For over 40 years, Papa Johns has prided itself on making higher pizza made with higher substances. Whereas the accuracy of that “higher substances” declare remains to be up for debate, there isn’t any denying that this method has earned the chain a spot up with there the pinnacle honchos of the meals supply scene. There are over 5,500 Papa Johns places dotted throughout 49 nations, making it one of many largest pizza chains on the earth. However is that reign coming to an finish?
Recently, we have seen indicators that Papa Johns’ standing is slipping. We’re not claiming that its pizza empire is ready to implode tomorrow (you will know when it’s whenever you see us stockpiling Particular Garlic Sauce), however the firm has positively tumbled from the highs it skilled on the peak of the COVID-19 pandemic. On the entire, latest years have been powerful on the restaurant {industry} as prospects grow to be extra selective about when and the place they spend their cash. Quick meals is struggling specifically, with meals and labor prices hovering throughout the board. It could be scuffling with a variety of the identical points confronted by its rivals, however a few of Papa Johns’ challenges are extraordinarily brand-specific — and arguably years within the making. From its controversial founder to worker battle, here is why we’re involved about Papa Johns.
Papa Johns might have constructed a world pizza empire over the previous 4 many years, however just lately this empire has began to shrink. In Might 2024, the chain shuttered almost a tenth of its places within the U.Ok., its second largest market after the U.S. The corporate defined that it was axing “underperforming places which can be not financially viable,” together with 16 eating places in London alone, (through BBC).
Downsizing is never a constructive signal for a enterprise — particularly one which’s made no secret of its ambitions to increase internationally. Whereas Papa Johns did hint at its U.K. closures earlier within the yr — citing an effort to “right-size” the market specifically, (through Restaurant Business), and department out into promising new markets reminiscent of Australia and Japan — it is not the one nation to lose shops. The chain additionally exited the Cayman Islands fully in 2023 and shuttered 17 places within the U.S. within the first half of 2024. Whereas the latter was offset by new openings in different components of the nation, the closures do nonetheless elevate some issues in regards to the chain’s efficiency in some areas.
When a enterprise like Papa Johns begins shuttering shops, you possibly can guess information of a decline in gross sales is not far behind. Lo and behold, 2024 was dotted with experiences of poor gross sales for the pizza chain, with its third quarter marked by a 6% decline throughout North America, placing gross sales at their worst for the reason that second quarter of 2019. This adopted a string of equally tough quarters for Papa Johns. In 2023, its CEO Rob Lynch (who has since left the corporate, however extra on that later) famous that April had been the worst month for gross sales at places open for at the least a yr since he’d joined the enterprise.
Like a variety of its rivals, the chain has been battling hovering meals and labor prices, in addition to a normal reluctance from prospects to splash money on common meals orders. In Might 2024, Papa Johns famous that when prospects did place an order, they had been far more frugal than up to now. Whereas pizza gross sales remained robust, it was sides and drinks that basically suffered. The corporate added that prospects had been opting to put their orders through third events — reminiscent of Door Sprint or UberEats — as a substitute of straight from the restaurant itself. These are industry-wide points, however that does not change the truth that Papa Johns appears to be taking a tougher hit than a few of its rivals. Domino’s, for instance, reported gross sales will increase all through 2024.
Papa Johns pizza field subsequent to bowls of toppings – DenisMArt/Shutterstock
Papa Johns took a serious blow in March 2024 when its president and CEO, Robert Lynch, resigned. “This was an extremely tough choice for me, as I see all the upside potential that exists for this nice firm,” Lynch stated in a press release, the place he additionally expressed his optimism for the chain’s future. “I’m sure that Papa Johns’ unbelievable leaders, franchisees and group members will proceed to do what solely Papa Johns can: ship higher pizza to the world.”
Regardless of all of the pro-Papa Johns sentiment, Lynch jumped ship to Shake Shack — a quick meals behemoth that, not like Papa Johns, skilled critical progress in 2024. As shares dropped, Papa Johns launched an interim CEO till Wendy’s alumnus Todd Penegor stepped into the position in August. Realistically, CEOs change jobs on a regular basis, and a change in management does not all the time imply an organization is on a downward spiral. Nonetheless, mixed with its latest disappointing gross sales stats, it does not precisely paint essentially the most optimistic image of the inside workings of the enterprise.
John Schnatter holding up an award at a podium – Rob Kim/Getty Pictures
John Schnatter might have given Papa Johns his title, however his habits within the years since hasn’t performed the corporate any favors. Whereas we cannot exhaust you (or ourselves) with Schnatter’s full checklist of controversies, a few of his most notorious moments as CEO embody claiming that Obamacare would improve the value of pizza in 2012, being accused of stalking in 1999, and sexual misconduct in 2009 (with Schnatter confidentially settling each instances), and blaming the NFL’s failure to cease nationwide anthem protests towards systemic racism for a droop in pizza gross sales.
The latter in the end served as the ultimate straw for Schnatter. Not lengthy after, he stepped down as CEO. Lower than a yr after that, Schnatter additionally stepped down as chairman when it emerged that he had used racial slurs throughout a convention name (which, sarcastically, had been organized as a coaching train to stop Schnatter from making future PR blunders).
Whereas Papa Johns took its founder’s face off its pizza packing containers again in 2018, it is laborious to completely distance your self from somebody who not solely shares the identical title however has since publicly denounced the firm. Schnatter has criticized both its internal politics and products, having eaten 40 pizzas in 30 days to show a supposed drop in high quality. Its shares might have recovered from the sharp declines that adopted Schnatter’s extra controversial moments, however will probably be powerful for Papa Johns to ever fully escape its founder’s shadow.
NFL star Cris Carter holds an NFL Papa Johns pizza field – Mike Moore/Getty Pictures
Papa Johns spent seven fruitful years as an NFL sponsor, having first signed on in 2010. Founder John Schnatter even personally appeared in a number of Papa Johns advertisements alongside NFL gamers, reminiscent of former Denver Broncos quarterback Peyton Manning. That every one got here crashing down in 2017 when Schnatter made his now-infamous feedback in regards to the league’s stance in the direction of gamers kneeling in the course of the nationwide anthem, the next decline in scores, and the NFL’s failure to intervene on the matter. “This yr the scores are going backwards due to this controversy,” The Washington Post quotes Schnatter as complaining. “And so the controversy is polarizing the client, polarizing the nation.”
As we all know, this did not precisely finish nicely for Schnatter. It additionally did not do a lot for the connection between the NFL and Papa Johns as an entire. In February 2018, simply three months after Schnatter’s outburst, it was introduced that they’d made a “mutual choice” to formally finish their partnership, (through Forbes). As a substitute, Papa Johns would shift its focus to partnering with native groups. The NFL wasted no time in shifting on; inside 24 hours, Pizza Hut was introduced as its new sponsor, with Little Caesar’s taking its spot in 2022. Whereas neither NFL and Papa Johns ever overtly pinned their skilled breakup on the Schnatter debacle, the timing says all of it.
Menus at Papa Johns – Brandon Bell/Getty Pictures
A standard development for the reason that pandemic is that prospects need worth. The likes of McDonald’s, Starbucks, and Chili’s have all leaned laborious into promotions and offers to entice the budget-conscious. That is someplace that Papa Johns has fallen brief, with the corporate itself acknowledging that it has a pricing drawback that has in the end given its eating places a fame for being costly.
As then-CEO Rob Lynch admitted in 2023, prices had soared at among the chain’s franchised places. “Among the pricing… had gotten out in entrance of the place the buyer was keen to spend,” he stated throughout an analyst name, including that these places had been “rising their costs at a sooner charge than [its] company-owned eating places,” (through CNN Business). This is not a brand new drawback for the corporate. Again in 2018, former CEO Steve Ritchie admitted that “there’s a notion that we’re overpriced. And since that notion exists, even the individuals who desire our model — our loyalists — use our rivals when instances are tight,” (through WDRB.com).
With the difficulty persisting years later (and lots of bemoaning the chain’s excessive costs in comparison with the likes of Domino’s and Little Caesars on social media), it looks as if Papa Johns nonetheless has an extended technique to go in nailing its pricing technique. The true query is whether or not or not it is too late to repair its expensive fame within the cultural consciousness.
Shaquille O’Neal in a Papa Johns shirt – Prince Williams/Getty Pictures
Within the wake of the PR nightmares that was John Schnatter’s exit from the corporate, Papa Johns hurried to enhance its picture within the eyes of the general public. The answer? Paying NBA Hall-of-Famer Shaquille O’Neal $8.25 million a yr to function an organization ambassador, after all. This deal concerned O’Neal starring in a string of Papa Johns ads, in addition to investing in 9 shops and taking a seat on the board of administrators. “Papa Johns is constructing a greater tradition, and I wish to be part of enhancing the [company] from the within,” O’Neal stated, (through CNN Business).
O’Neal performed a key position in that transformation for 5 years, throughout which era he impressed the Shaq-a-Roni pizza — via which Papa Johns has raised $13.1 million for The Papa Johns Basis — and was an integral a part of the corporate’s post-Schnatter restoration. “Papa Johns is in a a lot completely different place thanks, partially, to Shaquille’s involvement with the model,” former CEO Rob Lynch stated in 2024. Nonetheless, that point got here to an finish in 2024 when O’Neal announced that he would step down from the board on account of different enterprise commitments. Whereas he continues to function an envoy (and, most significantly, the Shaq-a-Roni goes nowhere), Papa Johns has misplaced an vital voice behind the scenes.
Papa Johns pizza field – Smith Assortment/gado/Getty Pictures
As if John Schnatter’s NFL feedback hadn’t performed sufficient harm, Papa Johns was slammed with a second wave of promoting disasters when its pizza was coopted by white supremacists. In November 2017, the web site Every day Stormer shared an image of a pie adorned with a pepperoni Swastika, captioned, “Papa John: Official pizza of the alt-right?”
This got here as a direct response to Schnatter criticizing the NFL for not cracking down on gamers protesting police brutality, which some members of the far-right took as an indication that he was on their facet. They quickly flocked to his protection, with Every day Stormer author Adrian Sol claiming that “this is perhaps the primary time ever in trendy historical past {that a} main establishment goes to be fully destroyed explicitly due to public outrage over their anti-white agenda,” (through Newsweek).
Papa Johns was fast to distance itself from these sentiments. Because it bluntly informed the Huffington Post, “We condemn racism in all kinds and any and all hate teams that help it. We don’t want these people or teams to purchase our pizza.” Nonetheless, it was too late to cease the controversy from fanning the flames that already surrounded Schnatter’s feedback.
Papa Bowls containing pizza toppings – PapaJohns / X, previously often called Twitter
Whoever coined the time period “if it ain’t broke, do not repair it” had clearly by no means labored in quick meals product improvement. Eating places are all the time coining new menu gadgets to peak buyer curiosity, a few of that are huge successes, and others… nicely, not a lot. Sadly for Papa Johns, the previous few years have seen a string of underwhelming launches which have performed nothing to endear the chain within the eyes of consumers.
The obvious is the infamous Papa Bowl. Added to the menu in 2019, this basically takes your normal pizza toppings and dumps them in a plastic bowl, sans bread. If that sounds unappetizing, that is as a result of it’s. Responses had been largely unfavourable, with some mocking the chain for basically undermining its hero product with a launch that referenced “pizza fatigue,” (through CNN Business). As The Washington Post put it, “Papa Johns new pizza bowls are a nasty execution of a nasty thought.” Harsh, however true.
Different stabs at new launches additionally fell flat. The Pepperoni Stuffed Pizza failed to impress, with prospects criticizing the ratio of bread to toppings and the sheer lack of pepperoni, whereas there have been additionally complaints in regards to the high quality of the brand new boneless hen wings.
Pizza going into oven – photo-denver/Shutterstock
As a normal rule, anybody with celiac illness or a extreme gluten intolerance ought to be cautious when a quick meals restaurant declares any merchandise to be “gluten-free.” Whereas it could be true that the dish is made with out gluten, the character of quick meals kitchens usually bears a number of dangers of cross-contamination.
That is the case for Papa Johns gluten-free crust. Again in 2017, gluten-free prospects had been excited to be taught that the chain would quickly begin serving a pizza base made with sorghum, teff, amaranth, and quinoa. Nonetheless, they had been quickly met with the disappointing information that the pizza truly wasn’t secure for them to eat. As the corporate informed CNBC, “Though Papa Johns Historical Grains Gluten-Free Crust is gluten-free and Papa Johns employs procedures to stop contact with gluten, it’s attainable {that a} pizza with Papa Johns Historical Grains Gluten-Free Crust is uncovered to gluten in the course of the abnormal preparation course of.”
Unsurprisingly, this information was met with mass disappointment. Contemplating how a lot the gluten-free market has grown lately, it stands to purpose {that a} product that was truly gluten-free would’ve drummed up loyal enterprise from those that truly required it for well being causes. Sadly, we’ll by no means know.
Window promoting for Papa Johns supply drivers – rblfmr/Shutterstock
Supply drivers are the glue that holds the quick meals {industry} collectively. That is why it is so irritating to see corporations undervalue the workers who make their orders occur. Sadly, Papa Johns falls into this class, with drivers in Kentucky, Colorado, Florida, Maryland, Minnesota, and Illinois complaining for years that the corporate had did not correctly reimburse them for the utilization of their private automobiles.
As per a lawsuit filed on behalf of fifty,000 drivers in 2017, the Papa Johns reimbursement coverage solely lined a set quantity per order as a substitute of the IRS normal enterprise mileage charge. This meant that they weren’t being reimbursed for the complete prices incurred by making deliveries, which in flip pushed their earnings beneath minimal wage, violating the Truthful Labor Requirements Act (FLSA) and a number of other state and federal wage legal guidelines.
It took seven years of litigation for the case to achieve its finish, with drivers in the end asking for a $20 million settlement. Whereas a number of Papa Johns rivals have been hit by related accusations by their supply drivers up to now — together with Pizza Hut and Domino’s — that does not change the truth that it is a dangerous look for an organization that is already handled its justifiable share of PR points through the years.
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