Obamacare comments hurt Papa John's reputation

Dec. 3, 2012 | by Alicia Kelso

Anti-Obamacare comments from Papa John's CEO/founder John Schnatter, as well as a major Applebee's franchisee, appear to have driven down both chains' consumer perception, even two weeks or more after those remarks were made, according to research firm YouGov BrandIndex.

Schnatter's comments about passing health care reform costs by raising prices coincides with a negative reaction among diners, seemingly accelerated by the Nov. 13 class action lawsuit accusing the company of sending unsolicited text messages to customers.

Specifically, during an early August earnings call, Schnatter said:

"From our point of view, Obamacare will cost about 11 to 14 cents per pizza, or 15 to 20 per order, from a corporate basis ... We're not supportive of Obamacare like most businesses in our industry, but our business model and unit economics are about as ideal as you can get for a food company to absorb Obamacare ... If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect shareholders' best interest."

Despite his Huffington Post op-ed on Nov. 20 claiming his follow up comments were misconstrued about cutting employee hours to avoid cost increases, the brand's perception levels continued to experience one of its sharpest drops of the year, sending it well below rival Pizza Hut, where it currently sits.

In addition to experiencing a perception drop, numerous "Boycott Papa John's" Facebook pages have been created since the August comments.

A perception drop also hit Applebee's after Zane Tankel, CEO of franchisee Apple-Metro, appeared on Business News and made similar comments, saying Obamacare would force him not to hire any more workers and to consider cutting their hours.

Denny's is an exception to this politically charged trend. Franchisee John Metz, who runs 40 locations, said in mid-November he would add a 5 percent "Obamacare" surcharge to customers' bills and reduce his employees' hours. Denny's perception with casual diners declined afterwards, but much less so than Papa John's and Applebee's. And, unlike those two chains, Denny's has since rebounded close to where they were before Metz's remarks, potentially due to CEO John Miller's apologetic statement a few days later.

The three brands were measured with YouGov BrandIndex's Buzz score, which asks respondents, "If you've heard anything about the brand in the last two weeks, through advertising, news or word of mouth, was it positive or negative?" Results were filtered adults 18 and older who have eaten at casual dining restaurants in the past month.

YouGov BrandIndex measurement scores range from 100 to -100 and are compiled by subtracting negative feedback from positive. A zero score means equal positive and negative feedback.

Papa John's buzz score high point for the month came on Election Day – Nov. 6 – with a score of 32. Eight days later, the score had dropped 10 points to 22, when the spam text lawsuit was unveiled. A few days later, Papa John's dropped below Pizza Hut's score and is presently at 4.

Read more about trends.

Topics: Customer Service / Experience , Papa John's , Trends / Statistics

Alicia Kelso / Alicia has been a professional journalist for 15 years. Her work with FastCasual.com, QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.
View Alicia Kelso's profile on LinkedIn

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