WHAT’S BEING CLAIMED:
- Papa John’s founder John Schnatter confirmed to Forbes that he uttered a racial slur by saying the N-word in a corporate conference call in May.
- The call was a “role-playing exercise,” designed to train Schnatter on appropriate things to say especially on racially sensitive issues to avoid PR problems.
- The incident caused Papa John’s shares to dramatically drop at a significant 5.9 percent.
Papa John’s founder John Schnatter admitted that he said the N-word during a corporate conference call with marketing agency Laundry Service in May.
Forbes Magazine reported the incident in an article on Wednesday, to which Schnatter promptly followed up with an apology in a statement released by Papa John’s saying,
“News reports attributing the use of inappropriate and hurtful language to me during a media training session regarding race are true. Regardless of the context, I apologize. Simply stated, racism has no place in our society.”
According to Forbes, during the call, Schnatter was trying to minimize the scathing remarks he made last year about the National Football League and supposedly said, “Colonel Sanders called blacks n—-s, “and went on to complain that Sanders never faced a backlash.
Sources said that Shnatter was most probably referring to the NFL dropping Papa John as its official sponsor after the founder accused the NFL leadership of damaging the company’s performance due to their failure of resolving the controversy involving the players kneeling in protest during the national anthem. This incident leads to Schnatter stepping down as CEO from the company.
A company spokesman, as told to CNBC, reaffirmed that “Papa John’s condemn racism and any insensitive language, no matter the situation or setting. Our company was built on a foundation of mutual respect and acceptance.”
As an effect of the Forbes article, a significant 5.9 percent drop of Papa John’s shares to an all 12-month low of $47.80 per share was reported in intraday trading on Wednesday. So far this year, their shares are down to 13% as compared to Domino’s which are up at 48.5%.
Crisis communications consultant CEO Dan Hill of Hill Impact shared his insights to CNBC saying, “This is the danger when organizations are tied to a personality….when things are going well and those people are popular and doing smart things, it works. But then you have a single point of failure and it’s that person’s actions that reflect on the entire organization.”
Although no longer the CEO of Papa John’s, Schnatter still remains as the chairman of the board and is still associated with the brand’s image and distinctively promoted in the company’s commercials and its pizza boxes.