Papa John's sales fall as founder attacks CEO

A Papa John's pizza box

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Showing just how hard it will be to divorce its image from its founder's, Papa John's said it may not be until next year that the process of collecting all materials with Schnatter's image from its stores would be complete. FBN's Cheryl Casone with more.

Papa John's stock spiral worsened on Tuesday, with shares plunging more than 8% in after-hours trading as the embattled pizza chain reported a major sales decline at USA stores amid a brewing battle with ousted company founder John Schnatter.

Adjusted earnings declined 31% to 49 cents, falling short of an expected 54 cents.

The latest controversy that resulted in Schnatter's departure as chairman came after revelations that Schnatter had used a racial slur against African Americans in a conference call.

Since then Papa John's has ceased its sponsorship of the National Football League, which replaced it with Pizza Hut. Stevie Ritchie, the president and current CEO acknowledges this diminished performance.

Papa John's denied Schnatter's claims in a statement.

"The research and analysis we conducted after comments by our founder in November of 2017 have made it clear that we needed to move away from a founder-centric marketing plan", Ritchie said.

Schnatter said the comment was taken out of context, and has since criticized Papa John's for its handling of the matter.

"Results have been challenged by recent events", Ritchie said in a statement, according to CNN.

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Then, for July, the drop steepened to 10.5 percent at established North American locations, the company said Tuesday.

"We are not dependent, nor should we be, on one person", he said.

Days after the racial slur scandal broke, Papa John's announced that it would remove Schnatter's image from its marketing materials, where he featured prominently. It is trying to distance itself from Schnatter, its biggest shareholder and a board member.

The pizza chain slashed its sales outlook for the year after reporting a third straight quarter of sales declines in North America.

"I couldn't be more excited than I ever have been in my 22 years with the Papa John's brand to flip the switch and look forward (and) not be distracted by the words and comments of one individual", Ritchie said.

Papa John's has overhauled its sales strategy to address sagging revenue, with an emphasis on menu discounts, investments in digital technology and customer outreach.

Papa John's CEO Steve Ritchie is seen above in a Twitter photo. Pizza Hut replaced Papa John's as the NFL's official pizza sponsor last February.

Papa John's is still searching for the right candidate to be its next CMO.

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