Papa John's vs Papa John: A timeline

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“Papa” John Schnatter has agreed to exit the Papa John’s board entirely before the company’s 2019 shareholder’s meeting in May. The company has agreed to replace him with a new board member unaffiliated with activist hedge fund Starboard Capital.

Schnatter is also dropping two active lawsuits against the company.

The settlement marks the end of an exhausting and ugly public battle between Schnatter and the board of the company he founded in 1984.

In a statement, Schnatter said, “I founded Papa John’s, built it from the ground up and remain its largest shareholder. I care deeply about its employees, franchisees, and investors and am thankful that I’ve been able to resolve these important issues, and that we can all focus on the Company’s business without the need for additional litigation.”

Schnatter was CEO of his company as recently as November 2017—just over one year ago. By May, he won’t even be on its board.

How did he get here?

Graphic by David Foster/Yahoo Finance
Graphic by David Foster/Yahoo Finance

Schnatter’s two massive missteps both happened on phone calls.

In November 2017, Papa John’s reported its Q3 earnings. The report showed flat same-store sales growth, which was below analyst expectations. On the earnings call, Schnatter blamed the flat sales on the NFL player protests led by Colin Kaepernick.

Schnatter, in fact, mentioned the NFL 44 times on that earnings call, Bloomberg counted. (Papa John’s was the “official pizza” of the NFL.) He told everyone on the call: “The NFL has hurt us by not resolving the current debacle to the players’ and owners’ satisfaction… NFL leadership has hurt Papa John’s shareholders.” He also said the player protests “should have been nipped in the bud” by the NFL sooner.

His comments put Papa John’s squarely on the political right, siding the brand with those who were against the NFL protests. Within two days, neo-Nazi website The Daily Stormer christened Papa John’s “the official pizza of the alt-right.” The website even used a photo of a Papa John’s pizza with a swastika made of pepperoni. It was an obvious low for the Papa John’s brand.

Competitors took advantage. When the CEO of Yum Brands, the parent company of Pizza Hut, was asked about Schnatter’s comments, he said: “We’re not seeing any impact from any of that.” DiGiorno mocked Papa John’s slogan (“Better ingredients, better pizza”) in a viral tweet.

The next month, in December 2017, the fallout from his NFL comments was still damaging the brand, and Schnatter resigned as Papa John’s CEO. But the company said he would remain as chairman of the board.