The decline and fall of Papa John

So that didn’t take long, did it? It was only a handful out hours after a report surfaced indicating that Papa John’s Pizza chairman John Schnatter had used the n-word during a conference call in May when the big guy tendered his resignation. His role in the company he founded had been shrinking since last year, but this was apparently the final straw. (NY Post)

Papa John’s founder John Schnatter resigned as the company’s chairman on Wednesday night after fallout over his use of the n-word during a conference call.

The company released a statement that said the directors had accepted Schnatter’s resignation.

“Papa John’s will appoint a new Chairman in a couple of weeks,” the statement read.

Forbes reported earlier on Wednesday that Schnatter used the n-word on a conference call in May.

There was plenty of irony to go around in this story. First of all, the damning comment came as part of a call which was described as, “a role-playing exercise to prevent future public-relations disasters.” As they say, the best laid plans…

Also, the context of the comment was described as Schnatter actually complaining about racism. If nothing else, this illustrates the problems that private sector businesses – particularly the largest ones – encounter when they dip a toe into social issues rather than simply enforcing standardized rules of conduct and sticking to what they do best. You need look no further than Starbucks and their contractions and downtime for “sensitivity training” to see how such things roll out. If businesses manage to keep their noses out of politics and divisive social issues they tend to hang on to more of their customer base.

Speaking of impacts on business, it’s also worth noting that Papa John’s stock value cratered after the news came out. I’ve always wondered why Wall Street reacts in such a fashion. Is the actual value of the company any lower this morning than it was yesterday? Schnatter is gone and I rather doubt that people who already enjoy and order their pizza are suddenly going to stop doing so. (Why people actually like the mediocre pizza the company sells is another question entirely. Get an original thin crust pie, people!)

It’s impossible to evaluate this story without noting that a lot of people have had it out for Schnatter for some time now and many in the media won’t be shedding any tears over this news. He’s always been open about being an Evangelical Christian and his public support for Donald Trump during the 2016 election only added to liberal ire over his success. When he went public with his criticism of how the NFL handled the National Anthem protests, the left’s displeasure with him grew.

But in the end, Schnatter had nobody to blame but himself. He’s a businessman and should have known better than to open himself up to these sorts of allegations. Of course, he may not be hurting all that much. While he will no longer hold an official position at the top of the pizza chain, he still reportedly owns more than 9 million shares of their stock and remains their largest stockholder. If he’s crying, he’s crying all the way to the bank.

David Strom 10:01 PM on September 26, 2022