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Papa John's founder out as CEO weeks after NFL comments

Posted: 5:11 PM, Dec 21, 2017
Updated: 2017-12-21 23:10:36Z

NEW YORK -- Papa John’s founder John Schnatter will step down as CEO next month, about two months after he publicly criticized the NFL leadership over national anthem protests by football players — comments for which the company later apologized.

Schnatter will be replaced as chief executive by Chief Operating Officer Steve Ritchie on Jan. 1, the company announced Thursday. Schnatter, who appears in the chain’s commercials and on its pizza boxes, and is the company’s biggest shareholder, remains chairman of the board.

Earlier this year, Schnatter blamed slowing sales growth at Papa John’s — an NFL sponsor and advertiser — on the outcry surrounding players kneeling during the national anthem. Former San Francisco 49ers quarterback Colin Kaepernick had kneeled during the national anthem to protest what he said was police mistreatment of black men, and other players started kneeling as well.

“The controversy is polarizing the customer, polarizing the country,” Schnatter said during a conference call about the company’s earnings on Nov. 1.

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Papa John’s apologized two weeks later, after white supremacists praised Schnatter’s comments. The Louisville, Kentucky-based company distanced itself from the group, saying that it did not want them to buy their pizza.

Ritchie declined to say Thursday if the NFL comments played a role in Schnatter stepping down, only saying that it’s “the right time to make this change.”

Shares of Papa John’s are down about 13 percent since the day before the NFL comments were made, reducing the value of Schnatter’s stake in the company by nearly $84 million. Schnatter owns nearly 9.5 million shares of Papa John’s International Inc., and his total stake was valued at more than $560 million on Thursday, according to FactSet. The company’s stock is down 30 percent since the beginning of the year.

Schnatter, 56, founded Papa John’s more than three decades ago, when he turned a broom closet at his father’s bar into a pizza spot. And it has since grown to more than 5,000 locations. Schnatter has also become the face of the company, showing up in TV ads with former football player Peyton Manning.

Schnatter is a 1983 graduate of Ball State University. He partnered with the Charles Koch Foundation in 2016 to fund the schools new John H. Schnatter Institute for Entrepreneurship and Free Enterprise.

Papa John's hasn’t decided if Schnatter will still be its spokesman, Ritchie said, adding that a decision will be made early next year.

The Papa John’s leadership change comes as the pizza chains that once dominated the fast-food delivery business face tougher competition from hamburger and fried-chicken chains that are expanding their delivery business. McDonald’s Corp., for example, expects to increase delivery from 5,000 of its nearly 14,000 U.S. locations by the end of the year.

Ritchie said his focus as CEO will be making it easier for customers to order a Papa John’s pizza from anywhere. That’s a strategy that has worked for Domino’s, which takes orders from tweets, text messages and voice-activated devices, such as Amazon’s Echo. Papa John’s customers can order through Facebook and Apple TV, but Ritchie said he wants the chain to be everywhere customers are.

“The world is evolving and changing,” he said.

Ritchie, 43, began working at a Papa John’s restaurant 21 years ago, making pizzas and answering phones, the company said. He became a franchise owner in 2006 and owns nine locations. He was named chief operating officer three years ago. Ritchie said plans for him to succeed Schnatter were made after that.

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