Papa John’s is helping out its struggling restaurant owners
Papa John's is losing the pizza wars. Big time.
It's not easy being a Papa John's franchise lately.
Sales have plunged since former CEO and chairman John Schnatter — the original Papa John — created a PR crisis for the company.
The company announced late Friday that it was planning to cut some royalties, food prices and online fees for the remainder of the year.
The new initiatives aim "to help address the sales and operating challenges following comments made by the Company's founder."
Schnatter stepped down as chairman of Papa John's after it was revealed that he used a racial slur during a conference call with a marketing firm earlier this year. Papa John's has stopped using his image in marketing materials.
In addition to the reduced fees and royalties, the company will also help franchisees pay for new marketing and in-store images.
In its earnings report last week, the company said same-store sales in North America fell 10.5% in July and 6.1% in the most recent quarter. It also reported that it was setting aside "$30 million to $50 million for the remainder of 2018" to help pay for new marketing and other re-branding efforts.
It's all part of Papa John's PR blitz to try and make amends for Schnatter's comments.
The company has already gone on a listening tour, reaching out to customers and local store workers.
Papa John's also hired Endeavor Global Marketing, the firm backed by Hollywood marketing legend Ari Emanuel, to help rehab its image. Endeavor's new chief marketing officer, Bozoma Saint John, previously of Uber, is helping lead the new campaign.
"I appreciate the open conversation that we have had with our franchisees and the support they have extended, both on this agreement and on the broader operating initiatives we are pursuing to improve performance and build a better future for our company and our stakeholders," said Steve Ritchie, president and CEO of Papa John's, in a statement.
The president of the Papa John's Franchise Association (PJFA) was even more blunt about the need for the company to go in a different direction and the challenges facing restaurant owners.
Papa John's founder apologizes for using N-word
"We believe it is time for the founder to move on. Steve (Richie) is pursuing the right initiatives to reinvigorate growth and recognizes the importance of working together to move forward successfully," said Vaughn Frey, president of the PJFA, in a statement.
"We appreciate the assistance being extended to our franchisees and believe the assistance program will help mitigate the impact that the founder's inexcusable words and actions have had on franchisees," Frey added.
But Schnatter still owns nearly 30% of the company — and he's not going away quietly.
"I am seriously concerned about the Company's declining sales, financial performance and, most importantly, the direction the Company headed under the stewardship of Steve Ritchie and the current board of directors," Schnatter said in a statement after the company released its dismal second quarter results last week.
Schnatter is also suing the company, and he claims that the poor performance is not due to his controversial comments — or his complaints last year about National Anthem protests by professional football players. The National Football League and Papa John's ended their partnership following Schnatter's remarks.
Shares of Papa John's are down 25% this year — and some experts have said that if Papa John's can't fix its problems soon, the company might need to consider selling itself.
Investors seemed to like the news of the Papa John's franchisee assistance program. The stock rose 5% Monday on a rough day for the overall market.