In what right-leaning CEO’s clearly thought was a good move, a move designed to communicate a coded message to customers and shareholders that they were good conservative businessmen who were not going to cow-tow to Barack Obama and the Democrat’s healthcare agenda, companies like Papa John’s, Applebee’s and Denny’s made a big show of how they’d have to raise prices, cut employee hours, cut wages, and potentially lose jobs if Obama won the election and Obamacare was enforced.
Conservatives applauded, the rest of the country talked about boycotts, and we here at Addicting Info took particular interest in John Schnatter, the photogenic TV fixture and CEO of Papa John’s, whose miserly statements (Papa John Committing Pizza Extortion – Forgets Business School Lesson Of Supply And Demand) seemed to fly in the face of his open-armed, paternal image (he is, after all, Papa John) and contradicted his grandiose promotional campaigns (“two million free pizzas”). On top of that, and seemingly to his chagrin, the backlash was significant, leading to a quick, panicked reversal (Papa John’s About Face – Will Be Giving Healthcare To Employees After All).
But the “about-face” was too little, too late. Schnatter had seriously miscalculated the consequences of that coded message. Because while his inner circle cheered, the greater public decided he and his company were mean-spirited and unlikable.
And unlikable turns out to be an even bigger problem than boycotts and sneering opinion pieces.
According to its own “brand perception” research company, YouGov BrandIndex, Papa John’s reputation among customers took a serious dive after Schnatter’s unseemly public statements against Obamacare and at the expense of his employees:
Papa John’s CEO John Schnatter’s post-Election Day comments about passing on health care reform costs by reducing worker hours and raising prices coincides with a swift negative reaction among casual food diners seemingly accelerated by the November 13th class action lawsuit accusing Papa John’s of sending unsolicited text messages to customers.
Despite Schnatter’s Huffington Post op-ed on November 20th claiming his words were twisted, Papa John’s perception levels continued to experience one of its sharpest drops of the year, sending it well below rival Pizza Hut. […]
Papa John’s Buzz score high point for the month came on Election Day – November 6th – with a score of 32. Eight days later, the score had dropped 10 points down 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. [article is dated 11.30.12]
According to the Huffington Post, Papa John’s response to this story was swift. In a hastily fired off email they countered the YouGov article, saying it “contradicted” other “reputational scores” done by the same company:
“BrandIndex polls a sample of consumers each day on many aspects of a brand’s reputation,” said Andrew Varga, Chief Marketing Officer of Papa John’s. “The publicized report failed to mention that during the same time period that YouGov claimed Papa John’s had a significant drop in brand favorability, their general population study showed significant increases in such key criteria as reputation, quality, value and whether consumers would recommend the brand to a friend.
“In fact,” he continued, “from November 6 through November 30, Papa John’s overall index number improved almost five points and was at or near recent highs and four of the five measures that make up the index also showed nice improvement.”
So to clarify, the YouGov BrandIndex poll numbers from their article were based on “adults who have eaten at casual dining restaurants in the past month” while the study Papa John’s refers to focused on “the general population.”
OK, that’s fair. We’ll go with that: the general population still likes Papa John’s, but with adults 18+ their reputation dropped from 32 to 4. Parse that as you will.
The take-away is clear: as Applebee’s (their numbers dropped from 35 to 5), Denny’s (10 down to 0) and Papa John’s have discovered, publicly bashing healthcare reform that is now the law of the land and putting the weight of that disagreement on the backs of those working for you is a prescription for failure. Whether Papa John’s and its lip-flapping CEO can fully recover their reputation remains to be seen.
But as Warren Buffett said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”