Published: Wed, August 08, 2018
Business | By Tara Barton

Papa John's same-store sales slide 6.1 percent

Papa John's same-store sales slide 6.1 percent

During a call with analysts, CEO Steve Ritchie said the company needed to "move on" and that the chain shouldn't be dependent on a single person.

The pizza giant, Papa John's, hit an extremely rough patch after the PR nightmare caused by its founder John Schnatter.

Papa John's says a key sales figure dropped 10.5 percent in July, and that it can't predict how long and badly it will be affected by the fallout with its founder.

North America comparable sales were down by 6.1 percent for the quarter that ended on July 1, before the tumultuous month that saw founder John Schnatter step down as chairman of the board, followed by the board distancing the brand from him.

The competing arguments come after Schnatter apologized and stepped down as chairman for using the N-word during a media training call last month.

That underscores the multiple challenges facing Papa John's. Executives attributed the decline to "recent events" and reiterated that they are reviewing the company's culture.

Schnatter, who remains Papa John's biggest shareholder and a board member, has a different take.

Papa John's denied Schnatter's claims in a statement.

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Before resigning as chairman, Schnatter had already stepped down as the company's CEO a year ago after facing criticism for saying that NFL players protesting the national anthem caused sales to decline for Papa John's, a sponsor of the NFL.

The company said it expects to "incur significant costs as a result of the recent negative publicity" of between $30 million and $50 million as it revamps its marketing efforts and brand images at "nearly all" of its store locations.

'The company is trying to deflect attention from the source of the problem - management's ongoing failures with regard to financial performance - and blame me for its problems, ' he said.

In a lengthy statement issued Tuesday, Schnatter said the latest earnings results "highlight the further deterioration of Papa John's financial performance under the tenure of Steve Ritchie".

Schnatter stepped down as Papa John's CEO last January.

Papa John's International Inc., based in Louisville, Kentucky, has more than 5,200 locations. Lately, Papa John's has been promoting $6.99 medium meat pizzas, including a new BBQ meat variety, after hawking two one-topping large pizzas for $7.77 each. "I couldn't be more excited than I ever have been in my 22 years with the Papa John's brand to flip the switch and look forward, not be distracted by the words and comments of one individual, but look forward to move this brand forward", Ritchie said at the end of the call.

Papa John's is still searching for the right candidate to be its next CMO.

Shares in Papa John's dropped more than 10 percent to $36.77 in extended trading.

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