John Schnatter

• 1. Introduction

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  John Hampton Schnatter, known to millions of customers as Papa John, was born on the 22nd of November 1961. By 2017 his net worth stood above $1 billion, built on a pizza chain that carried his nickname. Within about a year, he had lost his place at the head of that company. He then spent years in court and in front of cameras, arguing that he had been treated unfairly. How does a pizza business that begins in a tavern grow into one of the largest delivery chains in the world? What turns a founder's remarks into the end of his role in his own company? And what did he try next, once the brand carrying his name no longer answered to him?

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• 2. Broom Closet Origins

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  Jeffersonville, Indiana, is where Schnatter was born in 1961, the son of Mary and Robert Schnatter. His mother worked as a real estate agent, and his father served as a judge in the town. Schnatter has German ancestry. He graduated from Jeffersonville High School in 1980 and earned a business degree from Ball State University in 1983.

  Mick's Lounge, a Jeffersonville tavern co-owned by his father in the 1980s, became the birthplace of the business. In 1984, Schnatter converted a broom closet at the back of the tavern into a small pizza operation. To pay for it, he sold his 1971 Z28 Camaro and spent $1,600 on used pizza equipment. His first customers were the tavern's regulars. The pizzas sold well enough that a year later he moved into an adjoining space.

  The company went public in 1993. A year later it had 500 stores, and by 1997 it had opened 1,500. In the late 1990s, Schnatter moved the headquarters from Jeffersonville, Indiana, to Louisville, Kentucky.

  In early 2005, Schnatter stepped down as president and chief executive officer but stayed on as chairman of the board. He returned as CEO in 2008 and briefly shared the job with a co-CEO in 2010. By June 2019, the company was the fourth-largest take-out and pizza delivery restaurant chain in the world. Its headquarters were then in Jeffersontown, Kentucky, part of the Louisville metropolitan area.

  The car that paid for that first used equipment would go on to have a long and unusual afterlife of its own.

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• 3. The Camaro Returns

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  In 2009, Schnatter publicly offered a reward of $250,000 for the return of his old Camaro. On the 26th of August 2009, he bought the car back for $250,000. The family he had originally sold it to had since sold it on, so he also paid them a $25,000 finders' fee. To celebrate, Papa John's offered a free pizza to anyone who owned a Camaro.

  The original sale dated to 1983, and it had been meant to help his father's struggling business. The money left over after that help went toward starting Papa John's.

  Back in his hands, the car went on display at the company's headquarters in Louisville. The company also owns several replicas, which it uses on tours and for public and television appearances.

  On the 15th of August 2015, the original Camaro was stolen in Detroit, along with two other classic cars. All three had been slated to appear at the city's annual Woodward Dream Cruise. The car was recovered two days later on the city's west side, with minimal damage.

  Within about two years, it would be Schnatter's own words, not a thief, that put his standing at the company at risk.

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• 4. Anthem and Ouster

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  During an investor conference call in October 2017, Schnatter blamed the National Football League for poor financial performance. He was referring to the national anthem protests by football players. "The NFL has hurt us... We are disappointed the NFL and its leadership did not resolve this," he said.

  Papa John's had a marketing agreement making it the NFL's "official pizza company." It also had marketing deals with 23 of the league's 32 teams. Schnatter said the protests were hurting the company's sales. Later that same day, Papa John's announced that the NFL shield and the "official sponsor" designation would be removed from its commercials and advertising.

  On the 21st of December 2017, Schnatter announced that he would step down as CEO amid the controversy over his comments. Chief Operating Officer Steve Ritchie replaced him, effective the 1st of January 2018. The company said Schnatter would still appear in its commercials and on its pizza boxes. He was also its biggest shareholder, with approximately 9.5 million shares, and he remained chairman of the board.

  In July 2018, Schnatter joined an internal training call with marketing consultants. The call included a role-playing exercise meant to help him avoid remarks that could spark public controversy and damage the company's reputation. During it, he used a racial slur, claiming without evidence that Colonel Sanders had used the same word without facing public outcry.

  After the call, the marketing agency's owner moved to end its contract with Papa John's. Schnatter resigned as chairman of the board on the same day the incident was reported. Later that day, he also stepped down from the University of Louisville board of trustees. He has since maintained that the board conspired against him and unfairly forced him out.

  His resignation did not end the dispute. It moved it into the courts.

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• 5. After the Exit

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  On the 26th of July 2018, Schnatter filed a lawsuit in Delaware to gain access to the company's books and records. The company had refused him access after he resigned. He described its procedures as an "unexplained and heavy-handed way" to cut ties between him and the company.

  The company had also adopted a "poison pill" strategy, a defensive measure that limited his chances of buying back a majority stake. Schnatter filed a second lawsuit, in Kentucky, over a dispute about property ownership.

  In January 2019, a judge ordered the company to give Schnatter access to records about his ouster. A settlement of the lawsuits followed on the 5th of March 2019. The company agreed to share all of its records with him and to remove the part of its poison pill that restricted his communication with other shareholders.

  Schnatter, for his part, agreed not to seek to stay on the board after his term expired on the 30th of April 2019. He also agreed to step down before then if a mutually agreeable independent director was chosen. He kept the right to sue if the records showed wrongdoing by the company.

  The company also dropped a requirement that the activist hedge fund Starboard Value, which owns about 10% of the company, vote in favor of the incumbent board. In March 2019, Schnatter still owned 31% of the company's shares. By the 23rd of May he had sold 3.8 million shares, cutting his stake to 19%. By November 2019, it was under 17%.

  That November, Schnatter gave his first public comments since leaving, in an interview with WDRB, a Louisville Fox affiliate. He admitted using the slur during the diversity training call. He said he had done so to convey his hatred of racism and that he was quoting Colonel Sanders.

  The interview turned on pizza, too. "I've had over 40 pizzas in the last 30 days, and it's not the same pizza," he said. "It's not the same product. It just doesn't taste as good." He warned that "the day of reckoning will come." The interview went viral, and numerous parodies appeared online.

  Three months later, Schnatter clarified that he had not actually eaten over 40 pizzas in 30 days. He had tasted them, as a quality inspection activity. He also criticized how the company had been run right after his departure by Steve Ritchie, described as his former protégé. Ritchie had been dismissed after less than a year. Schnatter said he saw more common ground with Jeff Smith, who became chairman in February 2019. "The one thing he and I agree on is that Steve Ritchie is not a CEO," Schnatter said.

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• 6. Allegations and Marriage

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  Two accusations of misconduct, each from years before his ouster, are part of the public record. In 1999, Schnatter was accused of stalking and groping a woman. He claimed she was trying to extort $5 million from him. The situation ended with a confidential settlement.

  A second accusation came in 2009. Schnatter was accused of sexual misconduct involving a 24-year-old female marketing employee. That matter also ended in a confidential settlement.

  In 1987, Schnatter married Annette Cox. The couple lived in Anchorage, Kentucky, and had three children. On the 5th of December 2019, Cox filed for divorce, saying they had been separated for eight months.

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• 7. Ventures and Politics

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  Evergreen Real Estate, a Louisville-based company, was Schnatter's first move outside pizza, launched in 1996. The company owns a number of historic properties in Anchorage, Kentucky, his home community.

  In 2007, Schnatter launched Calistoga Artisan Sandwiches. In 2008, he made a million-dollar contribution to the Louisville Zoo's Glacier Run expansion. In exchange, Calistoga received naming rights to an adjacent water park. Calistoga was mostly shut down in 2012, though three locations continued to operate in Naples, Florida.

  Politics brought Schnatter attention in 2012, when he criticized the Affordable Care Act in remarks to a class on entrepreneurship. On a shareholder conference call, he said he opposed the law because "our best estimate is that the Obamacare will cost 11 to 14 cents per pizza."

  In May 2012, he hosted a fundraiser at his home for Republican presidential nominee Mitt Romney. He later contributed to Donald Trump's 2016 presidential campaign and made supportive comments about the Trump administration in January 2017.

  In 2022, Schnatter spoke at the Conservative Political Action Conference. He attacked cancel culture and President Joe Biden's small business policies. He also pushed a conspiracy theory that Biden created the 2021-2022 Russo-Ukrainian crisis as "a great distraction from all the real issues here that affect Americans."

  At the same event, he announced Papa Farms, a response to the unhealthiness of processed foods and the rise of commercial farms. The farm plans to grow crops without GMOs, pesticides or fertilizer.

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• 8. Giving and Honors

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  In 1998, Schnatter was named National Ernst & Young Retail/Consumer Entrepreneur of the Year. In 2000, the National Jaycees Organization named him one of the Ten Outstanding Young Americans. In 2007, he was inducted into the Junior Achievement U.S. Business Hall of Fame.

  In May 2009, he became honorary chair of the Ride to Conquer Cancer, which benefits Louisville's Norton Cancer Institute. The Kentucky Entrepreneur Hall of Fame inducted him in 2010, and in 2012 he became an honorary initiate of Alpha Tau Omega.

  In December 2015, Schnatter's charitable foundation donated $8 million to the University of Kentucky's Gatton College of Business and Economics. The gift established a research and teaching institute.

  On the 4th of September 2019, the foundation gave $1 million to Simmons College, a historically black college in Kentucky. Its president, Kevin Cosby, told a press conference that actions should speak louder than words, and that this gift for Black education spoke louder.

  Not everyone agreed. Gerome Sutton, a Simmons graduate and member of its board of trustees, said it did not take a rocket scientist to figure out what was going on. He accused Schnatter of trying to pay off the Black community with "30 pieces of silver."

  In October 2019, the foundation also gave $500,000 to Jeffersonville High School to renovate its baseball field. Schnatter had played on that field as a student. It was renamed the John H. Schnatter Stadium.

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