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Papa John's kicks Schnatter out of HQ, acts to fix brand, company culture

Investors are showing their approval in the actions taken thus far by Papa John's to act on the problems inflicted by its founder's words. Stocks were up decisively at the close of markets last week, so Papa John's leadership is pressing full-steam ahead to distance itself from its controversial founder.

July 16, 2018 by S.A. Whitehead — Food Editor, Net World Media Group

After a week of sheer brand "hell," Papa John's closed the week up a significant $2.28 at $53.55, even as the brand itself was all but imploding under the weight of its founder's words during a May media training session made public in a Forbes article last week. With that strong stockholder vote of approval on their actions thus far as their cue, the company's leadership announced Sunday night that it's taking even more steps to distance itself from controversial founder, John Schnatter.

The company said in a release it has formed a special board committee of all its independent directors to study and act on all of its relationships with Schnatter, with advise from independent outside legal counsel. In fact, after saying that Schnatter no longer has an active role in the company, following his termination as CEOand board chair, the committee directed the company to:  

• Terminate Schnatter's Founder Agreement, defining his company role, including spokesperson.
• Terminate a sublease agreement giving Schnatter use of office space at its Louisville headquarters.
• Request Schnatter cease all media appearances or make further statements regarding the company, its business or employees.

That last action was taken after Schnatter appeared on Louisville radio station WHAS still speaking as a spokesman, though the company terminated that role last  week.  

"We are very glad to get out of the NFL relationship because we still get to sponsor some players and we still get to sponsor some teams. ..." he said on the show, Pro Football Talk. "But we don't want to do business with Roger Goodell, period. ... we made a decision to get a divorce and we did."

The brand's new committee will also oversee an external audit and investigation of all the company's existing processes, policies and systems related to diversity and inclusion, supplier and vendor engagement, and Papa John's culture.

Late last Friday, relatively new Papa John's CEO Steve Ritchie — who replaced Schnatter last December — released a message clearly intended for its stockholders, as well as employees and the public essentially delineating leadership's plan going forward and acknowledging the damage that had been inflicted to the company by its founder. And right off the top of the statement, the brand made it very clear that Papa John's, the brand is not Papa John, the person, a.k.a. John Schnatter. 

"Papa John's is not an individual. Papa John's is a pizza company with 120,000 corporate and franchise team members around the world. Our employees represent all walks of life, and we are committed to fostering an inclusive and equitable workplace for all. Racism and any insensitive language, no matter what the context simply cannot — and will not — be tolerated at any level of our company.

The Board of Directors of Papa John's accepted Mr. Schnatter's resignation as Chairman of the Board earlier this week. It has also been decided he will no longer be in any of the advertising or marketing materials associated with the brand.

This decision is the first of several key steps to rebuild trust from the inside-out. We will be engaging a broad set of stakeholders to chart a course forward that demonstrates our commitment to diversity, equity and inclusion.

First, we will identify and retain an independent and outside expert to audit all of our existing processes, policies and systems related to diversity and inclusion, supplier engagement and Papa John's culture. As part of that process, we will establish a process for communicating progress against transparent goals to everyone in our Papa John's family.

The entire senior management team will also be visiting key locations across the country and hold listening sessions with employees in our stores to talk about what they are seeing and give them a platform to voice their concerns. To follow-up, we will initiate two-way conversations to invite ongoing feedback from employees and franchisees to ensure that their voices are heard.

I will personally be leading this effort because there is nothing more important for Papa John's right now. We want to regain trust, though I know we need to earn it. We will demonstrate that a diverse and inclusive culture exists at Papa John's through our deeds and actions."

What's next? That's what Pizza Marketplace wanted to know, so we consulted a brand strategist for some ideas. Likewise, we wanted to obtain further information on the subject of media training — the incident Papa John's was involved in that initially set this hurricane of brand events off last week when it was made public. Both of those subjects are explored in this other story on Pizza Marketplace today. 

Photo: iStock

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.