A pizza price war is putting pressure on the big chains and Papa John’s is hurting. Stifel Financial restaurant analyst Chris O’Cull downgraded the stock from hold to sell in a note on Monday, as reported by CNBC. Telling to him was recent promotions that make it seem the company is having trouble getting people in the door.
“In order for Papa John’s to drive transactions we believe it will need to commit to an everyday low price menu that will probably hurt franchisees’ profits until consumer perception of its value changes,” O’Cull wrote.
Company shares were down 4.5% in pre-market trading.
Papa John’s has battled problems for more than a year. Founder and chairman John Schnatter resigned from the board July 2018 after reports of racist language that he used in a conference call. The company raced to repair its image and pulled Schnatter’s face from all marketing and packaging.
If that weren’t enough, Forbes reported in July 2018 on a claimed sexist culture at the company.
Papa John’s has since continued to see falling sales and share prices. But in early February, the company got a $200 million cash infusion and named Starboard Value CEO Jeffrey Smith as chief executive.