Papa John's sales don't deliver following founder controversy

A Papa John's pizza box

A Papa John's pizza box

And yet. Papa John's current executives point to data showing sales got worse right after Schnatter, back in November, said the NFL didn't do a good job of handling players' national anthem protests.

"Clearly it's a hard time for the Papa John's brand, but there is a way forward", he said.

Shares declined by as much as 12 percent in after-hours trading Tuesday.

The latest controversy that resulted in Schnatter's departure as chairman came after revelations that Schnatter had used a racial slur against African Americans in a conference call. "Franchisees and partners have expressed overwhelming support for ... our decision to remove John as brand spokesperson".

"We are not dependent, nor should we be, on one person", Ritchie said.

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Papa John's says a key sales figure dropped 10.5 percent in July, and that it can't predict how long and badly it will be affected by the fallout with its founder. "I couldn't be more excited than I ever have been in my 22 years with the Papa John's brand to flip the switch and look forward, not be distracted by the words and comments of one individual, but look forward to move this brand forward", Ritchie said at the end of the call. A special committee of the board of directors will oversee an outside auditor's investigation into Papa John's culture, including the company's existing processes, policies and systems related to diversity and inclusion.

The company said it expects to "incur significant costs as a result of the recent negative publicity" of between $30 million and $50 million as it revamps its marketing efforts and brand images at "nearly all" of its store locations. "Obviously, the recent events have further evidenced that we need to move on".

But Schnatter said the sales slump started in mid-2016, when Ritchie "assumed CEO responsibilities". Schnatter left the chief executive seat at his namesake company in December previous year. Still, Schnatter, who admits to making those comments, says the company does better when he's there. He remains on the board, and owns 29% of the company's stock. "We have also begun an external audit of Papa John's culture and will address any improvements that are recommended at its conclusion". The company said it was "saddened and disappointed" by the lawsuit, which it called "needless and wasteful".

In a statement on Tuesday, Schnatter said he is concerned about the direction of the company under Ritchie, according to CNBC.

"History shows that the Company performs better with me involved, and it declines when I step away", he said.

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