Papa John’s founder John Schnatter resigned as chairman of his company last week after a recording of him using the N-word was leaked to Forbes — and the pizza chain founder hasn’t gone quietly into the night: He’s accused the company’s board of directors of failing to investigate the incident properly, and says he regrets stepping down. But a new investigative report from Forbes alleges more misconduct, saying Schnatter presided over a “bro” culture at Papa John’s, where women were often the target of sexual harassment, and himself engaged in sexual misconduct that resulted in at least two confidential settlements.
Schnatter is accused of stalking and groping a woman in 1999; he later claimed the woman was trying to extort him for $5 million, but the situation ended with a confidential settlement. Forbes also reports that a 2009 “incident” involving a 24-year-old female marketing employee resulted in another confidential settlement, and anonymous sources say there have also been more settlements over the years. Meanwhile, sources say women at the company were subjected to harassing behavior from Schnatter and other male employees, such as being asked about their bra size or if they were menstruating. Schnatter also allegedly asked employees to spy on their colleagues, and sometimes read workers’ emails. Schnatter, through a representative, “disputed” most of the Forbes story.
Schnatter stepped down as CEO in late 2017, after he claimed on an earnings call that NFL players’ national anthem protests were hurting Papa John’s sales. The company’s revenue slid, and an anonymous franchisee tells Forbes the company has been offering discounts galore in an attempt to win customers back. The recording of Schnatter using a racial slur, which led to Schnatter leaving the brand’s board of directors, was obtained by Forbes in the process of investigating this larger story, which also claims Schnatter installed loyalists and close friends, including CEO Steve Ritchie and international president Tim O’Hern, in leadership positions at Papa John’s so he could run the company unchallenged. Corporate employees being forced to sign nondisclosure and non-disparagement agreements also apparently kept people from coming forward.
In response to the allegations, Papa John’s spokesperson provided the following statement to Eater via email:
As previously announced, a special committee of the Board of Directors, comprised solely of independent directors, has retained an outside firm to oversee an audit and investigation of the culture at the company and to make recommendations for whatever changes may be necessary. We take this matter seriously. If anything is found to be wrong, we are determined to take appropriate action.
But it seems getting rid of Schnatter entirely won’t be so easy: As Forbes points out, he’s still on the company’s board and owns 30 percent of its shares, and even “showed up to work as usual” the day after he resigned as chairman. If Papa John’s hopes to keep selling pizza, it may need to completely disassemble the house that Schnatter built.
• The Inside Story of Papa John’s Toxic Culture [Forbes]
• Disgraced Papa John’s Founder Regrets Stepping Down After Racist Remark [E]
• Papa John’s Founder Resigns After Racist Rant Leaks [E]