Papa John’s takes further action to distance itself from founder John Schnatter

Papa John’s special committee takes further action against John Schnatter after May racial slur

Papa John’s special committee, consisting of a panel of all the independent members of the Board of Directors, and advised by outside legal counsel, has agreed to further distance itself from its founder, John H. Schnatter. It will no longer sublease office space to Schnatter.

This follows the resignation of the former chairman and his removal as spokesperson for the the company, which had already been announced—his Founder Agreement, laying out his role with Papa John’s had already been terminated by the same committee. Last week, Louisville, Ky.-based Papa John’s announced Shnatter’s removal from advertising and marketing materials across the system.

Schnatter had already stepped down last year as chief executive after blaming NFL anthem protests for a drop in sales, according to Vox. The tenuous relationship with senior management and the Board culminated in a May conference call with a marketing vendor in which he used the “N” word. The incident went public and accelerated his departure.

As first reported in Forbes: “On the May call, Schnatter was asked how he would distance himself from racist groups online. He responded by downplaying the significance of his NFL statement. “Colonel Sanders called blacks n—–s,” Schnatter said, before complaining that Sanders never faced public backlash.” Schnatter also recounted early life in Indiana where African-Americans were dragged behind trucks to their death.

The meltdown was a long time coming as Papa John’s founder became increasingly politically active in major national debates, including, most recently, the NFL kneel-down anthem protests, and a few years back, when the Affordable Healthcare Act became law. During the Affordable Healthcare Act debate, he initially suggested the company would add a surcharge to pizzas to offset and symbolize the added cost increases for worker benefits, which were calculated to be 14 cents per large pizza (the delivery fee was $2 at the time). As reported by ABC News and Politico, “If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect our shareholders’ best interests.”

Beyond dragging the company into political debates for the past few years, the latest incident, seemingly defined more by racial intolerance after using the “N” word, was the last straw for Papa John’s management.

Steve Ritchie, Papa John’s CEO, wrote an open letter following Schnatter’s resignation and his removal from marketing activities. In the letter he stated, “First, we will identify and retain an independent and outside expert to audit all of our existing processes, policies and systems related to diversity and inclusion, supplier engagement and Papa John’s culture. As part of that process, we will establish a process for communicating progress against transparent goals to everyone in our Papa John’s family.”

The Papa John’s special committee will be overseeing the steps the company is taking to promote diversity and investigate any incidents where the environment there may not be conducive to inclusion. The diversity initiatives are being led by Ritchie and senior executives are expected to conduct special visits to several locations and hold listening sections with franchisees and employees. The company expects this will create a feedback loop to further process on this front.

“The special committee also intends to oversee the external audit and investigation which the company previously announced that it will conduct of all the company’s existing processes, policies and systems related to diversity and inclusion, supplier and vendor engagement and Papa John’s culture, “ said the company in a statement.

Photo credit: Papa John’s

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