John Schnatter and the company he founded, Papa John’s, have been at odds for more than a year, but it looks like both sides are finally ready to get past their issues. In that time, Schnatter has resigned as CEO (blaming the NFL and the sideline protests for poor sales), resigned as Chairman (use of a racial slur) and filed lawsuits against the company (generally unhappy with the way things played out). For its part, Papa John’s has booted Schnatter, its largest shareholder, from his office at corporate HQ, removed his likeness from marketing materials and wrote a letter to shareholders about Schnatter that was characterized by more than one media outlet as “scorching”.
This level of rancor isn’t lost on paying customers, and the company felt the heat to the tune of a 7.3% decline in same store sales for the year, while North American store count fell by 3.0%. The company projects same store sales of -1.0% to -3.0% in 2019.
Now, though, it appears both parties are ready to close the book on this chapter of Papa John’s history. Last Tuesday, Papa John’s filed a separation plan with the Securities and Exchange Commission. As part of the plan, Schnatter will resign his seat on the company’s board (he stepped down as Chairman but retained a seat) by April 30 (the annual shareholders meeting) in exchange for having input on the independent director that will fill his place on the board. In addition, Schnatter will stop with the lawsuits while the company will provide him with internal correspondences that he seeks.
Schnatter will continue to be the largest Papa John’s shareholder and reserves the right to bring a new lawsuit should the correspondences contain evidence of wrongdoing on behalf of the company in regards to Schnatter’s exit and the subsequent drama over the course of the last year. But for now, the saga seems to have reached a conclusion.
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