Papa John's CEO Blames NFL For Slowing Pizza Sales; Should He Really Blame Netflix?

President Trump isn’t the only one lashing out at the NFL these days. Papa John’s Int’l Inc. PZZA founder John Schnatter pointed his finger squarely at the NFL blamed the NFL and commissioner Roger Goodell for its disappointing third-quarter sales on the company’s earnings call on Wednesday.

“The NFL has hurt us by not resolving the current debacle to the players’ and owners’ satisfaction,” Schnatter said, referring to the national anthem protests. “NFL leadership has hurt Papa John’s shareholders.”

The NFL has endured a steep drop-off in ratings in 2017, a phenomenon that the president says is related to the league’s tolerance of national anthem protests. However, the NFL is certainly not alone in its ratings struggle. While NFL ratings are down roughly 5 percent through the first seven weeks of the season, CNN reports that the four major networks have endured an overall prime time ratings decline of 8 percent. In other words, the NFL is actually holding its own relatively well as traditional TV networks are losing viewers in droves.

In that sense, Papa John’s (and its shareholders) might want to blame services such as Netflix, Inc. NFLX and Alphabet Inc GOOGL GOOG’s YouTube for their pizza problems, not the NFL.

At the same time, perhaps Papa John's should blame itself. As Nations Restaurant News editor Jonathan Maze pointed out on Twitter, rival Domino's Pizza, Inc. DPZ seems to be having no problem with NFL ratings.

Domino's Q3 ended Sept. 10, four days into 2017 NFL season, whereas Pap John's Q3 didn't end until Sept. 24. Yum China Holdings Inc YUMC's CEO on Q3 earnings call Thursday said the chain wasn't seeing any impact from the NFL protest controversy.

For what it’s worth, Stevens analyst Will Slabaugh said on Thursday that investors should still be hungry for Papa John’s stock.

“Despite the softer results, we continue to believe PZZA has one of the most attractive multiyear stories in restaurants with significant international unit-growth opportunity and untapped customer data tools in its online ordering and loyalty platforms, which could lead to improved top-line results (and valuation) in FY18,” Slabaugh said.

Stevens maintains an Overweight rating for Papa John’s but has lowered its price target from $85 to $80.

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