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The reputation of Papa John's, Applebee's and Denny's took a hit after high-ranking representatives came out against Obamacare.
The brand perception of Papa John's, Applebee's and Denny's took a beating after high-ranking representatives of the companies said Obamacare would force them to stop building restaurants, cut worker hours and raise prices.
After the comments, on a scale from 100 (totally positive) to -100 (totally negative), Papa John's score fell from 32 to 4, Applebee's score fell from 35 to to 5, and Denny's went from 10 to zero, then back to 6, according to a new survey.
Rachael Rothman, Susquehanna Financial Group analyst, shares her outlook on the restaurant operator, and explains why she downgraded the stock to "neutral" and maintains a $58 price target.
Along with everyone else, the casual dining restaurant sector has been struggling to cope with the effects of the economic downturn. For example, Darden Restaurants, which operates Olive Garden, Red Lobster and LongHorn Steakhouse, on Tuesday lowered financial expectations, sending shares down 10.7 percent. Prior to that the company had been leading the industry.
In October, Darden experimented with using more part-time employees in an effort to avoid Obamacare costs. A flurry of negative media coverage ensued. On Thursday the company will announce that it won't be reducing any full-time employees to part-time status. The company cited the bad publicity around its workforce tests, along with promotions that weren't working, when it lowered its profit outlook for the year on Tuesday.
The reputation results come from an online YouGov BrandIndex survey of 5,000 adults 18+ who had eaten at casual dining restaurants in the past month. The survey asked respondents if they've heard anything in the last two weeks positive or negative about the brand and gives a score from 100 to -100. A score of zero means equally positive and negative feedback.
While correlation is not causation, there was a noted dropoff in the BrandIndex scores after the company figures made remarks about how the Affordable Care Act -- or Obamacare -- was going to hurt their business.
For instance, Papa John's founder John Schnatter estimated in an August 1 earnings call that Obamacare costs would add $.11 to $.14 in costs to every pizza.
"Let's say fuel goes up, which it does from time to time, and we have to raise delivery charges," said Schnatter in the Aug. 1 earnings call. "We don't like raising delivery charges, but the price of fuel is out of our control, as is Obamacare. So if Obamacare is, in fact, not repealed, we will find tactics to shallow out any Obamacare costs. And, of course, strategies to pass that cost onto consumers in order to protect our shareholders' best interest."
In November, Schnatter told a college class that he supposed Papa John's franchises would decide to cut worker hours to avoid paying health insurance. Under the Affordable Care Act, employers have to provide health insurance for employees working over 30 hours a week or face fines.
Reached for comment, Papa John's told TODAY that Papa John's franchises are independently owned and operated and decisions about hiring and wages were up to individual franchise owners. Andrew Varga, chief marketing officer of Papa John’s, told TODAY the publicized YouGov BrandIndex findings "were contradicted by the results of BrandIndex’s own general population study which showed a significant improvement in reputational scores" for the pizza chain.
Despite the drubbing the brand has taken in the press and social media following Schnatter's remarks, which Lance Tucker, Papa John's CFO told TODAY have been "misquoted and mis-reported," the company said "there is also no change in its current positive sales or earnings guidance."
CEO of an Applebee's franchise running 40 Applebee's restaurants, Zane Tankel, caught flack after he told Fox Business News that the Affordable Care Act would cost millions and force them to stop building restaurants. Voice and email messages left for Tankel were not returned.
Denny's franchise owner in West Palm Beach, Fla., John Metz, told the Huffington Post that Obamacare would force him to charge each customer 5 percent extra to offset the costs. Per company instructions on this issue, calls to Met'z franchisor headquarters were referred to an external PR firm, which did not return a request for comment.
Both Applebee'sand Denny's released statements saying they while they respected the free speech rights of their franchise owners, the comments by Tankel and Metz did not reflect corporate opinions or positions.
Mary Ellen Muckerman, head of strategy at international brand consultancy Wolff Olins, told TODAY that "Franchises are just as close to the brand as the corporate parents." Political statements per se are not forbidden, but the question is, "are the statements consistent with the overall brand purpose?" said Muckerman.
Luke Kachersky, Director of Research at The Center for Positive Marketing at Fordham University, told TODAY, "Modern branding has shifted from positioning in terms of brand benefits to positioning in terms of values. The reason for this change, ostensibly, is that sharing values with your customers opens up an avenue toward a more authentic and enduring relationship."
Brand experts say that when the brand communication is inconsistent with its core principals, the brand is subject to flux, diminishment -- or even erasure. That can lead to the consumer's brand preferences to getting plucked off by another stronger, more confident brand, and a decline in sales.
"A brand is just a collection of ideas," Barbara Findlay Schenck, author of "Branding for Dummies," told TODAY. "When suddenly the brand message shifted to political stances, bottom line prices, price increases and staff cutbacks, the inconsistency rocked brand strength, confidence, and preference."
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Maybe Papa and Peyton should only give away a million and a half pizzas so they can afford to pay their employees healthcare. Hypocrites.
Everyone keeps dissing Obama because of Obamacare. Do you really think it would have been different if we had Romneycare? NOOOOOOOO. The same person who wrote Romneycare wrote Obamacare. The only difference is the voucher program Romney would have inacted. Romney even stated in one of his interviews he liked most of Obamacare and most of it would not change if his plan would be inacted.
When Brand was backed by reputation, quality and satisfaction guaranteed it was due to long term commitment to be the recommendation that first slipped from the tongue between neighbors. The technology of ink and paper printing and even the invention of the tin can and metal printing made brand name product where was seen as self-advisement.
Once Brand as established, it became a marketable commodity itself that could be bought and sold by anyone for any reason. It there was profit to have it could be made by buying and promoting a brand, if this ruined the brand then it could be removed from the market to make room for another brand owned by the same company. Once the market value of a brand was milked for all it worth, it could be discarded and New something could take its place. Today nearly every Brand is in ruins from goods to fine hotels to restaurants, the new generation cannot remember the Brand and the long history of effort to make a good brand was discarded, the loyal worker proud to have worked making a famous brand cannot mention it.
Pride in the Brand made it special, and doing away with brands make everyone the same, reduced incentive and made the brand unsupportable.
If here was global business incentive for a pizza or a hamburger restaurant, what would it be? Or if it were a global laundry, bakery, or funeral home what would be the business incentive? That incentive could be as simple as manufacturing equipment to be rented to the franchise, or a ready shrink wrapped shiny new facility with a recognized brand name out front all rented out to a local (owner) management who maintains the brands reputation.
But is not it possible that someday a home franchise would be created for the ideal family of 5.3 members, 1 cat, and 2 dogs, could be selected to become the home franchise unit of choice. The franchise owner (home owner) would make one payment that included the all the basics in exchange for getting the new home, with all the standard fixtures, standard room sizes, two car garage, 1/2 acre, storage shed, fence, shrubs. The supplier could have all the repairs, services cleaning work done by certified franchise approved bonded workers. The parent could be off to work, and the household business, nanny care and child's education and family recreation all rolled into the same identical package. Just trot down to the demo mall and select you home, and it will air lifted into place, replacing the previous installation, all within one week, while you are on paid vacation.
Or try the Homegos model that are stackable for family compounds, mid-size complexes and even Trump high-rise luxury module.
Since most of this can be delivered anyway, why again do we need a global franchise, when a little building 3 Greeks and 4 Italians and oven or two can do more locally than all the bull doze the neighborhood for Wal-Mart City, the franchise that IS small town America?
While the above is more of question, we all know that the incentive is to pay a CEO as much as needed to provide as much profit as possible to make as poor products for as little cost, quality and labor as can gotten away with and to 'legally' deliver the gains to the equity-stock-holders.
For the extreme academic question: What should be made of the idea of one planetary franchise corporation, with a single CEO, making as much profit for equity-share-holders as possible? Hint: "Who is it that is left out of this system?" That would have to be called communism if it had in include everyone know as non-equity share holder? If one CEO seems too few, then how many are needed to compete, if too few equity-share-holders existed, how many would needed to guide CEO's? Since the world is all about business should businesses be accountable, or is there some other group called public that has any role in the planetary franchise? The answer to these questions should be defined and codified and approved by King Grover Glenn Norquist I, (Marquis DeTax).
More Academics: (from above)
The reason that this is a statement of propaganda is because it advocates what already exists? There is a difference between a franchise and franchisee. The concept that is franchise is for the benefit of Large Parent Corporation called the Corporate Giant, LPC-CG that seeks potential owners of franchise locations.
Hence LPC-CG seeks to encourage, nurture and help the SMALL franchisee grow provide more people working (more taxes paid [from the 47% who don't pay taxes?]). The franchisee makes a down payment (capital) and the large franchise investors make more capital investment (more jobs and more taxes paid [from the 47% who don't pay taxes?]) and expansion (more jobs and more taxes paid [from the 47% who don't pay taxes?]) be better than taxing them [the LPC-CG franchiser who is barely paying anything in corporate taxes 10% average] out of existence. When the "rich" [The rich who are not paying taxes?" are gone … only rest of us [Who? The 53% who don’t exist or the 47% who don’t pay taxes?] will be left paying for those who have not contributed … right?
First things first the franchise in question is already spoon feeding the small business. (But are you really advocating that the Government do the Same?)
The main idea of franchise is to offer the lowest investment cost for a new business to make profits for the franchise supplying the capital, while offering slick down business model that allow the franchisee to hire the lowest paid worker possible, this assuring that both make profits (but the workers make little.)
Since both the franchise and the franchisee are doing their darndest not to pay taxes, and the low paid workers are not paying tax, so who then is paying those taxes? Do you even recognize that the roads outside, the traffic lights, the local police, fire and school and social services require taxes?
Your supporting argument seems to be that replacing the franchise with a government source of capital and nurturing, would help, fine, but then the average corporate tax of 10% is not much of a savings. Such a silly takeover would help the bottom line, but the government would not need a CEO or any equity-share-holders, who don’t want be taxed. It is also silly since government role is to dispense money for expenses, not in the least to run any business. (Business is capitalist and government is socialism, and the problem is that no one dares to address both.)
If the idea of franchise were a brand new concept then the economics would be so compelling that the government on all levels would cooperate - as it has to fault.
Since the idea of a franchise has been long developed then in what new way could the government help after having already given its all to encourage the franchise model do to make it better? In a franchise version of a perfect world no taxes would be paid, the workers would get just enough to stay a live plus a little bit more to assure a small burial, the franchise and the franchisee would make enough to keep the business going.
So the government realizes that the franchise model is successful and has lowered the cost to the customer then the government realized that its expenses have to be covered, then uniform taxes are the way to go. Yet when the government learns that this successful business model is not providing the long promised benefits then the government is ask to do more?
Clearly there are three groups all with their mouths open, wanting more, yet utterly willing to explode the whole system?
So to be fair each group should be asked to sacrifice the same proportion of its wealth to balance the system. Yet when we compare the groups measure by their wealth we see that the workers have the least to offer, making more sacrifice seem unfair, the franchisee demands success for the hard work suggesting that sacrifice there seems unwelcomed, the LPC-CG has been so successful for decades on end, feels entitled to keep its growing profits.
The low end of this deal has little choice, the high end is unyielding, and so it is the government that must yield? But this might seem quite a problem since the franchise business is no longer contributing enough to the tax coffers for pay the government bills, the government cannot cut anything that can help. The only thing the government can do is to hand out charity, to subsidize the franchise business, to equalize costs or to lower interest rates. It is not odd that many suggest that we can cut police, roads, schools and energy investments, but is very odd that these will help the franchise, the franchisee owner the workers or the community.
Take roads as the most vital long term area for cutting expenses, over 5 year the road would be in bad repair, after 10 years impassible. We could survive but not for all the customers no longer driving to your business. By the time any local, state, fuel taxes were cut you would be closed.
So having exhausted all alternatives cut and reduced and neglects all the indirect support for your business what are your plans?
My guess is that in 15 years of failure you will be suggesting taxes to replace the whole system neglected for lack of repairs.
What should bother a fiscal conservative is the imbalance of the cost structure. The engine should be working, the expense of the engine amortized for a return, the engine fluids and maintenance planned and budgeted and the materials and workers of a quality that lasts as long as possible.
The limitation of the fiscal conservative is one of moderating fiscal concerns long enough to examine what is being conserved and what is not. It all well and good to consider profit and its dark friend ownership, but quite another to expand those accounting principles to consider the whole picture with all its players. Otherwise the engine and its fluids and maintenance could make it last forever but without any workers.
Why are people upset because these corporations are telling the truth? Their reputation falls because they are telling the truth? I don't think so, I don't believe this, another propaganda story about how great obamacare is. Let's just wait a couple years and see how much obamacare helps the economy, and how many businesses shut down. Obama is not doing anything to help the economy, it appears he is trying to kill off what is left of it. If the healthcare costs don't get you, the tax penalties will. My brand perception of this news site just went way down after reading this nonsense.
Let them shut down...big deal...Minimum jobs are everywhere.
Their employees don't pay taxes and probably get money back anyway.
Their employees get free health care subsidized by me.
If their business model isn't supportive...good by!
How many of the above blabbermouths actually own a small business? 1? 2?
They simply parrot the Hannity/Limbaugh lines.
SEATTLE, Nov. 12, 2012 /PRNewswire/ -- On November 9, 2012, United States District Court Judge John C. Coughenour certified a nationwide class action case against Papa John's International, Inc. (NASDAQ: PZZA) with potential damages over $250 million. The lawsuit is brought on behalf of Papa John's customers across the United States who were sent unwanted text messages that advertised Papa John's pizza.
The ruling paves the way for what could be one of the largest damages awards ever recovered under the federal Telephone Consumer Protection Act. The class action lawsuit contends that 500,000 illegal text messages were sent to Papa John's customers across the country. Papa John's customers could be awarded $500 or more in statutory damages for each text message.
Erin Chutich, one of the plaintiffs in the case, stated, "After I ordered from Papa John's, my telephone started beeping with text messages advertising pizza specials. Papa John's never asked permission to send me text message advertisements." Chutich added, "Hopefully, this will be an important victory for consumers. Our lawsuit is about keeping spam from spreading from our email to our cell phones."
The US is the only "developed" country in the world where people routinely go personally bankrupt because of the misfortune of contracting a disease like cancer or because they suffered the indignity of getting old. This is "exceptional"?
All three serve slop for food anyway. They can raise their prices all they like because I still won't be paying them.
This is a brilliant idea!! Right next to the Obamacare costs increase on the receipts, we can add in War Costs. Certainly we need to track the $1.4 trillion which small business have to shoulder.
You would not believe the profit margin in pizza (why do you think the Mafia likes it so much?)
Essentially, a large pizza with all the great ingredients costs about $3.00 to make. What are YOU paying for a large pizza? I don't wanna hear Papa John moaning and groaning about his $.04 increase in insurance costs per slice......this is why anyone with a brain hates the Republicans.
The CEO's live like Kings, and they can't afford to give their employees medical insurance? Really!
All you crying CEO's make me sick!!!! Get a life! About time you have to pay for something!!!
If providing health insurance is so injurious to businesses (and I can see where it might impact the ability of exporters of manufactured goods to be competitive) why not just have Medicare for all? The processing and management costs go way down, there's no individual mandate to give indigestion to the Republicans and overall, both quality and cost of health care in general improve.
The "media" is intent upon helping Obama to gut the entire country. So much for a free and honest press.
All businesses who are against Obamacare are corrupt!!!
These same businesses already cut employees hours, have huge employment turn-over, and constantly raises their prices...
The bottomline, is that they will not be able to keep that money...and as for the shareholders, they only receive a few cents on the dollar anyway...
The healthcare plan forces everyone to participate from big to small businesses to the unemployed...
You do not here the little man complaining about the TAX he/she will have to pay if they do not particpate in Obamacare...
Imagine being unempoyed for a year, then you get a job and file a tax return the following year...and then you receive a letter from the treasury department stating that your income tax return was intercepted because you owe for medical insurance...
Get real people, big businesses are criminals...the grocery stores have been keeping peoles hours under 30 for years, and so have all of these restaurants...
People who work in these places do not make enough to afford their own place to live, and if they do it is because they are working more than one job...
It would be nice for once to see the owners of these restaurants, cut back their employees hours only to have the employees quit so that the owners would have to prepare the meals, prep the food, do the dishes, clean the place, and serve you...
For once these people are being held accountable for years of not paying providing health-insurance...
Only in America do you have perverted catholics complaining about everything except for their child molesting...
I started avoiding these places years ago was not impressed with their quality. Now I seek out local mom & pops which are much better. Who would want to eat at a place that would actively not provide health insurance to its employees?
THIS is what happens to you when you dare to question or criticize the great Emperor Obama.
.11 to .14 cents a pizza? For a company that pays well below the minimum wage to half of its employees anyway, i seriously doubt this is going to break anyone's bank acct. The only people getting screwed here are the delivery people who work solely off tips. They finally are able to get health care from a cheap-skate employer and the employers wanna B*&$h about it? Wow. great company. They convince there employees to re-invest their hard earned money into the company by buying" Stock Options", and then never making a dime from it, continue to feed the pocket of the CEO's and big wigs. Its a joke.
since hearing about the "oh poor me 11cent pizza cost" i can not purchase a papa johns pizza. i drove by the local PJ yesterday thinking what a miserable employer. Sorry for the poor folk who work there or at olive garden or red lobster or at any Wyndham timeshare ripoff resorts or for donald trump and particularly at the las vegas garbage dumps of sheldon adelson (the venetian, sands expo and convention center) as well as his gambling places in china. adelson has been a great business man on the backs of low wage earners "as long as they are healthy and do not need medical care" and fools who lose at his gambling places. Let adelson keep his promise to give another $100 million to destroy my country.
Stop them all.
I boycott them all. You should too.
Even as a young black man the word PATRIOTISM felt good to me then, it seemed to mean something then. As I grew older I have realized that most politicians and business owners have to be about the buck and that makes many become unPatriotic gradually. Noone wants to admit it but BUSINESS especially does not care about the condition of its fellow citizens ( and that is part of PATRIOTISM RIGHT?). If it were not for UNIONS workers would not have the benefits it enjoyed up until the last few years, I know that UNIONS have done some bad things but overall they improved the conditions , pay, and benefits that workers had and that was what really made our economy strong and made many of us feel like we were all in this together. BALONEY, look at what employers have done to us. Most of them took well paying jobs with health benefits and closed them and sent them to countries where they could get away with not being regulated for quality and also pay little or nothing. HOW IS THAT FOR PATRIOTISM? And when they got the BUSH TAX CUTS to create jobs all they did was send more jobs overseas and buy more houses and maybe an island or 2. I think that they have gotten so bold that the things that they have quietly felt now they are caught saying them in public ,and are and should be judged and thusly for the sentiments that they create. CEO's , and money people do not care much more for us than they do the TALIBAN, and many do not want to say it. RICHES HAVE GONE TO THEIR HEADS. But we should realize that this is their true core and they want us to work for nothing and bow down to them, at least those are the sentiments they create. The single payer system should have been adopted to create a standard of care for all and take that burden off the backs directly of businesses but they did not want Pres. OBAMA to have a victory and had already decided to fight and stonewall any efforts he made even if they were good and for the good of us all. NOW IS THAT PATRIOTIC? ABSOLUTELY NOT! !! !!!