After constructing the requisite infrastructure for sustainable unit growth, Papa John's CEO Rob Lynch told analysts in May that franchisees have "bought into our plans. There's no better proof than Sun Holdings, which just signed a deal to open stores across Texas through —the largest domestic development agreement in company history. The announcement continues Papa John's record-setting year in terms of unit expansion.
In the first half of , the pizza chain posted an unprecedented net openings , with 68 in Q1 and 55 in Q2. In the trailing four quarters, Papa John's opened a net of units. It finished Q2 with 5, stores systemwide, including 3, in North America and 2, internationally. Same-store sales in North America markets lifted 5. Meanwhile, international comps rose We see tremendous potential in this premium brand, backed by an innovative culture and highly attractive economics.
Previously, Papa John's anticipated net new openings between — for , but that was upgraded to to after its performance in the second quarter.
Roughly 80 percent of growth is coming from international markets, where Lynch believes the chain has significantly more white space than its competitors. O'Neal has also replaced Schnatter in the brand's ads. Ever since, Schnatter — who started the pizza brand in a broom closet in his father's tavern in and helped it grow to nearly 3, restaurants in 49 states and 20 international markets — has been making headlines for controversial statements regarding the company.
In October, Schnatter told FOX Business that no one on the board knows anything about pizza, and franchises are under "a lot of duress" because the unit economics are not healthy.
There is no change," O'Neal says. It doesn't matter what he has said about me. I don't care. I'm on a mission to make [Papa John's] the No. According to O'Neal, his fellow board members are also unfazed by Schnatter's comments to the media.
According to the report, the alleged behavior from Schnatter included everything from "sexually inappropriate conduct" to recruiting employees to spy on their coworkers. The pizza titan was also reportedly in the habit of reading workers' emails in his constant effort to protect himself and his reputation. When Schnatter was eventually forced to leave the company, Papa John's shareholders even tried to sue the company and its founder for trying to hide this toxic workplace culture, though the suit was later dismissed in court.
Papa John's has found itself in the spotlight in recent years, and it has nothing to do with its pizza. Instead, it has to do with numerous comments and actions by the company and its founder John Schnatter that have been characterized as offensive and even racist. For example, in the company apologized after an employee at a New York location referred to an Asian customer as "lady chinky eyes" via Eater.
The following year, another incident made headlines after a Papa John's delivery man left a racist rant on a customer's voicemail, apparently by accident via ABC News. Papa John's had to issue yet another apology in when an employee at a location in Denver used a racial slur in place of a customer's name, which was then printed on their computer-generated receipt, reports the Denver Post.
Incidents of racism have run all the way to the top at Papa John's. In , the NFL ended their national sponsorship deal with the pizza chain after founder John Schnatter made comments suggesting that Papa John's pizza sales were suffering as a result of players kneeling in protest during the national anthem via The New York Times.
Around that time, some white supremacists groups even suggested making Papa John's the official pizza of the alt-right via Huff Post. The racist attitudes and comments made by Papa John's founder John Schnatter eventually culminated in his complete removal from the company he created.
Then just six months later, Schnatter was heard using the N-word on a conference call. Amid the outrage, tanking sales, and in the wake of several organizations cutting ties with the company in response, Schnatter was forced to resign as chairman of the board via CNBC.
Papa John's moved swiftly to distance itself from Schnatter, and remove him as the face of the brand via Eater. Papa John did not bow out gracefully, though. Shortly after he resigned, he sued the company over his removal, even going so far as to suggest the board had planned a coup against him via CNN.
After a yearlong legal fight, Papa John's and Schnatter reached a settlement, and he stepped down from the board entirely. Since then, Schnatter has continued to make disparaging public comments about Papa John's, and has sold off a large chunk of his 29 percent share of the company per Restaurant Business. In the wake of his departure from Papa John's, founder and former CEO John Schnatter has not had very nice things to say about the company. And while his claims that executives he trusted to run his business stole the company out from under him could be taken as nothing more than bitter mud-slinging via WDRB , some of his other comments have sparked a public debate among pizza lovers.
Specifically, Schnatter claimed that Papa John's pizza tastes different since he was removed from the company. Papa John's responded that it has not made any changes to its pizza recipe or the way it's prepared via CNBC. However, not everyone was convinced, and some customers have also questioned whether or not Papa John's pizza has changed, and not for the better.
Despite Papa John's insistence that nothing is different, it's worth noting that it's kinda hard to verify those claims entirely. That's because the company was very secretive about their ingredients until a journalist called them out in As Papa John's works to rehabilitate its image after founder John Schnatter's scandalous departure, it has turned to a national icon to be the new face of its brand. It's worth noting he is Papa John's first African-American board member.
These days, you can find the former basketball star all over Papa John's website , social media , and commercials. He also invested in several franchise locations in Georgia. O'Neal has said he is committed to making Papa John's the top pizza chain despite its recent history. He also says he is unconcerned with Schnatter's public comments, including the suggestion that Papa John's wasn't leveraging the NBA star's full value, noting that "sometimes people don't know when to keep their mouths shut" per CNBC.
Between the PR nightmare that surrounded John Schnatter's exit from Papa John's, competition from the likes of Pizza Hut and Domino's, and the perception that the pizza chain was too expensive, it was a rough couple of years for the company's bottom line.
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