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Papa John’s CEO Will Step Down Amid Controversy

— December 25, 2017

Papa John’s CEO Will Step Down Amid Controversy

John Schnatter, the 56-year-old founder of the Papa John’s pizza, will step down as the company’s CEO amid controversy.  Schnatter had been taking heat after a few comments he made last month about the NFL’s handling of the anthem protests.  Schnatter will officially be replaced on the first day of the new year the company’s chief operating officer, Steve Ritchie, and will remain chairman of the board.

Schnatter made some remarks during the company’s third-quarter earnings call on November 1st that didn’t sit well with listeners.   Papa John’s is a National Football League sponsor and advertiser, and Schnatter indicated it had been “hurt” by the “take a knee” protest led by African-American players to draw attention to police brutality.  “And more importantly, by not resolving the current debacle to the player and owners’ satisfaction, NFL leadership has hurt Papa John’s shareholders,” Schnatter said, adding, “Leadership starts at the top, and this is an example of poor leadership.”

Schnatter had also stated of the NFL’s ratings, “You need to look at exactly how the ratings are going backwards.  Last year the ratings for the NFL went backwards because of the elections.  This year the ratings are going backwards because of the controversy.  And so, the controversy is polarizing the customer, polarizing the country.”

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A fury of comments from disgusted social media users followed, accusing the company of racism, while white supremacists vowed to make Papa John’s the official pizza of the alt-right.  Papa John’s responded amid the controversy, stating: “We condemn racism in all forms and any and all hate groups that support it…We do not want these individuals or groups to buy our pizza.”  But, it wasn’t enough.

Schnatter, who founded Papa John’s in 1984 when he began selling pizza out of the broom closet of his father’s Indiana tavern, had helped grow the business to its position as the world’s third-largest pizza delivery company, currently with 5,000 locations.  He had stepped down from his post once before 2005, but returned in 2008.  In 2010, the company attempted without success to acquire a co-CEO to help Schnatter with decision-making.

Many were taken aback by the Papa John’s founder’s reaction to the implementation of Obamacare a few years ago.  In 2012, he announced that the initiative would cost the company $0.11 to $0.14 per pizza or $0.15 to $0.20 cents per order.

“We’re not supportive of Obamacare, like most businesses in our industry,” Schnatter said. “But our business model and unit economics are about as ideal as you can get for a food company to absorb Obamacare.”  In other words, he upped the price of pizza in order to compensate for the additional health care costs.

Upon stepping down, the company says Schnatter plans to pursue his “personal passion for entrepreneurship, leadership development and education.”  His replacement, Ritchie, joined the pizza biz nearly twenty-two year ago, making $6 an hour as a Papa John’s customer service representative.  He commented that “all of the PR things have been quite a distraction,” and said, amid the controversy, he wants “to put the focus back on our people and pizza.”


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