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Papa John's sales drop amid founder controversy

Papa John's sales drop amid founder controversy

CEO Steve Ritchie said the company will "make every effort" to keep North American franchisees from closing stores, including offering relief from royalty payments and other aide.

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 it can't predict for how long or how much its sales will be hurt by bad publicity.

Schnatter stepped down as chairman last month after his use of a racial slur during a May media training session went public. Executives attributed the decline to "recent events" and reiterated that they are reviewing the company's culture.

Schnatter, who remains a board member and owns about 30 percent of the company, sued his fellow board members last month for not standing behind him, and he has called for Ritchie's ouster. He said in a statement that he is 'not going away'.

Schnatter, in a separate statement, said the company's results "further exemplify" his concerns over the leadership of Ritchie (who took over as CEO from Schnatter at the start of the year) and the board of directors.

The beleaguered pizza chain posted dismal second-quarter results and issued a bleaker forecast for the year.




Before resigning as chairman, Schnatter had already stepped down as the company's CEO past year 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. "We have also begun an external audit of Papa John's culture and will address any improvements that are recommended at its conclusion".

'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.

"We are not dependent, nor should we be, on one person", Ritchie said. Schnatter initially drew scrutiny last November when, while still serving as Papa John's CEO, he blamed a sales decline on the company's relationship with the NFL and its handling of player national anthem protests.

Papa John's CEO Steve Ritchie is seen above in a Twitter photo. 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.

Ritchie said Papa John's is determined to "move on" from Schnatter.

Revenue was down by 6.2 percent to $408 million and net income fell by just under 50 percent to $11.8 million, or 36 cents per share, down from $23.5 million, or 65 cents per share in the quarter ended June 25, 2017.