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Shaq is Bringing Fun Back to Papa John's
By: Entrepreneur
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O’Neal is always looking for something new. And last year, as it so happened, Papa John’s was looking for something new, too.

Today Papa John’s operates in all 50 states and 48 countries. Between its franchise and corporate stores, the company counts 5,336 locations and 120,000 employees. It’s the third-biggest pizza delivery chain in the world, behind Domino’s and Pizza Hut. But it started with an American origin story as humble as any you’ve ever heard. 

It was 1983 in Jeffersonville, Ind., and John Schnatter, fresh out of college and 23 years old, sold his Camaro to purchase a pizza oven. Then he took a sledgehammer to the walls of a broom closet in the back of his father’s bar, set up a kitchen, and began crafting his Papa John persona. In 1986, he sold his first franchise. In 1993, the company went public. And in 2009, Schnatter tracked down his old Camaro and bought it back for $250,000. 

Schnatter was the undisputed leader and face of the company he built. In 2010, with some 3,500 stores to its name, the company signed on as the official sponsor of the NFL, which amplified Papa John’s already huge visibility. Quarterback Peyton Manning became a franchisee and for years would appear in commercials with Schnatter, tossing a football like old chums. The company rode rocket-ship growth, with 14 years of positive or flat same-store revenues, a 22 percent increase on earnings per share, and record sales of $3.7 billion globally in 2016. 

Then came November 2017. The news was everywhere: While trying to explain lackluster sales -- Papa John’s numbers were lower than expected -- Schnatter chastised the NFL management for allowing its players to continue kneeling. At the time, kneeling for the national anthem was among the hottest-debated subjects, dividing America along predictable political lines. “We are totally disappointed in the NFL and its leadership,” Schnatter said, adding that the problem should have been “nipped in the bud a year and a half ago.”

Suddenly Papa John’s learned the lesson that almost every major brand does when it picks a political side. Nobody wanted to talk about Papa John’s vine-fresh sauce or six-ingredient pizza dough. They instead wanted to talk about Schnatter. The company’s fourth-­quarter sales dropped 3.9 percent, effectively flattening a year of modest gains, while franchisees across the nation began distancing themselves from their founder. 

“We’re not John Schnatter,” says Melanie Langford, who runs 11 Papa John’s stores in Alabama. She and her team relayed that message over and over on phone calls to churches, schools, and other corporate account holders within the community. “We’re the local guys. We employ people locally, and we support local families.” 

Two weeks after the initial comment, and after the neo-Nazi site Daily Stormer called Papa John’s the “official pizza of the Aryan master race,” the brand finally responded. It apologized on Twitter and gave neo-Nazis an emoji middle finger. But by then, damage had been done. “What Schnatter said should have been corrected by public relations immediately,” Langford says. “Instead they sat on it.” 

The PR fire continued to blaze. In January, Schnatter stepped down from his role as CEO. Papa John’s and the NFL ended their relationship, and Peyton Manning sold his stake in 31 stores. Then the bottom fell out. Forbes published a claim from Papa John’s former creative agency alleging that Schnatter had used racist language, including the N-word, during a call. In response, Schnatter stepped down as the company chairman. But that didn’t soften the blowback.

“We’re still dealing with the NFL thing, and now this?” says Kenyatta Theodore, an African American Papa John’s franchisee who at the time operated three stores with her husband, Herb, in New Orleans. “It was like someone had punched me in the stomach.”

Theodore began hearing customers say they didn’t want to support Papa John’s -- or rather, they didn’t want to support Papa John Schnatter. During a teacher appreciation day, one teacher refused her free slice on moral grounds. “Most people don’t even know that we own our stores,” says Theodore. “We never felt like we had to tell them before.” When people started asking why they didn’t leave the company and its controversial founder, Theodore replied: “John Schnatter does not represent me. I represent myself. I’m a franchisee, and this is my store.”

Schnatter, for his part, maintains that his intended use of the N-word was to point out that another company, one that his agency wanted him to partner with, had used that word in the past. A power struggle ensued within Papa John’s, and Schnatter was evicted from the office. He launched a website to share his side of the story and filed two lawsuits, both of which have since been dropped. While Schnatter still owns about 20 percent of the company, he now has nothing to do with the daily operations, say company reps. And he’s been rapidly selling off his shares.

In 2018, during the corporate battle, 186 franchise stores shut down. One of those belonged to Kenyatta and Herb. “It really affected us tremendously,” Theodore says. “We went from one of the highest-ranked stores to the bottom.”

Papa John’s installed a new CEO to solve the problem. He was Steve Ritchie, a 23-year veteran of the company. And nervous franchisees wanted to see action -- fast.

Cue Shaq.

As a spokesperson, O’Neal is a big upgrade from Schnatter, some say. “John’s really smart, and his tenacity built Papa John’s, but he’s a bit socially awkward,” says Langford, the franchisee from Alabama. “He comes across as quirky.” O’Neal, on the other hand, is as comfortable with crowds as he is with a basketball. “When he smiles, his whole face smiles,” she says. “So while I kind of miss the NFL, I’m really happy to have Shaq.”

It’s early days, of course, and even O’Neal can’t turn around a brand in a few months. 

Papa John’s corporate, however, expects sales to rebound by the end of 2019. “This year is all about doing the work,” says Ritchie. “We would hope at the tail end of the year we’re starting to show some monthly positive numbers, and next year will be a time of celebration.” 

But one number is already rising: Consumer sentiment is up double digits, says Ritchie. And he attributes part of that to O’Neal. “He’s very serious about the work he’s doing here,” the CEO says, “but at the same time, we need a little bit of fun.”




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This article was published by Entrepreneur. A link to the original appears after the post.

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