The Real Deal New York

Hundreds of Papa John’s stores could close: The takeaway for retailers

Store sales continue to be down about 10 percent since its founder's use of a racial slur in July
September 08, 2018 12:00PM

(Credit: Mr. Blue MauMau via Flickr)

Unacceptable behavior at the corporate level has real consequences for business, as Papa John’s demonstrates.

Since Papa John’s founder, John Schnatter, used a racial slur in an interview in July, same-store sales have been down about 10 percent with no sign of relief on the horizon.

“We are surprised the company’s aggressive promotions the past several weeks have not curtailed the sales declines and we believe if the trend persists that it could lead to accelerating store closures during the next six months,” wrote analyst Chris O’Cull about the company’s third quarter results to date, as cited in CNBC.

O’Cull predicted up to 250 stores could shutter unless the company’s sales see a dramatic change. The shut-downs are also likely to effect the company itself as Papa John’s makes about 35 percent of its profit by selling ingredients to its franchisees.

Though Schnatter has been sidelined from the company since his July comments, he’s still trying to orchestrate his way back to the helm of the pizza giant he created, according to Bloomberg.

Schnatter has a track record of making derogatory comments. In October 2017, he disparaged the NFL about how it handled players who refused to stand for the national anthem; since then, the company has lost a total of 5 percent of its market share. [CNBC]Erin Hudson