After several fumbles, missteps Papa John franchises being offered assistance

Papa John's founder John Schnatter (center) in better days before his ouster from the company he founded in 1984. | 
August 11, 2018 |

After what can only be characterized as disastrous 12-month period, franchisees of Papa John's pizza are being offered assistance to weather an environment of diminished sales and negative publicity.

In an announcement from their corporate headquarters, the Lousiville, Kentucky-based franchisor said franchisees will be granted a reduction is some royalties, food service pricing and online fees through the rest of 2018. The company will also provide funding to support new marketing initiatives consistent with the companies efforts to reposition itself in the highly-competitive pizza market. 

The changes came in the wake of a stormy period starting last Autumn when Papa John founder, pitchman, and chief executive officer John Schnatter blamed their decline in sales on the controversy surrounding NFL players kneeling during the national anthem. Papa John's was the official pizza of the NFL and advertised heavily during games.

Schnettners said players kneeling were polarizing and they were the reason sales had fallen. The comments were widely criticized. Following the controversy, in December 2017 Schnatter voluntarily stepped down as CEO.

Although the comments were criticized, there was one group that, unfortunately for Papa John's, embraced Schnatter's comments - the so-called alt-right. That group, which includes a variety of white supremacist and hate groups, dubbed Papa John's as the "official pizza of the alt-right" and posted a picture of a pizza with a pepperoni swastika.  

Matters worsened for Papa John's, reputed to be the third largest pizza delivery company after it was revealed Schnatter used a racial epithet to described African Americans during a quarterly earnings conference call in May. Although Schnatter was the company's largest shareholder, he was forced out off the board of directors in July where he had continued to serve as chairman.  

Acknowledging the damage Schnatter had done to the brand he created in 1984, Vaughn Frey president of the Papa John’s Franchise Association (PJFA) said it was time for Schnatter "to move on."

"We appreciate the assistance being extended to our franchisees and believe the assistance program will help mitigate the impact that the founder’s inexcusable words and actions have had on franchisees," Frey said.

The negative publicity has not been without continued consequences for the company and franchisees. During their most recent earnings conference call on August 7. Sames store sales fell 10-percent in July and the company expects total annual sales to drop 7 to 10-percent.

In the last year, the shares of Papa John's (PAPA) have lost almost half their value dropping from $78.69 to their Friday closing price of $40.26. Papa John's has one store in Elk Grove and Roseville and two in Sacramento. 


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