Several weeks after criticizing the NFL over its handling of player-led national anthem protests – which he credited to declining pizza sales – Papa John’s Founder John Schnatter is stepping down has CEO.
In November, Schnatter criticized NFL leadership for mishandling the anti-American demonstrations of players on the sidelines during the national anthem – with many taking a knee, raising fists or not showing up on the field at all.
Paying for taking sides?
On a Nov. 1 conference call, Schnatter addressed the NFL’s failure of not putting an end to the divisive on-field anthem protests.
“The controversy is polarizing the customer, polarizing the country,” Schnatter said during a company conference call, according to the Chicago Tribune.
Shortly after blaming the NFL for bad business, Papa John’s reconsidered its positioning on the issue.
“Papa John’s cited falling sales, as the impetus behind their concerns, and decision to speak out against NFL leadership,” Breitbart reported. “However, after the company received a significant backlash from the media – in addition to Nazi websites labeling the company the ‘official Pizza of the Alt-Right’ – Papa John’s backtracked.”
It was not long before Schnatter apologized for publicly criticizing the NFL, as he took to the company’s Twitter account in a series of tweets to praise the anthem protesters’ determination to “create a platform for change.”
The reversal, however, was too little, too late for Schnatter.
“Schnatter will be replaced as chief executive by Chief Operating Officer Steve Ritchie on Jan. 1, the company announced Thursday,” the Tribune reported. “Schnatter, who appears in the chain’s commercials and on its pizza boxes, and is the company’s biggest shareholder, remains chairman of the board.”
There was no indication from Ritchie whether or not Schnatter’s remarks about the NFL’s handling of the anthem protests were the driving force behind him stepping down as CEO.
The decision of Schnatter to relinquish his CEO title caught one restaurant industry expert by surprise.
“At the very least, it was distracting, and I’m wondering whether this was board-driven or if it was John’s choice,” John Gordon, a restaurant consultant with the Pacific Management Consulting Group commented, according to USA Today.
However, the move was anticipated in lieu of recent developments by another expert, CFRA Equity Analyst Efraim Levy.
“I see mostly strategic continuity, but I expect Steve Ritchie to also put his own imprint [on Papa John’s]," Levy told the national daily.
The protests Schnatter criticized the NFL over started last season when then San Francisco 49ers quarterback Colin Kaepernick began protesting during the national anthem by taking a knee, saying he was standing for black men who have been mistreated by police.
Dynamic business partnership
Papa John’s Senior Vice President of Marketing Robert Thompson addressed the dynamic business partnership of the NFL to the pizza giant last month.
“The NFL is crucial to Papa John’s business, [as] the company began its partnership with the NFL in 2010 and has ‘Preferred Pizza’ partnerships with 23 NFL teams” Thompson proclaimed in November, according to Breitbart. “Last year, the company signed a multi-year partnership with the NFL and the Super Bowl.”
He made it clear that the NFL provides a crucial lifeline to Papa John’s success.
“Our partnership with the NFL, in particular, has been exceptional,” Thompson added. “One of the reasons the NFL is such a strong marketing opportunity is because of the number of people that watch the games live – whether it be at home or in the stadium.”
Schnatter’s investment in his company nosedived both before and after entering the controversial issue.
“Shares of Papa John’s are down about 13 percent since the day before the NFL comments were made – reducing the value of Schnatter’s stake in the company by nearly $84 million,” the Tribune informed. “Schnatter owns nearly 9.5 million shares of Papa John’s International Inc., and his total stake was valued at more than $560 million on Thursday, according to FactSet. The company’s stock is down 30 percent since the beginning of the year.”
Schnatter started his pizza empire – which is now America’s third-largest pizza chain – from the ground up as a young man back in the 1980s.
“Schnatter, 56, founded Papa John's more than three decades ago, when he turned a broom closet at his father's bar into a pizza spot, and it has since grown to more than 5,000 locations,” Chicago's largest daily noted. “Schnatter has also become the face of the company, showing up in TV ads with former football player Peyton Manning.”
He has made a name for himself and his company as few in the fast food industry have.
“Schnatter has been one of the last CEOs who also act as their brand's advertising pitchman – a list that once included Col. Harland Sanders for Kentucky Fried Chicken and Dave Thomas of Wendy's,” USA Today’s Zlati Meyer explained. “By stressing that Papa John's had better ingredients and a better tasting product, he was able to turn the burgeoning chain into a national force against giants like Domino's Pizza and Pizza Hut.”