Pizza chain Papa Murphy’s pins sales slump on election-season ad costs

Is a hard-fought presidential election bad for pizza sales?

Apparently so, if like Papa Murphy’s, the Vancouver, Wash.-based chain of 1,500 take-and-bake stores, you are an advertising-dependent small fish among the industry giants.

The publicly traded company’s shares were pounded Thursday — down 23.4 percent to $4.02 — after Wednesday’s report of a decline in comparable-store sales that it blames in part on the high cost of advertising during an election year.

“We had a disappointing quarter, as the increasingly competitive environment, both in the pizza category and more broadly, magnified the effects of lower absolute media levels in this presidential election year,” said Ken Calwell, president and CEO of Papa Murphy’s Holdings, in announcing the third-quarter results.

The company had warned earlier that 2016 would bring a double-whammy in the cost of advertising, and Calwell said Thursday that Papa Murphy’s had done less promotional media due to “the inflationary impact of the Olympics and the presidential election on the cost.”

Papa Murphy’s reported a 5.6 percent decrease in comparable-store sales at domestic franchisee-owned stores and a 7.7 percent decrease at company-owned stores. Revenues were up only 1.4 percent to $28.5 million, although it opened 26 new stores just in the latest quarter.

Of course Papa Murphy’s is not the only company to attribute faltering financial performance to the election: For instance, Dunkin’ Donuts last month said election-year uncertainty had slowed new franchise openings.

Pizza powerhouse Domino’s, however, experienced no such problem. It said in mid-October that domestic same-store sales had popped 13 percent above last year’s level.

Papa Murphy’s slowdown led to a net loss of $421,000, or 3 cents per share, compared to net profit of $1.12 million, or 7 cents per share, in the same quarter last year.

For 2016, Papa Murphy’s now forecasts domestic a comparable-store sales decline of 4.5 percent to 5 percent, roughly double its previous guidance.

The Seattle Times