In the latest Papa John’s news, a group that represents the company’s franchisees has hired an attorney, and an asset management firm is upping the ante on its bet that the pizza chain will recover from negative publicity.
Let’s start with the franchisees. Bloomberg reported that Papa John’s Franchise Association has hired the Miami-based franchise attorney Robert Zarco to represent the interest of franchisee.
Founder John Schnatter’s “comments about the NFL during the earnings call and his use of a racial slur in the media training session with the company’s marketing firm have significantly harmed the brand and our membership’s store sales,” Vaughn Frey, the association’s chairman, told Bloomberg. “The brand image has been severely tarnished.”
According to Bloomberg, the group represents 44 percent of franchised restaurants and more than 1,200 locations, which are still feeling the impacts despite implementation of a franchisee assistance program.
Papa John’s earnings continued to feel the pain of bad publicity surrounding Schnatter and the subsequent legal battle. Revenue dropped just under 16 percent, to $364 million, during the third quarter of 2018, and same-store sales in North American declined 9.8 percent overall.
Analysts question whether the recent numbers will hinder the company’s efforts to find a buyer. Same-store sales were better than expected, though, and executives said that surveys of consumer sentiment show improvement.
That and analysts’ acknowledgment that progress has been made may have been enough to persuade the asset management firm T. Rowe Price to increase its ownership stake once again.
The company filed paperwork with the U.S. Securities and Exchange Commission, noting that it now owns 10.7 percent of Papa John’s shares after buying 3.4 million shares. According to Papa John’s website, T. Rowe Price previously owned less than 0.4 percent as of July 30 after dumping nearly 1.7 million shares.