Papa John's founder and CEO John Schnatter surprised many in the restaurant industry by announcing yesterday that he would step down as CEO at the end of 2017, with COO Steve Ritchie being promoted to the CEO position effective January 1, 2018. Schnatter plans to continue in his role as chairman of the Papa John's board of directors.
This surprising news comes at the end of a rough and tumble year for the pizza giant -- in November, Schnatter blamed the company's lackluster sales on the National Football League's inability to deal with player national anthem protests during games. During a November earnings conference call, Schnatter was reported as saying:
"The NFL has hurt us by not resolving the current [protest] debacle to the players' and owners' satisfaction...NFL leadership has hurt Papa John's shareholders...Leadership starts at the top, and this is an example of poor leadership."
Papa John's is particularly sensitive to the popularity of the NFL -- since 2010, the company has been the official pizza sponsor of the NFL, and television ratings have been down in 2017. According to reports, the ongoing NFL ratings decline will cost its broadcast partners -- NBC, Fox, ESPN, and CBS -- as much as $500 in lost revenue in 2017. And advertisers such as Papa John's are feeling the squeeze too.
Regardless of the reason why, it's clear the popular pizza chain has lost its mojo. The stock is currently hovering around its 52-week low of $55.05 (the high was $88.91), and in the November earnings conference call, the company announced that same-store sales were up just 1% and not 1.4% as analysts had expected.
While it's not clear if Papa John's financial fall can be directly attributed to the ongoing NFL issues, or to bad management within Papa John's -- or some combination of the two -- it's clear that founder John Schnatter is hoping that by stepping down, the company will regain its mojo and turn around its financial slide.
Only time will tell on both counts.