White Pizza

Seven years ago, Papa Johns' founder resigned after making racist remarks. Today, the company is struggling with its damaged brand.

“Feed the poor and get rich or feed the rich and get poor.” – Colonel Sanders

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Once upon a pepperoni, Papa John let the N-word spew from his mouth like a splash of pizza sauce.

John Schnatter founded the chain in 1984 and had become the brand. He had an admirable entrepreneurial success story. He did the ads. His face was on all the pizza boxes. But his lips ran loose.

Even in a media training session that was supposed to help clean up his act, he dropped the N-word.

“Colonel Sanders called blacks (N-Words) and Sanders never faced public backlash,” he said in a role playing exercise with a public relations firm.

“People used to drag African-Americans from trucks until they died,” Schnatter reportedly said. (Comic: ChatGPT.)

Schnatter was too old to have his mouth washed out with soap. Instead, his flappy tongue cost him his reputation, his job and millions of dollars in stock value.

That was 2018. Seven years later, the pizza purveyor is still struggling to find its identity in a crowded field of fast-food delivery.

Read More: CEOs Say The Dumbest Things. (Business Blunders)

On Thursday, Papa Johns reported earnings and revenues that fell well below Wall Street expectations. Its stock had already plunged on Tuesday, following an exclusive report from Reuters that buyout firm Apollo Global Management backed out of a $2.1 billion offer to take the struggling company private. The stock fell even further on Friday.

Papa Johns remains open to a buyout but for now it’s committed to a transformation that is “still in the early innings,” CEO Todd Penegore said on a conference call with investors on Thursday.

Somehow, Papa Todds doesn’t sound appetizing. And now the chain may be in the early innings of a restaurant recession that has bitten Chipotle’s big burrito, beaten the humus out of Cava, and tainted Sweetgreens with a bitter taste.

After Schnatter’s remarks, Papa Johns lost momentum that could have put it on par with Domino’s and Pizza Hut in sales. Today, it’s still not even a Little Caesars.

If you know anything about pizza – or are not up late, stoned and starving – you know that all these pies suck. But without Schnatter behind the brand, Papa Johns might as well change its name to … I don’t know … Daddy’s Outhouse?

On Friday, Papa Johns stock was trading at about the level where it fell to after Schnatter stepped down in 2018. And Schnatter, who made Forbes’ rich-guy list in 2017 with a net worth of $1 billion, hasn’t appeared on the list since.

In today’s anti-woke, screw-DEI, roundup-all-the-immigrants-legal-or-not climate (or what I like to call American Racism 2.0), some may think a great business success like Schnatter could get away with a few off-color remarks. But they’d be overlooking an obvious business lesson: Don’t insult your customers.

Colonel Sanders’ grandson was so peeved about Schnatter’s remark that he took to the air and called the paternal pizza peddler a liar and a weasel. The colonel never used racial slurs and even attended and donated to Black churches, he said.

“There was no racism in him,” grandson Trig Adams recalled. “To him, all people were equally children of God.”

All people were equally his customers, too.