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The Inside Story Of Papa John’s Toxic Culture

Two years ago John Schnatter fanciful himself untouchable. He was CEO of Papa John’s, a inhabitant pizza sequence he founded, and served as a entire TV pitchman. The business had grown to 5,000 stores and $1.7 billion in revenue, and his function tallied some $950 million. “We see news story after news story of CEOs who run companies into a ground,” Schnatter scoffed in his 2016 autobiography, that chronicled a business’ rise. 

Then Schnatter began to do accurately that. The universe already knows of his dual biggest flare-ups. Last November, he criticized a NFL’s doing of inhabitant anthem protests, pursuit a whole event a “debacle.” Papa John’s shares crashed 11% in hours and kept falling, Schnatter lost his CEO title and authorization sales forsaken an estimated 5% or more. Then, in July, while stating this story, Forbes schooled that Schnatter had used a N-word and finished other argumentative remarks on a discussion call dual months prior. On Jul 11, a day that news broke, he quiescent as chairman.  

But a problems run distant deeper. Based on interviews with 37 stream and former Papa John’s employees—including countless executives and residence members—Schnatter’s purported function ranges from espionage on his workers to intimately inapt conduct, that has resulted in during slightest dual trusted settlements.

Papa John's owners John Schnatter

Papa John’s owners John SchnatterJamel Toppin

To strengthen himself, Schnatter, 56, consecrated loyalists in a firm’s tip ranks, who enabled a “bro” culture. That includes general trainer Tim O’Hern, a tighten crony of Schnatter’s from Jeffersonville High School, as good as stream CEO Steve Ritchie, who worked directly for Schnatter for 3 years and has run daily operations given 2014. “John got Steve to where he is. Steve is not going to do anything to spin on John,” says a former comparison executive.

“Papa John’s has effectively been a open association operated like it is secretly owned,” a maestro worker says. “Nothing is function there unless John wants it to happen.” 

Under Ritchie’s and Schnatter’s watch, mixed insiders report a washing list of transgressions: Female employees were mocked and asked if they were menstruating. Male executives finished references to “gangbangs” and comments about either women wanted “to burst on a train.” Three former employees contend Ritchie was benefaction when these forms of remarks were finished and usually laughed along. 

Reached by a representative, Schnatter doubtful many of this story. Papa John’s did not respond to steady requests for comment. Ritchie, for his part, did not respond to a ask for comment. And O’Hern contested portions of this story, nonetheless he reliable his tighten ties to Schnatter. 

Since roughly 2013, corporate employees have sealed nondisclosure agreements exclusive them from deliberating Schnatter’s personal life. Other confidentiality and nondisparagement contracts and imperative allotment agreements serve disheartened people from vocalization out. So when Schnatter wrote his memoir, Papa: The Story of Papa John’s Pizza, no one could plainly brawl it.

Now a full story is being told for a initial time. Forbes spent months piecing it all together. No sources cited in this essay approached us; all were contacted directly. Most spoke on a condition of anonymity, citing authorised shackles or fear of retaliation.

Says a recently over executive, “The usually people that are staying there are a people that can’t get a good pursuit elsewhere.”

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o know Papa John’s stream state, one needs to know how it was built. John Schnatter grew adult in Jeffersonville, Indiana, a son of a clerk and a sequence entrepreneur. In 1984, he consecrated a pizza oven during his dad’s tavern, Mick’s Lounge, and started churning out pies. The pizza sole well, and he non-stop a stand-alone emporium a following year. “I built that initial Papa John’s. And afterwards we built a pizza empire,” Schnatter writes in his book.

Early employees credit Schnatter for fueling growth. “It was a American dream. We went from 23 stores to 900, and they continued to grow after we left,” says former trainer Dan Holland, who helped take a association open in 1993 and over dual years later. 

Money altered things. Schnatter altered a organisation into a lush new domicile in Louisville, Kentucky, in a late 1990s. When he consecrated a fresco for one of a ceilings, he had his face embellished into a plaster. His possess bureau was given with black marble and a fireplace. Schnatter infrequently conducted meetings from his use bike and was disposed to outbursts. In one case, he altered a neglected executive’s parking mark to a really behind of a garage. (Reached by a representative, Schnatter denied a incident.) “John had this tendency: When he was finished with you, he was finished with you,” says Donna Alcorn, who left Papa John’s in 2010 as a comparison clamp trainer and says she had a certain trust overall. “That’s given he’s left by so many executive teams in his life.”

One former executive says a married Schnatter would disappear for days on work trips, stirring guess that he was “hooking adult with girls.” (Schnatter denies this.) In 1999, a mobile phone deputy named Lesli Workman filed a lawsuit alleging that Schnatter groped her after assembly her during a celebration in a Louisville park, proceeded to petiole her, afterwards asked her trainer to send her to Papa John’s to plead a probable phone contract. Schnatter denied a allegations and filed a retaliation alleging that she attempted to extract $5 million from him and Papa John’s. The box finished with a trusted settlement.

Forbes

In 2005, after 3 years of descending profits, Schnatter stepped down as CEO for a initial time. Nigel Travis, afterwards a trainer and COO of Blockbuster, was hired to fill a role. Schnatter remained authority nonetheless was relocated to offices 20 mins away. In exile, he fought for control. During annual bill meetings with a board, for instance, he would breeze apart bill proposals and force residence members to select between him and his CEO. (Schnatter says his bill finished adult being some-more accurate.) In another case, during a eleventh hour he torpedoed an agreement with franchisees that Travis had spent months negotiating. When asked about a friction, Travis is diplomatic. “Most of a time John and we had a really considerate relationship,” he says.

Over time, Schnatter started to revisit a categorical campus some-more mostly to learn what was going on. He allegedly recruited Papa John’s employees to view on their colleagues. He review workers’ emails, according to dual sources with trust of a episodes, and infrequently conducted business from disposable phones. Schnatter denies that he accessed emails or recruited employees to view on any other, nonetheless admits he spasmodic used disposable phone for reasons of “corporate security.”

Travis left to turn CEO of Dunkin’ Brands in 2008, and Schnatter returned to power. He fast consecrated new executives. Among them was his former schoolmate Tim O’Hern, who had spent a before few years operative for a tiny genuine estate association owned by Schnatter. O’Hern had served as a Papa John’s clamp trainer until a mid-2000s, when he was allegedly asked to leave a association for mistreating employees, a former comparison executive says. (O’Hern disputes that allegation, observant he never mistreated anyone and was never asked to leave a company, nonetheless he acknowledges that an review into his control took place around a time he departed. He says he does not remember a inlet of a inquiry.)

Forbes

Either way, after returning to Papa John’s in 2009, O’Hern became a executive figure in a Schnatter orbit. And he never left. “He’s John’s hench man that does whatever John wants,” a former executive says.

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ust after reclaiming CEO duties, Schnatter attended a NCAA Final Four in Detroit. During a outing there was an occurrence with a 24-year-old womanlike Papa John’s selling worker that resulted in a second trusted allotment and a employee’s quick departure. Three sources tell Forbes they know of additional settlements between Schnatter and women involving inapt conduct, nonetheless sum could not be reliable by announcement time. (Schnatter disputes this.) 

A womanlike worker says that Schnatter asked about her bra stretch and either she’d slept with her before boss, and that he never let her pass in a gymnasium though giving her a hug. (He denies this.) A masculine executive recalls going out to cooking with his mother and bumping into Schnatter during a bar. Schnatter allegedly told a executive that he “had a lovable wife, if she’d mislay some weight.” Schnatter didn’t remember a occurrence when confronted by a executive later, and Schnatter now says it didn’t happen. 

Schnatter tapped a former executive from Anthem insurance, Jude Thompson, to assistance run Papa John’s as co-CEO in Apr 2010. Two former executives explain he got a pursuit given he was one of Schnatter’s buddies. Schnatter denies this. Thompson also disputes that’s given he got a job, observant that he has “a flattering renowned business career.”

Thompson brought a lady who was not his mother to association events, including a Super Bowl. “That form of function would be not usually allowable, nonetheless encouraged,” one of a executives recalls. Thompson denies a incident. Schnatter tells Forbes that Thompson did indeed pierce a mistress to a Super Bowl.

Thompson over in 2011, after usually 12 months as co-CEO. Schnatter tapped a comparison clamp president, Tony Thompson (no propinquity to Jude), to be arch handling officer and afterwards president, that mixed sources contend ushered in a brief informative respite. Schnatter stepped behind from a day-to-day and a business hummed along. But when Tony Thompson left to run Krispy Kreme in 2014, things changed.

Schnatter consecrated longtime staffer and clamp trainer Steve Ritchie—who started out as a Papa John’s patron use representative—to be arch handling officer and run daily operations. Ritchie had once worked with Tim O’Hern opening some Papa John’s franchises, afterwards spent 2008 to 2011 consulting during Schnatter’s side investment, a sandwich judgment named Calistoga Bakery Café. By 2015 he was Papa John’s president.

Forbes

Six former executives questioned Ritchie’s education for a pursuit of president, let alone CEO. His one saving trait, they say: fealty. When a Louisville announcement named him to a Forty Under 40 list in 2013, Ritchie was asked to name his purpose model. “John Schnatter,” he answered.

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itchie’s watch brought an finish to a respite. “The longer he was in that position, a some-more fast a enlightenment declined,” says a recently over executive. At association off-sites, execs finished their crudest jokes, a ones about “gangbangs” and women wanting to “jump on a train.”

But it manifested even behind in Louisville. Multiple sources contend meetings were filled with impertinence and inapt comments. Ritchie allegedly never intervened. “These things would occur in meetings and discussion bedrooms and whatever. Steve would usually laugh. He would usually laugh,” says an particular benefaction during such incidents.

The control of Dustin Couts, a longtime operations personality and tighten crony of O’Hern’s, is one example, 3 sources say. In one purported instance, he discussed porn with a womanlike youth employee, one source says; in another he showed inapt images to colleagues on his dungeon phone; in nonetheless another he asked a co-worker if she was on her duration after she disagreed with him. And he once asked a masculine colleague, in front of a woman, either his marriage ring was indeed his “cock ring.” Couts didn’t respond to a content summary and a phone call requesting comment. Papa John’s also didn’t respond to questions about a allegations.  

Ritchie allegedly knew of these forms of improprieties. At one association city hall, he referred to Operations Support and Training, a section Couts headed during a time, as a “frat.” Meanwhile, Couts clearly suffered no consequences. In fact he got a new title. In May 2018, he was named informal clamp trainer of Papa John’s Asia/Pacific, according to his LinkedIn page.

The enlightenment impacted a business. “[Ritchie] promoted people formed on his personal attribute with them contra their results,” says a former executive. Among a middle circle: Tim O’Hern, who was named trainer of general in May; VP of tellurian record operations Tim Newton; comparison clamp trainer of North American operations Edmond Heelan; and Couts. Some of them are also parsimonious with Schnatter. O’Hern would transport to his lake residence regulating Schnatter’s helicopter, with Couts infrequently tagging along.

One former executive describes Ritchie’s care character as “knee-jerk,” and says that he doesn’t deliberate data. Another says he regularly unsuccessful to residence logistical issues during Papa John’s, for fear of angering Schnatter, who considers himself a master of operations. “You would demeanour during a metrics and find that we had a outrageous commission of people removing an false order,” a executive recalls. But zero was done. Infrastructure during Papa John’s also lagged behind. “From a record perspective, it wasn’t a easiest association to work for,” says Mark Nance, who left as clamp trainer of digital solutions in 2016.

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he gossip during Papa John’s is that Schnatter finished his NFL “debacle” comments in Nov 2017 to support his tighten crony Jerry Jones, a owners of a Dallas Cowboys, who was reportedly feuding with a league’s commissioner, Roger Goodell. (Schnatter denies that was his reason.) In a successive all-staff meeting, Schnatter told employees that he wanted to tell Goodell “to get off his donkey and uncover some leadership,” according to an particular who was there. (Schnatter admits he used “words to that effect.”) Partly as a outcome of his NFL comments, corporate income fell 5% in a initial entertain contra a before year. Net income, meanwhile, was down 40%.One Papa John’s franchisee says that, in an try to win behind mislaid customers, in new months a association has implemented some-more discounting than during any indicate in a history, and that some-more operators are positioning to sell than ever. “Things went to hell” after Schnatter’s remarks, recalls an executive who left progressing this year.

Forbes

Schnatter handed a CEO purpose to Ritchie on Jan 1, heading many to trust that he had corroborated divided from a business. In truth, small changed, given Ritchie already ran a day-to-day. If anything, Schnatter indeed became “more concerned than ever” in an try to conduct a crisis, says a source tighten to a company’s tip ranks.

This spring, Schnatter feuded with Brandon Rhoten, who was afterwards Papa John’s arch selling officer, over efforts to revoke Schnatter’s participation in TV advertisements. (Schnatter denies this, and claims Rhoten due putting him behind in ads; Rhoten did not respond to mixed requests for comment.) Schnatter allegedly bristled during a suggestion. According to a source tighten to a company, he privately hired a selling group to rise ads featuring him that would atmosphere in pivotal markets. Rhoten was dismissed in May. “As shortly as he attempted to mislay John from those commercials, his crow was cooked,” says an particular tighten to a situation.

Also in May, Schnatter participated in a discussion call with selling organisation Laundry Service, in a role-playing use dictated to equivocate another public-relations kerfuffle. During that call, when asked how he would stretch himself from racists, Schnatter finished remarks he suspicion were simply practice, nonetheless that mixed people on a call found offensive, according to a source informed with a situation. He downplayed his NFL snafu, observant that “Colonel Sanders called blacks n—–s” nonetheless never faced open backlash. He also finished anxiety to his upbringing in Indiana, where, he said, people used to drag African-Americans from trucks, in an apparent try to illustrate his hatred to racism. Laundry Service fast altered to cancel a agreement with Papa John’s, says a source with approach trust of a situation. (Schnatter says that Papa John’s revoked a agreement and that “in both of these contexts, [he] was creation a clever matter opposite racism.”) 

After Forbes reported on a occurrence progressing this month, Schnatter reliable his use of a N-word and apologized, “regardless of a context.” He stepped down as authority that night. But dual days later, on a TV interview, he walked behind a reparation and blamed Laundry Service for inducing his use of a slur. “They were compelling that kind of vocabulary,” he said, after adding that, “You know, Forbes is gonna lie.” 

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he subsequent section of a Papa John’s tale is maturation in genuine time. As of final week, a company’s partnership with Major League Baseball was indefinitely suspended. Its name will come off a University of Louisville football stadium. Rumors of a buyout are percolating. And Schnatter has dead from all advertisements. Nearly everybody expects Papa John’s to pierce on though him. 

Papa John's owners John Schnatter

Papa John’s owners John SchnatterJamel Toppin

Except those closest to Schnatter. He is still on a board, owns scarcely 30% of shares and has Ritchie, O’Hern and a rest in command. Even if he does behind away, a corpse of his enlightenment remain.

Schnatter seems vigilant on maintaining influence. He pays for his bureau space during Papa John’s headquarters, that began as a approach to keep a private staff on site. The association is attempting to cancel a agreement, nonetheless Schnatter’s member contend it has no grounds. And on Jul 12, a day after he quiescent as chairman, Schnatter showed adult to work as usual.

With additional stating from Susan Radlauer.

Reach Noah Kirsch during nkirsch@forbes.com. Cover picture by Jamel Toppin for Forbes.

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Article source: https://www.forbes.com/sites/forbesdigitalcovers/2018/07/19/the-inside-story-of-papa-johns-toxic-culture/

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