When he becomes CEO of Papa John’s Pizza on January 1, Steve Ritchie will have a lot more on his plate than just delicious, steaming pies. He’s going to have to figure out how to jump-start the chain’s lagging growth, dig it out of a politico-business controversy, and succeed a legend who just happened to start the company.
Chief Operating Officer Ritchie, who began at the company in 1996 as a customer-service rep, already was tapped as Schnatter’s eventual heir apparent in 2015. Ritchie will take the reins of the Louisville-based No. 3 pizza chain after the chain abruptly announced a transition from CEO and Founder John Schnatter right before Christmas. Schnatter will remain chairman.
It isn’t clear yet whether Schnatter’s scrap with supporters of the National Football League anthem protests—in which he complained during a conference call with investors that the league’s handling of the controversy had hurt pizza sales—was the catalyst to the timing of his concession of Papa John’s top job. But Ritchie did imply to the Wall Street Journal that the publicity didn’t help matters. The company declined Chief Executive’s request to interview him.
“Clearly all of the PR things have been quite a distraction. I want to put the focus back on our people and pizza.”
“Clearly all of the PR things have been quite a distraction,” Ritchie told the publication. “I want to put the focus back on our people and pizza.”
Ritchie has good reason to make such a focus his imperative. First, he’s got to turn the business around. At a time when streaking rival Domino’s keeps posting 6- to 12-percent quarterly sales gains in same-store sales, during the third quarter, Papa John’s North American growth slowed versus a year ago, and Schnatter lowered both its full-year same-store sales-growth outlook for the region and its overall earnings guidance.
Meanwhile, Papa John’s still trails Domino’s in the race to digitize ordering and delivery. Papa John’s lately has introduced innovations such as Facebook Instant Ordering, where it was the first pizza chain to do so. But analysts say that overall, Domino’s has established a huge lead in digitization over both Papa John’s and Pizza Hut—an advantage that actually is helping Domino’s challenge Pizza Hut for the industry’s No. 1 spot these days.
And investors have soured on Papa John’s. After peaking at a price of more than $89 a share about a year ago, Papa John’s has plummeted to a price of about $56 a share. (Investors shaved about 4 percent off its value in Friday trading through mid-afternoon, the day after the transition announcement.)
Which brings us to the Schnatter element in the difficulties that face Ritchie as he ascends to the helm of the chain that has 3,400 units in North America and 1,600 overseas.
Papa John’s has been a heavy advertiser during NFL games and has employed football stars such as Peyton Manning as pitch men, with Schnatter himself often appearing in the TV ads. And Papa John’s is the official pizza sponsor of the NFL.
But in November, Schnatter publicly complained about the NFL’s handling of the national-anthem protests, which seemed to be dinging viewership and which clearly got the league, its teams, players, management and the brand’s image with fans caught up in the vortex of racial politics that developed around the issue.
“The NFL has hurt us by not resolving the current debacle to the players’ and owners’ satisfaction,” Schnatter said. His remarks immediately drew backlash on social media, where some chose to cite Papa John’s pizza quality instead for sluggish sales. Others supported Schnatter’s diagnosis of one of the league’s problems.
Ritchie likely will avoid open commentary on the anthems even as he turns a critical eye to Papa John’s NFL involvement. “The NFL has continued to experience declines in viewership,” he told the Journal. “We’re evaluating all partnerships on a day-by-day, week-by-week and month-by-month basis to make sure we’re getting the benefit.”