On December 21, 2017, Papa John’s (PZZA) announced that founder, CEO, and chairman John Schnatter will be stepping down as a CEO on January 1, 2018. He will be replaced by Papa John’s chief operating officer Steve Ritchie. However, Schnatter will continue to serve as chairman.
Although Papa John’s has not stated any reason for Schnatter’s resignation, it comes just two months after Schnatter blamed NFL (National Football League) leadership for a decline in NFL viewership due to players’ national anthem protests. Papa John’s has been the official pizza of the NFL since 2010, and Schnatter claimed that the decline in NFL viewership hurt Papa John’s sales in 3Q17 and 4Q17. Following the announcement of Schnatter’s resignation, Papa John’s stock fell 3.9%.
This year has been a tough one for Papa John’s. Many fast-food and fast-casual restaurants have been testing delivery services, and investors fear their entry into the delivery business could shake pizza companies’ dominance in the space. As of December 22, 2017, Papa John’s was trading at $56.90, which represents a fall of 33.5% since the beginning of 2017.
During the same period, peers Domino’s Pizza (DPZ) and Yum! Brands (YUM) had risen 21.1%, and 30.1%, respectively, and the S&P 500 (SPX), and the Consumer Discretionary Select Sector SPDR ETF (XLY) had risen 19.9% and 21.6%. XLY has invested more than 10% of its holdings in restaurants and travel companies. Next, we’ll look at analysts’ recommendations for Papa John’s.