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Papa John's blames NFL leadership for lackluster pizza sales as shares sink more than 11%

  • Papa John's said the league and its leadership "hurt" the company by not resolving the player protests that have been taking place during the National Anthem.
  • The company said the combination of declining NFL viewership and negative consumer sentiment associated with the league caused sales in the third quarter to slump.
  • Papa John's has been the official pizza sponsor of the NFL since 2010.

Papa John himself slammed NFL leadership on Wednesday, blaming the organization for lackluster sales at his pizza restaurants in the third quarter.

John Schnatter, the founder and CEO of Papa John's, said the league and its leadership "hurt" the company by not resolving the player protests that have been taking place during the National Anthem.

"The NFL has been a long and valued partner over the years, but we are certainly disappointed that NFL and its leadership did not resolve the ongoing situation to the satisfaction of all parties," Schnatter said during an earnings call Wednesday. "This should have been nipped in the bud a year and a half ago."

Papa John's, which has been the official pizza of the NFL since 2010, said the combination of declining NFL viewership and negative consumer sentiment associated with the league caused sales in the third quarter to slump.

Shares of the pizza chain fell more than 11 percent on Wednesday.

"The NFL has hurt us and, more importantly, by not resolving the current debacle to the [players' and owners'] satisfaction, NFL leadership has hurt Papa John's," Schnatter said.

"Leadership starts at the top, and this is an example of poor leadership," he said.

In North America, same-store sales grew 1 percent, falling short of analyst expectations of a 1.4 percent rise, according to Street Account. And the company expects this trend to continue into the next quarter.

"The NFL situation has persisted in the pressure that it's applying to our sales that has bled into the start of the fourth quarter," Steve Ritchie, chief operating officer, said during the conference call.

Ritchie also blamed the competitive restaurant environment and temporary store closures caused by hurricanes for weak sales.

"Like Subway in recent years, Papa John's has invested in athletes to market their products," Darren Tristano, a food-service trend expert, told CNBC via email. "When athletes are at the top of their game, these investments can pay off with sales growth but when you invest in retiring players like Peyton Manning and injured players like J.J. Watt to endorse your brand, the impact can be lessened. With team parity in the NFL, ratings have fallen and marketing has become less effective for brands associating with the league."

However, "The results wouldn't suggest cutting ties with the NFL," Tristano said.

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