Papa John’s sales have gone down drastically recently with the issues of former CEO John Schnatter. These issues started when Schnatter used a racial slur during a conference call this year. Due to the decline in sales the company recently announced that it was planning to cut some royalties, food prices, and online fees for the rest of the year. Along with these breaks in fees the company will be helping franchisees to pay for new marketing and in-store images to remove images of the former CEO. The company has already participated in a “listening” tour where they were reaching out to customers and workers. They also worked with a marketing firm to help rehab its image. Papa John’s shares are down 25% this year and Schnatter still owns 30% of the company which will create future issues.
The decision the company made of removing the CEO was risky in itself, but it was necessary for the image of the company. This is a very difficult position for the leaders of the company to be in because the company could be in jeopardy of closing if the issue is not addressed. In this situation I feel the leaders of this company have already made some good decisions to show the customers and franchisees that they do care and want to make the situation right. By taking on some of the financial burdens for the franchisees it will help to make them believe they are cared about and to continue to work on the success of their business.
The company was put into this situation because the former CEO made a poor decision when making some comments on a conference call. I believe that this can happen when people in power truly believe they have gotten to a point in leadership where the possess the most “power” and don’t think about what issues their actions might cause in the moment.
La Monica, P. R. (2018) Papa john’s is helping out franchisees hurting from the PR crisis. Retrieved from: https://money.cnn.com/2018/08/13/news/companies/papa-johns-financial-assistance-franchisees/index.html