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Papa John’s making a push to improve its diversity

The embattled pizza chain wants a more diverse executive team and plans a minority-owned franchise development program.
Photograph: Shutterstock

Still reeling from the fallout over racially insensitive comments from its founder, Papa John’s on Friday said it is planning to increase the diversity of its leadership team and do more to promote the development of minority-owned franchises.

The pizza chain is also planning to give all of its employees unconscious-bias training. Executives have already completed the program, CEO Steve Ritchie said in a letter published Friday on Papa John’s website.

The efforts come as the chain is reportedly working with investment bankers, including Bank of America and Lazard, to help provide assistance as it works to recover from a major crisis stemming from comments made by founder and former chairman John Schnatter.

Papa John’s stock rose nearly 5% on Friday on the reports. Debtwire and Reuters reported on the deal with Bank of America and Lazard.

A source confirmed that the company is working with bankers, indicating that the focus is on improving the business. CNBC on Friday said that the company “isn’t currently exploring a sale.”

Papa John’s has not commented on the reports.

On Friday afternoon, meanwhile, Papa John’s tweeted out a video showing some tweets and responses from customers angry about Schnatter’s comments over NFL player protests in November and his use of a racial slur revealed last month. “We heard you,” it began. “You expected better from Papa John’s. So did we.”

In the letter, Ritchie said that “diversity, equity and inclusion” have been among his top priorities since he became CEO in January.

“Papa John’s is 120,000 corporate and franchise team members around the world,” Ritchie said. “We stand for equity, fairness, respect and opportunity. Our most important ingredient is our people.”

The letter and the diversity efforts come as Papa John’s works to distance itself from its founder and former chairman and CEO, John Schnatter, who courted controversy in November when he appeared to blame protests by players for declining NFL ratings and his own chain’s weakening sales.

The controversy erupted into a full-blown crisis last month after it was revealed that Schnatter used the N-word during a training program designed to help him avoid such public relations disasters.

Schnatter, who had already ceded the CEO title to Ritchie, stepped down as chairman. The company then removed its founder from its marketing, kicked him out of its office and ended his founder’s agreement.

Schnatter has since said he regrets stepping down and that he is the only one who can save the company, and has blamed the chain’s sales challenges on existing management, including Ritchie, his hand-picked CEO. Schnatter still owns 30% of the company and has started a website called “Save Papa John’s” to publicize his campaign.

The company’s sales challenges are very real. Same-store sales fell 6.1% in the second quarter and then plunged 10.1% in July as the controversy worsened. The company also faces a fall without its NFL sponsorship, which it had used for years to build sales.

Papa John’s is already working to help its operators, who have seen a decline in store count over the past year as the sales challenges mounted. And the company is also intent on  improving its image, which has taken a massive hit over the past few months.

Ritchie in his letter listed several efforts the company is making to improve its diversity, including an already-announced independent audit of the company’s culture.

He also said that company executives visited Atlanta, Los Angeles, Dallas, Detroit and Chicago as part of a “listening tour to get feedback from team members and franchisees.”

Ritchie also said he is “personally committed to adding more diversity to the leadership team of Papa John’s.”

He said the company is assembling an advisory group of “nationally respected diversity, equity and inclusion experts” to guide Papa John’s efforts.

The company is starting a minority-owned franchise expansion and development program. And it is forming a foundation to focus on “making a positive impact in communities where our team members live and work.”

“I started my career in the pizza business 25 years ago because pizza brings people together,” Ritchie wrote. “I found a home at Papa John’s where people from all backgrounds work side by side every day.”

UPDATE: This story has been updated to include reports of talks with bankers. The story has also been updated to include information on a video the company sent out Friday.

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