Papa John's Franchisees Say Sales Are Down In The Double Digits Since Its Founder's Slur

[SirReginald]

Another Papa John’s franchisee in the Mid-Atlantic region said sales are down almost 10 percent, while the owners of about 120 locations in Florida have sought to distance themselves from the founder.

“We want to make it clear that we do not share the same sentiments as the founder of Papa John’s, John Schnatter, who recently resigned as chairman of the board,” a group representing about 50 restaurants in Tampa said earlier this month. Owner groups from central and south Florida issued similar statements.

The reports of declining sales show store owners are bearing the brunt of the fallout after the news exploded that Schnatter, who until recently was the company’s chairman, used a racial slur on a call with a media agency. Papa John’s is about 79 percent franchised domestically, meaning independent owners operate the restaurants.

Stifel analyst Chris O’Cull said this week that the company is in a “precarious position,” with brand damage increasing after Schnatter’s offensive language. Consumer sentiment is “extremely negative” and domestic comparable sales have declined in the mid-teens since the news emerged, O’Cull said, citing channel checks.

Stifel analyst Chris O’Cull said this week that the company is in a “precarious position,” with brand damage increasing after Schnatter’s offensive language. Consumer sentiment is “extremely negative” and domestic comparable sales have declined in the mid-teens since the news emerged, O’Cull said, citing channel checks

Given the franchisor’s actions have put the franchisees in this unhealthy financial condition, we expect the company may need to provide some royalty relief or other financial assistance to keep franchisees from closing restaurants,” O’Cull said in a note to clients. He downgraded the stock to sell from hold.

Papa John’s has tried to mitigate the situation by ramping up communications with franchisees over the past several weeks, according to a person familiar with the situation. The company has hosted webcasts led by Chief Executive Officer Steve Ritchie, held one-on-one discussions with store owners and sent out emailed memos with updates, said the person, who asked not to be named because the matter is private.

Schnatter, 56, is the company’s largest shareholder, controlling about 29 percent of the stock. He resigned as chairman earlier this month after reports that he used a racial slur and graphic depictions of violence against minorities during a conference call with a media agency in May.

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Spoiler

Terms of Service Violation

 

[JQ Legend]

 

[ORDER_66]

all he had to do was not be racist and failed at that... fukking cacs gon cac no matter what...

 

[Luke Cage]

White folks need to learn the power of the black dollar.

 

[Paper Boi]

they gonna have to rename their whole company.

 

[BaldingSoHard]

they gonna have to rename their whole company.

 

[ThrobbingHood]

all he had to do was not be openly racist and failed at that... fukking cacs gon cac no matter what...

Fixed

 

[DaPresident]

Eff them AND that wack pizza

 

[Cat piss martini]

#fukkpapajohns

 

[EBK String]

White folks need to learn the power of the black dollar.

shouldn't no black ppl have been eating that nasty ass pizza even before he came out as racist

 

[ThaEruditious]

The one thing they do respect from us is the money that we funnel to their companies. I'm ecstatic for their losses

 

[Billy Ocean]

all he had to do was not be racist and failed at that... fukking cacs gon cac no matter what...

He just one of the extremely dumbass ones that couldn't even control his racism down to a point where it didn't fukk up the only color a businessman should really give a fukk about...GREEN. Cac fakkit let his obvious boiling hatred of Black people hurt his, and his business partners, money.

 

[frush11]

Maybe cause they pizza is cheeseless and dry as fukk

 

[klientel]

In a sense its kinda fukked up that people aren't fukking with Papa John's.....

Simply because its mostly independent franchises. Alot of people who have very little to do with Papa John's corporate are getting fukked up right now. Owners are losing money so that means less shifts for the drivers, cashiers and pizza makers (alot of whom are black). I doubt corporate steps in and helps these people out. They probably dont give a fukk.

Meanwhile the Papa John's CEO will just "retire" and is probably worth a billy, so life is great for him.

 

[SirReginald]