December 03, 2019
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Papa John’s founder claims he was set up, warns that a ‘day of reckoning will come’

Timothy D. Easley | AP
Timothy D. Easley | AP
In this Oct. 18, 2017, file photo, Papa John's founder and CEO John Schnatter attends a meeting in Louisville, Kentucky.

Papa John has gone scorched earth on the company he built.

John Schnatter, the founder and former public face of Papa John’s, claimed the company’s board of directors conspired to oust him as chief executive in a loaded interview with WDRB. Schnatter resigned from Papa John’s in July 2018 after he admitted to using a racial slur on a company conference call. But 16 months later, Schnatter has changed his tune, saying insiders set him up and that the whole incident was “fabricated.”

It is unclear what he believes the fabrication was, given that he confirmed what he said on the call.

“I never dreamed that people that I cared about, that I loved, that I made multimillionaires, would do what they did,” Schnatter told WDRB. “Shame on them.”

Papa John’s did not immediately respond to a request for comment from The Washington Post.

Schnatter used the racial slur during a call between Papa John’s executives and the marketing agency Laundry Service in May 2018, Forbes reported. The group was doing a role-playing exercise meant to prepare for public relations challenges, and Schnatter was asked how he would separate himself from racist groups online. Schnatter reportedly said that Colonel Sanders, founder of Kentucky Fried Chicken, never received backlash for using the slur. He also described graphic violence against black people, although he said his intention was to convey his hatred of racism.

But at the time, Schnatter took ownership of what he said.

“I can’t talk like that even if it’s confidential and it’s behind closed doors,” Schnatter told WHAS in Louisville after he resigned. “I did it. And I own it. And I’m sorry. And I’m sick about it, frankly.”

Schnatter started Papa John’s in 1984 after graduating from Ball State University, with a pizza oven in the back of his father’s tavern in Jeffersonville, Indiana. As the business grew into one of the world’s biggest pizza chains with more than 5,000 locations worldwide, Schnatter’s persona remained central to the company. It took a significant hit after his departure: Same-store sales were down 7.3 percent in 2018, the company’s shares plummeted, and it lost big partnerships with Major League Baseball and several sports teams.

Now, Schnatter says his former friend and handpicked replacement, Steve Ritchie, and members of Papa John’s board of directors “used the black community and race” to “steal” the company from him. He said board member Olivia Kirtley and former board member Mark Shapiro “should be in jail,” and he took shots at Rob Lynch, former president of Arby’s, who now serves as Papa John’s chief executive.

“They stole the company, and now they’ve destroyed the company,” Schnatter told WDRB.

After the incident, Papa John’s scrubbed Schnatter from promotional materials and the company logo. Schnatter’s name was removed from the Center for Free Enterprise at the University of Louisville, and Papa John’s name was removed from the school’s football stadium. Soon after, Schnatter tried to stage a comeback.

He created a website, SavePapaJohns.com, in an attempt to share his side of the story with the public and took out a full-page ad in the Louisville Courier-Journal for an open letter to employees, saying “We will all get through this together.” In a 61-page letter sent after his resignation, Schnatter also accused Papa John’s senior executives of “frat club” behavior, including sexual harassment and bigotry.

“John Schnatter is being hypocritical,” a special committee of Papa John’s board of directors told the New York Post. “Many of these supposed events took place during the period when John Schnatter was responsible for the management of the company as CEO.”

In Schnatter’s absence, the company has laid waste to Papa John’s motto “Better Ingredients, Better Pizza,” he said. He’s done his homework, too.

“I’ve had over 40 pizzas in the last 30 days, and it’s not the same pizza,” Schnatter said. “It’s not the same product. It just doesn’t taste as good.”

For months after he resigned, Schnatter remained Papa John’s biggest shareholder, but he has sold nearly 4 million of his shares this year, netting more than $160 million. His stake in the company is now less than 17 percent, according to a Securities and Exchange Commission filing. But he insists he is still beloved by employees and told WDRB that there would be cheering and backflips if he were to return. He said he believes history will smile upon him.

“The day of reckoning will come,” Schnatter said. “The record will be straight.”

 



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