Papa John’s is finding it difficult to move past its founder’s tarnished image.
Late on Sunday, the company said that Schnatter could no longer have an office at its Louisville, Ky.-based headquarters.
The company also asked him to “cease all media appearances, and not make any further statements to the media regarding the company, its business or employees.”
That came after Schnatter did some media interviews over the weekend, both apologizing again for using a racial slur and defending himself in the process.
He accused the marketing agency that held the training session in which he made the comment of trying to get Papa John’s to pay $6 million, or it would “bury the founder.”
“I’m not for sale,” he told WLKY News in Louisville. Schnatter wore a Papa John’s shirt during the interview.
He also said during a radio interview with WHAS that he was “pushed” into using the word.
While Schnatter made repeated apologies during the interviews, saying that it was wrong to use the word regardless of context, they only seemed to deepen a controversy that has engulfed the company he founded.
Schnatter resigned as chairman on Wednesday, after Forbes reported his use of the word during a conference call in May, which was designed to help Schnatter avoid public relations problems.
The company also removed him as its spokesman. Over the weekend, various uses of his image were scrubbed from the company’s website, including a photo of Schnatter with company employees, the story of the chain’s founding, and Schnatter’s image on its logo.
That followed a letter from Steve Ritchie, the chain’s current CEO who succeeded Schnatter back in December, declaring that, “Papa John’s is not an individual.”
“Papa John’s is a pizza company with 120,000 corporate and franchise team members around the world,” he wrote. “Our employees represent all walks of life, and we are committed to fostering an inclusive and equitable workplace for all. Racism and any insensitive language, no matter what the context, simply cannot—and will not—be tolerated at any level of our company.”
Ritchie said that the company would be taking “several key steps to rebuild trust from the inside out.” He said the company plans to retain an independent expert to audit policies regarding to diversity, inclusion, supplier engagement and the company’s culture. He also said the company would communicate progress with these efforts.
And he said senior leadership would visit key locations to hold “listening sessions” with employees to enable them to voice concerns.
Ritchie said he would personally lead the effort. “There is nothing more important for Papa John’s right now,” he said. “We want to regain trust, though I know we need to earn it. We will demonstrate that a diverse and inclusive culture exists at Papa John’s through our deeds and actions.”
The company has also formed a special committee of independent board members to evaluate Papa John’s relationship with Schnatter. The committee terminated Schnatter’s Founder Agreement that defined his role with the company, including his role as its spokesman.
Indeed, Papa John’s faces a rough road repairing its image. Schnatter had been the company’s founder, chairman and CEO, and had long appeared as the primary spokesman in the chain’s advertisements. He remains its largest shareholder, with more than 30% of company stock, and he is still on its board.
One of the chain’s risk factors in federal securities documents, in fact, says that “our business and brand may be harmed if … the reputation of Mr. Schnatter [was] negatively impacted, including by social media or otherwise.”
Last week, Major League Baseball and numerous of the league’s teams ended their relationship with Papa John’s in the aftermath of the comments. Papa John’s used that deal to promote several offers, including a “Papa Slam” that gave customers 40% off online orders if a player hit a grand slam.
As it was, the company had already ended its relationship with the NFL. It was that relationship which led Schnatter to complain on an earnings call with analysts back in November that, “The NFL has hurt our shareholders” by not doing something to stop protests by players during the national anthem.
Schnatter blamed those protests for weakening NFL ratings and, therefore, Papa John’s weak sales.
Those comments led to a firestorm on social media, setting the stage for the May conference call where Schnatter apparently used the n-word.
But the chain’s same-store sales have fallen further since the November comments, including 5.3% in the first three months of the year, as Technomic consumer trends report data suggest that the company’s reputation was hurt this year.
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