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    Papa John's Founder John Schnatter Exits as CEO

  • Did Schnatter's controversial NFL comments cost him his job?

    Papa John’s
    John Schnatter founded Papa John’s in 1984.

    Papa John’s founder John Schnatter took plenty of heat for his comments about the NFL’s handling of anthem protests. So did the brand. It issued apologies on social media and even had to condemn white supremacy after a neo-Nazi site, The Daily Stormer, endorsed Papa John’s and published a post that asked if the chain was “the official pizza of the alt-right.” Schnatter’s statements also appear to have cost him his job.

    On Thursday, Papa John’s announced that Steve Ritchie was being promoted to chief executive officer, effective January 1. Schnatter is shifting to a role as chairman of the company, where he “will continue to champion the core principles that led to recognition as the industry leader in product quality and customer satisfaction,” Papa John’s said.

    Schnatter, 56, founded Papa John’s in 1984. His comments about the NFL, which came during a third-quarter earnings call on November 1, made immediate headlines.

    “The NFL has hurt us. And more importantly, by not resolving the current debacle to the player and owners' satisfaction, NFL leadership has hurt Papa John's shareholders," he said.

    “The NFL has been a long and valued partner over the years, but we are certainly disappointed that the NFL and its leadership did not resolve the ongoing situation to the satisfaction of all parties long ago,” he continued. “This should have been nipped in the bud a year-and-a-half ago. Like many sponsors, we are in contact with NFL, and once the issue's resolved between the players and the owners, we are optimistic that the NFL's best years are ahead.”

    Competitors, like Pizza Hut, quickly distanced themselves by saying the NFL anthem protests, started by former San Francisco 49ers quarterback Colin Kaepernick, were playing no role in their sales.

    What made this more puzzling was that Papa John’s third-quarter sales were pretty much in line during the difficult period. Same-store sales were actually in the green at 1 percent growth, year-over-year. But the comments and negative sentiment sent shares dropping by as much as 13 percent the day the news broke. Shares of the Louisville, Kentucky-based company are down more than 30 percent this year.

    Papa John’s had advertising deals with not only the league, but also 23 individual teams. Schnatter often appears in advertisements during NFL games, and has credited its close relationship with the NFL and particularly quarterback Peyton Manning for sales boosts in the past. Manning has more than 30 franchises and is a frequent personality in the chain's ads.

    At the time, Nielsen data showed that NFL viewership was down about 5 percent from the same point the previous year. But whether or not this was related to players kneeling during the anthem was impossible to pinpoint. It could also have been part of a broader trend for broadcast TV as a whole—the four major networks’ viewership has declined an average of 8 percent during prime time.

    Papa John’s tried to quell the kickback with statements. "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,” the company said following the post on Papa John’s being the official pizza of the alt-right.

    Schnatter has stepped down from the CEO role before. He removed himself from the gig in 2005 before returning in 2008. He also added a co-CEO, Jude Thompson, in 2010 before ending the arrangement a year later.

    Ritchie, 43, has been a longtime employee with Papa John’s. He started with the company in 1996 as a customer service representative making $6 per hour. In 2006, he became a franchisee and, in 2010, started upping his duties and was promoted to chief operating officer in 2014. Papa John’s added Ritchie to the succession plan for the company’s top job in 2015 when he was named president.

    “I am so proud of Steve—he has excelled at every job he's ever held at Papa John's—from being an hourly customer service rep, to a delivery driver, store general manager, director of operations, franchisee and most recently President," Schnatter said in a statement. "With 120,000 Papa John's corporate and franchise employees, Steve will put the spotlight on our pizza and the most important ingredient—our team members. We couldn't have a more proven leader to guide Papa John's through its next stage of growth."

    Papa John’s said 98 percent of its managers are promoted from hourly positions.

    "I am humbled to take on this role," Ritchie said in a statement. "By focusing on our team members, we will deliver the world class experiences our customers deserve. At Papa John's, any opportunity is achievable if you dedicate yourself to putting your best foot forward every day. I'm certain our future company leaders are delivering pizzas in one of our 5,000 stores around the world right now."

    In the role, Papa John’s said, Ritchie will lead the chain’s global development and facilitate brand's marketing, digital, and customer experience evolution.