On paper, Papa John’s founder John Schnatter was the ideal role model for any would-be entrepreneur. Selling his prized Camaro to fund the conversion of a broom closet in his dad’s bar into a pizza outlet. Developing a product and business model that lured even the co-founder of Pizza Hut into the venture’s franchisee ranks. Forging relationships with celebrity operators such as Peyton Manning, who hugged Schnatter post-Super Bowl win instead of his teammates.
It’s reality that transformed Schnatter into the standard against which loose-cannon chain founders will forever be judged, an ugly flight into racial slurs, finger pointing and turning in mad-dog fashion on the very operation that had made him an industry hero.
Certainly, no founder from the past can match Papa John Schnatter in crazy-town cred, and there have been some real straightjacket nominees. Al Copeland had a dream concept and an Old Faithful of cash in Popeyes, the chicken chain he hatched and ran. He would also amass an Elon Musk-scale fortune by supplying it with a proprietary spice mix whose recipe he owned. Then he went and bought the rival Church’s chain, for reasons only a psychiatrist could guess. Franchisees of both chains turned murderous, debt mounted, and plenty of lawyers got rich. Copeland was subjected to the corporate equivalent of walking the plank.
At least his name wasn’t on the chain. The executives who tried to right Carl’s Jr. after the ousting of founder Carl Karcher in the early 1990s weren’t as fortunate. Karcher was a legend, an entrepreneur who borrowed $311 against his car to fund his first foodservice venture, a hot dog cart. Like Schnatter, he’d been a spokesman for the chain, and was widely known throughout California not only as the Carl in Carl’s Jr. but as a philanthropist and supporter of conservative causes. After he was pushed out, he openly fought with his handpicked successor, chain veteran Don Doyle, over such issues as whether burritos should be added to Carl’s menu. Much of the battle was waged in public, via call-in radio shows and local news reports.
Eventually Doyle left—ironically, to become president of Hardee’s, which would subsequently be absorbed by Carl’s parent.
Schnatter no doubt wishes his arch-nemesis and chosen successor would similarly vamoose. The papa of Papa John’s has been at his most Darth Vader-like in blasting former protege Steve Ritchie, whom he said was due to be fired in June for incompetence and allowing a culture of sexual harassment to flourish. He squarely blames Ritchie for the pizza chain’s dire sales problems, which could bring the closing of as many as 250 stores, according to one financial analyst. Curiously, virtually every other life form lays the blame on Schnatter’s use of a racial slur in a corporate meeting, and his insistence last season that the NFL’s refusal to ban passive protests during the national anthem had neutralized any benefits of the chain’s league sponsorship.
Those dissenting beings include Ritchie, who’s found his inner Tony Soprano in responding to Schnatter’s slams.
It’s easy to be sympathetic. But Ritchie and his fellow directors shouldn’t be so quick to profess total victimhood. It wasn’t as if they were helpless to prevent some of Schnatter’s rogue moves, especially when his tendencies toward the bizarre were well-known. Ritchie and other directors acknowledged in a late-August open letter that Schnatter had pulled off such astounding moves as giving orders to Papa John’s staff without Ritchie’s knowledge and producing his own commercials for the chain. There’s also an indication that Schnatter spoke with Wendy’s about buying Papa John’s without including Ritchie in the meeting.
As tough as the task might be, a chain’s leadership has the obligation to prevent end runs like those from happening. It just underscores that there’s no hero in this situation, only woeful tales that should be locked away in a closet.