Following reports that Papa John's franchisees could be forced to increase prices and slash jobs because of President Obama's health care overhaul, Papa John's has hired a public relations firm to clear the air and rid the Internet of false claims.
The pizza PR war is on.
According to Politico, pizza mega-chain Papa John's has been releasing the hounds on bloggers who mischaracterize founder John Schnatter's purported comments about the effect of health care reform on his stores' finances.
The dispute stems from an interaction Papa John's founder and CEO John Schnatter had with a reporter who snuck up on him by sitting in on an entrepreneurship class he spoke to in Florida.
That reporter claims Schnatter said that because of the federal health care law, which requires companies to provide health insurance to all of its full-time employees, pizza prices would rise 11-14 cents and Papa John's would have to close stores and cut jobs.
Not so fast though. In a Huffington Post op-ed he wrote to clear the air, Schnatter says Papa John's has no plans to cut jobs (he says they'll actually add 5,000 and open hundreds of stores) and decisions like reducing an employee's hours to below the threshold for full-time work are left up to the franchisees themselves.
"Since our franchisees own the restaurants they operate, who they hire, how many hours they give each employee and what they pay each employee is up to them, not me or Papa John's," Schnatter wrote. "Like any small business in these economic times, our franchisees are under a tremendous amount of pressure on costs."
The flap over rising pie costs, he says, was due to a misunderstanding on an investor call. On that call, Schnatter said the cost of providing health insurance to all of his company's uninsured, full-time employees could come out to about 14 cents on a large pizza, ABC News reports. He did not say this would amount to a price increase for consumers. He believes his company's sound business model and unit economics would allow it to seamlessly absorb health insurance costs.
Even as Schnatter bolsters his defenses, some media — both large and small — haven't backed down from reporting on the founder's statements about the Affordable Care Act.
CNN — which according to Politico was not contacted by Sitrick and Co., the national crisis PR firm hired by Papa John's — fact-checked the potential price increase and concluded that not only would prices not rise under the new law, the issue would be moot because employers have no obligation to provide health care for part-time workers and many John's stores would be exempt from doling out coverage because they'd be considered small businesses. Essentially, they wouldn't be taking on enough health claims to significantly raise their prices.
Mike Sitrick, chair of Sitrick and Co., told Politico that before Schnatter's explanatory op-ed ran in The Huffington Post, it contacted a good number of bloggers (but not large publications) and politely asked them to remove their stories, as they were based on faulty, mischaracterized information. Sitrick says many complied and his firm hasn't had to send out as many desist notices since.
Last week, however, blogger John Stabley, who picked up on the CNN report, says he was contacted by Sitrick and asked, politely, to remove his story.
Stabley told Politico he refused to do so and is confused why CNN hasn't been contacted to take down its story while he has.
"It's interesting that Papa John's went after Stabley Times for relaying what CNN reported, but never went after CNN for the original report," Stabley told Politico. "Of course they claim to have 'somehow missed' the CNN story."
Sitrick told MSN News that the CNN story ran in August, and his firm was not retained until November. He says transcripts show that Stabley posted false information about Schnatter and Papa John's.
Sitrick told Politico that his company sends desist requests as it comes across the purported falsities and simply missed the CNN report.
"When we see these blogs come up, we send them notes and overwhelmingly, with very few exceptions, they apologize and remove it," Sitrick said.
According to a study conducted by YouGov BrandIndex, which researches brand perception, Papa John's buzz score among casual diners shot down following Schnatter's post-election comments about reducing employee hours and raising prices and a Nov. 13 class action lawsuit against the corporation for sending unsolicited text messages to customers. On Election Day, Papa John's buzz score was 32. By late November, it had plummeted to four.
Similar dissatisfaction was measured among Applebee's and Denny's consumers. Major franchisees of both companies had publicly stated they'd be forced to increase prices and cut hours if a health care overhaul was put into place. Denny's CEO John Miller apologized for his franchise owner's comments, and the company experienced a major rebound in its YouGov score in the days that followed.
In response to the YouGov BrandIndex score, Papa John's told The Huffington Post that the marketing firm's findings are contradictory. In another YouGov general population study, the pizza chain says it performed favorably, experiencing increases in reputation, quality and other categories.
YouGov, however, says its general population score measures overall perception and doesn't track day-to-day perception as well as its buzz score does.
"YouGov's Buzz score measures the perception of what was being said about the brand," the firm said in a release. "The perception of the brand itself among casual dining eaters during the same period showed an increase, although this was not statistically significant. We are happy to make this clear."
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