January has been a tough month for fast/casual eateries. First, TGI Fridays closed 36 locations. Now, Papa John’s Pizza is closing ‘up to 100’ stores in an attempt to stave off disaster in the face of waning sales and soaring costs…
A memento of happier times: Schnatter and NFL super-star Peyton Manning
in an ad for a pizza give-away promo in partnership with the League…
Two clear signs in the space of a week! The Great Fast Food Sector Shakeout I predicted several years ago is commencing exactly when I said it would: Early-mid 2020s.
A long, slippery slope…
Papa John’s hasn’t been the same since the shareholders dumped founder, CEO and Chairman John Schnatter (see photo, top of page). All Hades broke loose in the boardroom when Schnatter got Papa John’s ‘fired’ as the official Pizza of the NFL. That was no small accomplishment. But he made it look easy. Schnatter complained about negative effects on his sales, which he claimed were a result of the player’s dispute over taking a knee. Papa John’s stock price took a beating and the Board took what it considered appropriate action.
“I built Papa John’s from the ground up and remain its largest shareholder. I love my Company, its employees, franchisees and customers,” Schnatter posted, in what was intended as the launch of an appeal to shareholders to bring him back.
He then went on to detail developments in his legal battle with his own company over his ouster. You’ll recall that Schnatter got Papa John’s ‘fired’ as the official Pizza of the NFL after he complained about negative effects on his sales which he claimed were a result of the player’s dispute over taking a knee. Papa John’s stock price took a beating and the Board took what it considered appropriate action.
That was back in the spring/summer of 2018. Later that year, the chain closed 51 ‘underperforming’ locations. The precipitous edge of a long, slippery slope..
Fast-forward to 2024
Last year, the chain shuttered 22 more locations. There was no fanfare. No big announcement. Now, the Head Office has advised investors it anticipates more ‘strategic closures’ of dozens more ‘low-performing’ locations in 2024. However. The decisions on which locations will close are yet to be finalized.
“As we work to fully optimise our restaurant operations and improve profitability across the market, we will continue evaluating the growth potential of our restaurants,” the chain said, in a statement. “This includes working collaboratively with our franchisees to strategically close low-performing locations when necessary, as well as continuing to invest in the right locations for the benefit of our customers.”
Where Papa John’s is at
The chain currently operates 5,500 restaurants worldwide. It has a footprint in 49 countries and territories, and ranks as the world’s third-largest pizza delivery company.
The Head Office insists that closing the underperformers is ‘critical’ to the chain’s continued success. Maybe even its survival?
My take
It was John Schnatter’s personal style and charm that propelled the brand to its peak greatness. Since his ouster, the chain has slid downhill alarmingly.
In the old days, when Schnatter was at the helm, we’d receive news releases from Papa John’s regularly, announcing new deals and promotions, new products and new celebrity and sports-realm collaborations. Nowadays? We hear from Papa’s maybe once in a blue moon. That’s no way to keep the brand image riding high and proud among all the other guys in the pizza sector. Falling customer allegiance and tanking sales are proof of that.
This is just my opinion… But I think Papa John’s should woo Schnatter – the original Papa John – back to the fold. So he can once again work his personal brand of charis-magic, and maybe restore the company he founded to its former glory.
The question remains, though… If asked to return, would Schnatter be willing to forgive the Board for dumping him in the first place?
~ Maggie J.