Continuing his assault on the company he founded, John Schnatter on Monday told franchisees in a letter that he had recommended Papa John’s CEO Steve Ritchie be ousted in June, before controversy engulfed the pizza chain and left its chairman without a role.
In the letter, published Monday on the website Save Papa John’s, Schnatter said the board agreed to oust Ritchie and asked him to become the chain’s executive chairman.
Schnatter also wrote that the company’s human resources department has “detailed evidence of sexual misconduct, harassment and intimidation by virtually everyone” in Ritchie’s inner circle.
“As for Steve, I’ve given him chance after chance to prove himself as CEO,” Schnatter wrote. “It is now clear, however, that he is out of his depth as CEO. It is simply not enough—in fact it is destructive of the company we all love—for him to repeatedly tell us everything will be OK, see that things remain unsatisfactory, and then watch as Steve blames someone else.”
In a statement on Monday, Papa John’s accused Schnatter of making false statements and said that he was never asked to be executive chairman.
“Once again, John Schnatter is making untrue and disparaging statements in a self-serving attempt to distract from the damaging impact his own words and actions have had on the company and our stakeholders,” the company said. “At no time has the board asked John Schnatter to become executive chairman. In fact, the company has taken multiple steps to separate itself from him. John Schnatter also publicly supported Steve Ritchie’s appointment as CEO at the end of last year.”
The letter continues an intensifying battle between the Louisville, Ky.-based pizza chain and its disgraced founder, who resigned as chairman last month after acknowledging he used the N-word during a conference call.
That incident followed a November incident in which Schnatter, who was then CEO, blamed NFL player protests during the national anthem for the league’s poor ratings and, in turn, Papa John’s own weakening same-store sales.
Since the controversies began, Papa John’s same-store sales have deteriorated, falling 6.1% in North America in the second quarter and then 10.1% in July as the controversy worsened.
Schnatter owns 31% of Papa John’s stock and remains a director, and he has since said that he regrets resigning as chairman and that only he can fix the company. He has blamed the company’s sales challenges on existing management and its response to the comments.
The result is an odd war between Schnatter and Ritchie, who served as the company’s president while Schnatter was CEO before taking over the top job in January.
“I am so proud of Steve,” Schnatter said of Ritchie in December. “Steve will put the spotlight on our pizza and the most important ingredient, our team members.”
Schnatter now blames Ritchie for the current problems and says that the company’s board and management together own just 2% of Papa John’s shares.
“Papa John’s is not just an investment for me,” Schnatter said. “It’s my life, my job and my passion. I care about this company. I care about its franchisees, employees, customers and shareholders. My name is on every pizza box. I will do everything I can to make sure Papa John’s thrives, not only as a shareholder but as someone who loves this company and the people who dedicate their lives to it.”
Since the July controversy, Papa John’s ended Schnatter’s founder’s agreement and stopped using him in its commercials and other marketing.
The company has tried to distance itself from Schnatter and the image left by the comments. It announced a series of moves last week aimed at improving the company’s diversity and culture. Papa John’s also told customers who complained about Schnatter’s remarks, “Thank you for your anger,” in a video posted to social media sites.
“We have taken important steps to move the company forward and create a better future,” Papa John’s said in its statement. “The special committee, franchisees, employees and shareholders are supportive of these steps and the new business priorities being executed by the leadership team, led by CEO Steve Ritchie. We are confident in the company and the new direction we are headed.”
Schnatter has filed a lawsuit against the company and has posted details of the lawsuit, along with letters and other releases, on his website.
In his latest letter, Schnatter said that one of Ritchie’s direct reports was having an affair with a woman in the IT department. That IT employee “secretly accessed” Schnatter’s review of Ritchie, which included him among a list of senior management that needed to be replaced.
“She secretly accessed my draft review of Steve and shared those drafts with her ‘boyfriend,’ who then gave them to Steve,” Schnatter wrote. “Steve then decided, and communicated to others, that he needed to get rid of me to save his own job.”