Papa John's sales fall as founder attacks CEO

Carly Kramer Papa John’s in the John A. Delaney Student Union

Papa John's reported its most recent earnings Tuesday.

Papa John's global said its domestic sales were down 10.5 percent last month in the wake of John Schnatter's admitted use of racial language and feud with the company he founded, and executives warned their turnaround plan will take time to bear fruit. Meanwhile, rival Domino's continues to post gains.

Papa John's has hired new agencies - Endeavor Global Marketing on creative and Weber Shandwick's Powell Tate on PR, to help it try to mitigate the situation.

On Tuesday, the company said its same-store sales in North America fell 10.5% in July and 6.1% in the most recent quarter.

The Kentucky-based company reported a same-store sales decline of 6% at North American store locations in its second quarter, outpacing the decline expected by analysts. Schnatter left the chief executive seat at his namesake company in December past year.

In a statement to CNBC after the earnings release, Schnatter said: "As I communicated to the board as early as December 2016 and several times in 2017, I am seriously concerned about the company's declining sales, financial performance and, most importantly, the direction the company headed under the stewardship of Steve Ritchie and the current board of directors".

Papa John's CEO Steve Ritchie's comments included zingers like this: "We are not dependent, nor should we be, on one person".

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A Papa John's restaurant is seen on July 11, 2018 in Miami, Florida.

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'. "Instead of addressing the real and fundamental issues confronting the Company since that time period, and taking actions to turn sales around, 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".

In an interview with The Associated Press last week, Schnatter said the chain's troubles reflect its move away from marketing its 'roots, ' including his disappearance from TV and radio ads starting late past year.

Papa John's has made the news steadily during the past month after the company's leaders pushed out Schnatter following a report that he used a racial slur.

The chain's troubles reach farther back. His take on the struggle is slightly egocentric, to say the least.

That's around when he started disappearing from TV and radio ads, though his image remained on pizza boxes and elsewhere until last month.

Papa John's board voted to adopt a "poison pill" aimed at preventing founder John Schnatter from getting a controlling stake in the company. The results were worse than Wall Street analysts' forecast of a 4.7 percent drop in comparable sales at North American restaurants.

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