Papa John exits as CEO, but not entirely

The NFL kneeling controversy has seemingly claimed another victim, but he doesn’t show up on the roster of any of the league’s 32 teams. John Schnatter, the founder of Papa John’s pizza and star of most of their commercials, will resign as CEO of his company next month. The move is clearly related to the company’s profits dropping to roughly one-third of original forecasts, but it’s impossible to ignore the fact that their sinking prospects seemed to come as a result of Schnatter sticking his beak into the National Anthem protests. (TPM)

Papa John’s founder John Schnatter will step down as CEO next month, about two months after he publicly criticized the NFL leadership over national anthem protests by football players — comments for which the company later apologized.

Schnatter will be replaced as chief executive by Chief Operating Officer Steve Ritchie on Jan. 1, the company announced Thursday. 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.

Earlier this year, Schnatter blamed slowing sales growth at Papa John’s — an NFL sponsor and advertiser — on the outcry surrounding players kneeling during the national anthem.

Rob Kim at the Daily Caller reminds us that the company’s prospects were looking relatively sunny until two months ago, when Schnatter criticized the NFL and the league’s “poor leadership” in handling the Kaepernick situation, saying they should have “nipped it in the butt” when it started. (I’m pretty sure he meant to say “bud.”)

“We are totally disappointed that the NFL and its leadership did not resolve the ongoing situation to the satisfaction of all parties long ago,” Schnatter said on a phone call with investors in November. “This should have been nipped in the butt a year and a half ago,” Schnatter continued, “Leadership starts at the top, and this is an example of poor leadership.”

While I certainly sympathized with Papa John’s take on the kneeling controversy it was a poor choice to make from a business perspective. We’ve covered far too many of these stories here in the past and most of them wind up the same way. When a business decides to dip a toe into heated political controversies, they immediately polarize one half of their target market against them. This is rarely made up for by increased enthusiasm (and presumably sales) from the other half. Particularly when it comes to food, people who like your product were probably already buying it, and those who don’t are unlikely to begin just because they happen to agree with you on a policy question.

The one exception to that rule might be Chick Fil A, which was the target of protests across the country after their CEO came out against gay marriage. They’re currently one of the hottest brands in the fast food sector, but as a recent Business Insider report revealed, that’s largely because management has instructed their regional managers to tone it down and focus on the food, not political debates.

Returning to the Papa John’s situation, I have to wonder how much this move by the boss is going to improve their prospects. After all, he’s not really leaving the company. He remains their largest stockholder and will still be the Chairman of the Board. People don’t tend to forgive and forget all that quickly, particularly the social justice warriors. But if he’s no longer showing up in their commercials all the time or making public statements, who knows? It worked for Chick Fil A so it might work for Papa John’s. I just wouldn’t hold my breath waiting for those sales figures to rise overnight.