Published: Wed, August 08, 2018
Economy | By

Papa John’s sales, shares plunge amid battle with company founder

Papa John’s sales, shares plunge amid battle with company founder

FBN's Cheryl Casone with more.

Papa John's sales have drastically declined since it was revealed last month that famous founder John Schnatter had used a racial slur during a media training phone call.

Ritchie said that Papa John's made the decision to distance itself from Schnatter after he said in November that the National Football League protests hurt sales. Quarterly revenue fell more than 5% to $408 million, below the $425.5 million mark projected by Wall Street analysts polled by Thomson Reuters.

Schnatter resigned from his position as chairman last month after it was reported that he used a racial slur during a conference call.

Papa John's Pizza CEO John Schnatter is seen on March 31, 2012 in Las Vegas, Nevada. "We have also begun an external audit of Papa John's culture and will address any improvements that are recommended at its conclusion".

"The research and analysis we conducted after comments by our founder in November of 2017 have made it clear that we needed to move away from a founder-centric marketing plan", Ritchie said.

Schnatter would admit the remark and apologize, but later say his words were taken out of context and that he regrets giving in to pressure step down as chairman of the company's board.

"Results have been challenged by recent events". "Instead of addressing the real and fundamental issues confronting the Company since that time period, and taking actions to turn sales around, the Company is trying to deflect attention from the source of the problem - management's ongoing failures with regard to financial performance - and blame me for its problems".

In a lengthy statement issued Tuesday, Schnatter said the latest earnings results "highlight the further deterioration of Papa John's financial performance under the tenure of Steve Ritchie". And of course, the images of that one person it depended on for so long are hastily being wiped from marketing materials such as pizza boxes and logos.

In an interview with The Associated Press last week, Schnatter said the chain's troubles reflect its move away from marketing its 'roots, ' including his disappearance from TV and radio ads starting late a year ago.

Schnatter, who remains a board member and owns about 30 percent of the company, sued his fellow board members last month for not standing behind him, and he has called for Ritchie's ouster.

The company also revised its estimates and now expects comparable sales in North America to decline between 7 and 10 percent this year "because of the negative media coverage and customer sentiment", said CFO Joe Smith.

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