Regardless of its greatest efforts to rehabilitate its model, Papa John’s continues to be paying for offensive remarks made by its founder.
John Schnatter admitted final month to utilizing the N-word on a convention name. He apologized and resigned as Papa John’s chairman quickly after Forbes revealed a narrative in regards to the incident.
On Tuesday, the corporate mentioned its same-store gross sales in North America fell 10.5% in July and 6.1% in the latest quarter.
“Outcomes have been challenged by current occasions,” Steve Ritchie, president and CEO of Papa John’s (, mentioned in an announcement. “Our whole management group understands the significance of getting our tradition and enterprise enhancements proper.” )
Shares fell greater than 10% after hours.
On a name with analysts, Ritchie mentioned that Papa John’s stakeholders agreed with the corporate to take Schnatter out of the general public eye.
Associated: Papa John’s to pizza-eaters: We’re listening
“I’ve spent a big period of time in current weeks within the discipline, speaking with our franchisees, our clients, our drivers and workers,” he mentioned. “Franchisees and companions have expressed overwhelming help for … our choice to take away John as model spokesperson.”
“We aren’t dependent, nor ought to we be, on one particular person,” he mentioned.
Days after the racial slur scandal broke, Papa John’s introduced that it will take away Schnatter’s picture from its advertising supplies, the place he featured prominently. A particular committee of the board of administrators will oversee an outdoor auditor’s investigation into Papa John’s tradition, together with the corporate’s present processes, insurance policies and techniques associated to range and inclusion.
Ritchie mentioned that Papa John’s made the choice to distance itself from Schnatter after he mentioned in November that the NFL protests damage gross sales.
“The analysis and evaluation we performed after feedback by our founder in November of 2017 have made it clear that we wanted to maneuver away from a founder-centric advertising plan,” Ritchie mentioned. “Clearly, the current occasions have additional evidenced that we have to transfer on.”
Ritchie famous that comparable gross sales have slumped since November. Schnatter left the chief government seat at his namesake firm in December final yr.
Associated: Papa John sues Papa John’s
However Schnatter, who mentioned he regrets resigning from his put up as chairman, is not strolling away with out a battle. He stays on the board, and owns 29% of the corporate’s inventory. He has filed a lawsuit in opposition to the corporate, requesting to see firm paperwork “due to the unexplained and heavy-handed manner through which the corporate has handled him for the reason that publication of a narrative that falsely accused him of utilizing a racial slur.”
Papa John’s denied Schnatter’s claims in an announcement. The corporate mentioned it was “saddened and disenchanted” by the lawsuit, which it known as “unnecessary and wasteful.”
Schnatter expressed concern over the well being of the corporate in an announcement revealed on Tuesday.
“Historical past exhibits that the Firm performs higher with me concerned, and it declines once I step away,” he mentioned.
— CNN’s Jordan Valinsky and Jackie Wattles contributed to this report.
CNNMoney (New York) First revealed August 7, 2018: four:51 PM ET