It seems Papa John is not just about being a giant pizza company these days. That is because many reports are suggesting it suffers from a plethora of deeply-rooted issues. And they are, in fact, nothing close to the racial slur on a conference call courtesy of its founder. According to Forbes, the company is suffering from a “toxic” work environment.
The news organization claimed to have interviewed at least 37 employees, both current and former. The interview resulted in a discovery that revolves around inappropriate behavior and scandalous conduct. All of these only painted John Schnatter’s portrait even blacker as well as the pizza empire he created.
During the wake of the report, Papa John’s shares sold off just nearly 5 percent. Its stocks even whipsawed, especially since new revelations came to surface. These revelations, in particular, were greatly focused at Schnatter. And with the recent selloff, the company’s shares are now down to less than 1 percent since the scandal arose.
As per Schnatter’s attorney, Patricia Glaser, the story did not only contain inaccuracies, it is also plagued with multiple misrepresentations. She adds that it is always easy to come up with “false statements” when the person behind it is hiding “behind the cloak of anonymity.”
Glaser announced that the Board and the special committee have continuously acted without an investigation into the fact. “It’s a perfect example of ready, shoot, aim,” she said.
The report revolves around the toxicity around Schnatter, including a fraternity-like culture which he seems to promote. These issues reportedly disparaged women and have even encouraged employees to spy on their very own colleagues.
There are also a number of sexual incidents, most of which involve the founder himself. The report continues suggesting that there are at least two confidential settlements.
Papa John recently released a statement, focusing on the alleged issues thrown at the company and its founder. “We take this matter seriously. If anything is found to be wrong, we are determined to take appropriate action,” the statement reads.
There is another issue that suggests Schnatter’s way of protecting himself. He is believed to have promoted – and even hired – employees who are loyal to him. Among them is none other than Tim O’Hern and Steve Ritchie, the president and current CEO of Papa John Pizza, respectively.
In the report from Forbes, a former senior executive said that Steve, in particular, got to where he is because of John. And because of that, he is not going to anything to turn on the founder.
The report added that there are around six employees who questioned the promotion of Steve to a higher rank. They believe that he is not qualified at all. And if not for his loyalty to Schnatter, he would have remained in his old position.
Ritchie is also said to be promoting people based on his personal relationships with them. In fact, there is an inner circle in the company and it consists of O’Hern, Tim Newton (Vice President of Global Technology Operations), Edmond Heeland (Senior Vice President of North America Operations), and Dustin Couts (Regional Vice President).
Following the damning news, it is only expected for the company to face a challenge which seems to be unconquerable. This, in particular, will be hard for Ritchie, as he has to convince internal and external stakeholders that whatever is happening is just a meaning exercise that will soon lead to change, not a PR stunt. As seen in other companies facing such backlash, it is easy for big brands like Papa John to lose its strength in the market. Unless, of course, if it can find a way around it.