Nation & World

'I am Papa John'

Ousted pizza chain founder wants his company back

Bloomberg

An image of John Schnatter, founder of Papa John’s International, is displayed on a pizza box.
Bloomberg An image of John Schnatter, founder of Papa John’s International, is displayed on a pizza box.

John Schnatter is not finished trying to convince you that he is — still — Papa John.

His new website, SavePapaJohns.com, says as much in bold, capitalized letters.

The ousted founder of one of country’s largest pizza chains relentlessly has tried to reclaim his company since resigning as its board chairman last month.

His latest move — launch the website, complete with a dump of press statements and legal documents that he believes will win over employees, investors and customers alike.

“The board wants to silence me,” the site’s homepage reads in red letters. “So this is my website, and my way to talk to you.”

That’s Schnatter’s side of the story. Papa John’s, meanwhile, has focused on reframing its brand and distancing itself from Schnatter over the past few months.

Crisis communications experts say that as Schnatter tries to save face, he’s only leveling blows to the company he founded more than 30 years ago.

In a statement, a Papa John’s spokesperson said the company is not, “nor should we be, dependent on one person.”

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The spokesperson said customers, franchisees, employees and investors have been supportive of the steps Papa John’s has taken to separate itself from Schnatter.

“No matter what John does, he will not be able to distract from the inappropriate comments he made,” the statement said.

Getting The truth out

On his site, Schnatter says he is “getting the truth out there” and describes the story behind the company’s founding.

Alongside a slew of documents related to his lawsuit alleging that the company did not provide him with proper documents and records, Schnatter uploaded a letter to Papa John’s employees disputing claims that he wanted his image removed from Papa John’s’ building and products.

Schnatter remains a member of the company’s board.

“As you all know, Papa John’s is our life’s work and we will all get through this together somehow, some way,” he wrote in the letter.

The documents also include Schnatter’s claims of misconduct within the company’s top management, including allegations of sexual misconduct, that the board is not addressing.

A week ago Saturday, Forbes reported on the tense culture at Papa John’s and included allegations by four current employees who say that chief executive Steve Ritchie leads “an insular band of executives who are prone to inappropriate behavior and who have received special treatment and fast-tracked careers.”

Ritchie denied those allegations, Forbes reported.

Schnatter resigned as chairman of the Papa John’s board on July 11 after using the N-word during a call between company executives and the marketing agency Laundry Service.

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Schnatter had been participating in a role-playing exercise meant to coach him on public relations crises when he was asked how he would distance himself from racist groups online.

Schnatter later said he regretted resigning and that the Papa John’s board was wrong to dismiss him without an investigation.

He previously had stepped down as the company’s chief executive after saying that protests among National Football League players had hurt his pizza sales.

Poison pill

In July, Papa John’s took the highly unusual step of implementing a stockholder rights plan to further distance itself from Schnatter. The move — commonly known as a “poison pill” — blocks any investor from acquiring more than 15 percent of company stock without board approval.

Schnatter already owned a 29 percent stake, and the “poison pill” constrains his share to less than 50 percent.

Investment experts said the move had rarely, if ever, been used against a company’s own founder and is more commonly deployed to block activist investors from taking a controlling interest.

Papa John’s previously had said it no longer would include Schnatter in any of its advertisements.

The University of Louisville is removing the Papa John’s name from its football stadium. Major League Baseball suspended a league-wide Papa John’s promotion, and some teams said they would close concession stands at their stadiums.

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As part of its rebranding, Papa John’s announced a new assistance program for franchisees in the United States and Canada to help stymie the consequences of Schnatter’s comments.

The program includes reductions in food-service pricing and online fees through the end of 2018 and will provide funds to support new marketing strategies.

‘A refreshed brand’

Analysts appear to have taken note. In a research report from earlier this month, an analyst at Stephens wrote that Papa John’s would need to “present a refreshed brand message and image.”

“We feel strongly that an aggressive focus on the company’s new initiatives (particularly brand, value and technology) present a much greater chance for success versus remaining tethered to Mr. Schnatter’s image, which we believe would make a sales recovery incrementally more difficult.”

An August Jefferies report similarly noted the franchisee assistance program as part of a broader company response to “remedy the situation” that will “help challenged operators bridge the gap while negative sentiment weighs” on same store sales.

Schnatter’s strategy has been to attack Papa John’s’ management as a way to save his standing with the company, said Timothy Coombs, a crisis communication expert at Texas A&M University.

In response, the company either can ignore Schnatter in the hopes that he will stop drawing attention, negotiate with him privately or take the rare step of building a separate website dedicated to refuting Schnatter’s claims.

Coombs said he couldn’t think of a past example when a former founder launched a website to lambaste the company he built. In the end, Schnatter’s attacks ultimately erode the company’s broader reputation, Coombs said.

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“If you really care about the company, you still support it,” Coombs said. “You don’t burn it down.”

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