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Papa John Founder Says He Wasn't Forced To Retire

Papa John Founder Says He Wasn't Forced To Retire

John Schnatter founded pizza chain Papa John's Int'l, Inc.

(NASDAQ: PZZA), and despite what some media outlets reported, he said during a Fox Business interview that he wasn't forced to retire as the company's CEO.

'Good Run'

Schnatter quit as CEO of Papa John's in 2018 after a "fantastic nine-year run" in which the stock rose from less than $7 per share to nearly $80, he said during the interview.

A succession plan was in place, and Schnatter said he quit after a "good run" and "good fun."

Clearing The Air On Kneeling Controversy

Papa John's was the "most associated brand" with the National Football League, as one-third of its budget was spent on the league, Schnatter said.

When the kneeling controversy dominated headlines, the executive said he hoped NFL Commissioner Roger Goodell would be able to quickly fix the problem, which he said was "hurting" the pizza franchise and its small business owners.

Schnatter went on to blame the company's bad performance on the NFL's "poor leadership" and said he simply wanted Goodell to take ownership of the league's poor ratings and find a solution.

Racial Slur Incident

Schnatter used a racial slur during a conference call dedicated to "diversity training," he said.

What happened during the call was he pointed out KFC founder Colonel Sanders used the slur, he said. This language would not be "tolerated for one second" if used at Papa John's, Schnatter said. 

"I would never call a black person the N-word," he said. "That is not the way I was raised."

The conference call in question was taped by Papa John's media agency Laundry Service, and its owner attempted to extort the pizza chain for "millions of dollars," he said. In addition, Laundry Service or someone tied to the media company allegedly "miscommunicated and mischaracterized" what was said and media outlets "ran with it," the ex-CEO said. 

Next Steps

Recently appointed CEO Rob Lynch needs at least a year to "fix the business," including a transition away from executives loyal to ex-CEO Steve Ritchie, Schnatter said.

Ritchie is "not saying good things" about activist investor and current Chairman Jeffrey Smith, he said. 

Smith could look for a suitable buyer to acquire the pizza chain so long as synergies can be generated, Schnatter said. The Papa John's founder acknowledged that merger talks with Wendys Co (NASDAQ: WEN) did take place.

The odds of such a transaction finalizing have "gone up" with Lynch as CEO, he said. 

Papa John's shares were trading 1.49% higher at $50.37 at the time of publication Monday. 

Related Links:

Analysts Bullish On Papa John's CEO Change

MKM Bullish On Papa John's: 'Return To Basics'


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