this audience,” Papa John’s Chief Executive Steve Ritchie said on a conference call. Instead, the company will shift its marketing from the broader NFL sponsorship to partnerships with 22 NFL teams and on its relationships with league players and personalities, Mr. Ritchie said.
One person familiar with the matter said that the mutual decision to part ways stemmed back to everything that took place between the company and the NFL in recent months, which included company founder John Schnatter saying the NFL “hurt” the company in an earnings call, while expressing consternation that the league hadn’t resolved the player protests during the national anthem.
Mr. Schnatter’s comments came after weeks of controversy for the league, both with sagging ratings and the controversial national anthem protests that drew the ire of some fans and President Donald Trump. In a series of tweets, Papa John’s later walked back those comments, writing it believes in the “right to protest inequality and support the players’ movement to create a new platform for change.”
This topic was at the epicenter of the NFL’s infighting, as Dallas Cowboys owner Jerry Jones feuded with other owners over Commissioner Roger Goodell’s contract extension. Some owners believed Mr. Jones, who has said he is the joint owner of more than 100 Papa John’s stores, was behind Mr. Schnatter’s critical comments, people familiar with the matter told the Journal in November. If true, that would have created a dicey situation for Mr. Jones and the league—with one of the most influential owners directing a league sponsor to criticize the NFL. Mr. Jones denied those suggestions at the time.
Papa John’s, which has been an NFL partner since 2010, had bought a lot of advertising before the season started, betting on an improved year. The average audience for a game was 14.9 million during the 2017 regular season, down 9.7% from the prior year, according to Nielsen.
In December, Mr. Schnatter stepped down as CEO, but remained chairman.
Mr. Ritchie, who had been chief operating officer at Papa John’s since 2014, became CEO in January.
Mr. Ritchie told analysts that Papa John’s has hired a new advertising and public relations firm in an effort to engage with customers and improve profits. It also plans to redirect investments to build out its data and analytics capabilities. Currently, more than 60% of its sales are through digital channels, he said.
The announcement about the NFL partnership came as the Louisville, Ky., company reported same-store sales fell in its latest quarter. Papa John’s reported a profit of $28.5 million, or 81 cents a share, in the fourth quarter, down from $32.6 million, or 88 cents a share, a year earlier.
Revenue rose 6.4% to $467.6 million, a quarter typically the biggest for pizza sales.
But North American same-store sales—a key sales metric for the chain—fell 3.9%, wider than the 3.2% decline expected from analysts polled by FactSet. International same-store sales increased 2.6%.
Excluding one-time items, Papa John’s earned 65 cents a share, compared with 69 cents a share a year before. Analysts polled by Thomson Reuters had forecast adjusted earnings of 67 cents a share on $465.8 million in revenue.
For 2018, the company guided North America comparable sales to be flat to down 3% with international comparable sales rising between 3% and 5%.
Shares, down 28% over the past year, fell 5% to $53.60 in after-hours trading Tuesday.
