Papa John’s: It’s Time to Slice Humble Pie

John Schnatter, CEO of Papa John's, makes news over Affordable Healthcare for employees. Photo Courtesy of Jason Merritt/Getty Images. Above Promotions Company. Tampa, FL 2012.

John Schnatter, CEO of Papa John’s, makes news over Affordable Healthcare for employees. Photo Courtesy of Jason Merritt/Getty Images. Above Promotions Company. Tampa, FL 2012.

John Schnatter, CEO of Papa John’s, first came under attack after his address to shareholders in August. What wasn’t meant to be a public declaration of being against the Affordable Healthcare Act as introduced under the administration of President Barack Obama, turned into a discussion gaining a lot of confusion and animosity towards the pizza chain.

John proclaimed in August that, “We’re not supportive of Obamacare, like most businesses in our industry. But our business model and unit economics are about as ideal as you can get for a food company to absorb Obamacare.” The Politico article containing words from the call went on to include the company would use tactics to protect its shareholders. In the same call John went on to say, “Our best estimate is that the Obamacare will cost 11 to 14 cents per pizza, or 15 to 20 cents per order from a corporate basis.”

Now for the general public who sees that Schnatter was a huge donor and supporter of the Republican Presidential Candidate, Governor Mitt Romney, they can equate the use of his term of Obamacare and his personal support to mean an attack on policies and lack of consideration to employees. However, I do not believe this is where John went wrong. Stick with me, I’ll show you where his words started to bite him.

  • After the shareholders meeting, Papa John’s announced its NFL promotion to giveaway 2 million pizzas.
  • Schnatter says that franchises will more than likely reduce employee hours. This news reignited the public spurring a boycott of Papa John’s.

I do not believe that it is the concern of people who support the healthcare act or not, that is really driving the criticism, it’s the simple math of it all. The mixed statements coming from John has caused this backlash. Here’s why.

The public sees an increase in rates, free pizzas being given away and a reduction in employee hours. Period. John has not clearly addressed the fact that instead of raising rates, the employee hours will be reduced. Although, as seen, it was not swallowed as easily. But making a statement to amend a previous one would have placed some indication that there is an “either or” or not both in this situation. But instead of clarifying the company’s position, he left individuals to ask the question, “why raise the rates and give away pizzas if you still intend to not provide healthcare to your employees and reduce their income?”

Now that probably isn’t the message John was intending on sending, but due to the inconsistency or not providing clarity in their business’ possible solutions, he created an uproar to those who like to do arithmetic, such as Caleb Melby of Forbes Magazine. You see, Caleb decided to break down the proposed revenue of the increase and even the promotional giveaway. Like many others, this giveaway was really putting a wrench in to the thought of customers seeing employees lose income instead of Papa John’s incorporating the insurance. Even in the August call, John indicated that his company is structured to handle such a change. So if this is a manageable change to the business model, why continue to speak about the regulation in a new public appearance? Now this just comes off to the public as a man upset with the outcome of the election.

What really draws my interest as a media professional to his original statement to the shareholders, is that if he had used words to not draw an emotional response to government policy, increasing the price of the pizza would have been forgotten after it was implemented. Instead his words then have tangled with his words now. Truth be told, the cost of food increases every year. In fact, food increases are felt by consumers often throughout the year. The increase would have been assumed by many as the cost of inflation not disdain for providing healthcare to employees. Had emotions over politics never entered the original statement, the majority of the public may have never been the wiser. Just think about it, if Frito-Lay decides to make a huge spend within their company, does the typical American know the reason behind it?

I wanted to give Schnatter some credit from his recent statement. He said he isn’t in support or against the Affordable Care Act. But as mentioned above in his words at the stakeholder’s meeting, that isn’t the truth. It makes it hard for the public to believe, “the good news is 100 percent of the population is going to have health insurance” when a couple of months ago you stated you were not in support of Obamacare. Unfortunately, by the time he publicly mentioned this in a recent appearance, everyone had already stoned him for going against their company’s mission of protecting their best asset, their employees and had NOT forgotten his original comment of being against the healthcare act.

John Schnatter really has only one thing left to do at this point in his crisis, slice up and eat some humble pie. Here is what I recommend:

  • John needs to make one final and clarifying statement on the topic of how his company will handle healthcare as it concerns his employees.
  • His final statement should be either pro-customer or pro-employee. If he has paid attention to the comments, he would realize that none have been highlighted as saying, the public will not pay the extra cents so others can have health insurance. Either way, he needs to make one final statement and stop discussing it from various angles. The inconsistency is not sitting well with customers.
  • The company needs to focus on publicly highlighting their mission to their employees and to the customers. Ensuring to the public, a business that started off small, can still relate to the working class (his demographic).
  • Until this is completed, the emphasis on giving away 2 million pizzas needs to simmer in the oven before serving it back to the public. (Pun intended.)
  • This should all be done before the boycott gets legs and runs away too far for him to fix.

What do you think? How has the Papa John’s discussion played out among your family members, friends or business associates? Above all, please walk away with this reminder to not incorporate political emotions into your company’s public stance.

Leave your comment below as you may be featured in a follow-up article.

 

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Above Promotions is a full service publicity, marketing and promotions company, founded with the purpose to serve an array of clients that are looking to expand their presence in the marketplace. From a local to international market, Above Promotions Company can provide the exposure that goes above your expectations. Visit http://www.abovepromotions.com today.

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Ebony T. Grimsley is the Creative Director and Owner of Above Promotions Company. She is also the recent author of “Because You’re Small: Effective Marketing Strategies for Immediate Implementation.” To find out more information on the book, please visit http://www.abovepromotions.com or purchase online at Amazon, Booktango and other online bookstores

 

 

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Comments
14 Responses to “Papa John’s: It’s Time to Slice Humble Pie”
  1. Mike Carroll says:

    This sounds like it was written by a Dominos-loving Democrat. The average American citizen doesn’t hear about these things nor do they care. I hadn’t heard about any of this until I stumbled upon it on my Twitter feed after someone RT’d it. Obama Care is going to ruin a lot of jobs and businesses.

  2. Well, (Papa) John may have “Better Pizza” but he sure doesn’t have the Best image right now. I find it hard to trust almost anything I read in media these days regarding what notable figures/celebrities have to say.
    It’s just too easy to manipulate the truth and stir things up before everyone finds out the hard way. It’s not good business, it’s not good press, it’s not good.
    I’m glad I prefer a Local Business Pizzeria, Gianni’s in Venice….and I’m sure I won’t be reading his political views in the media anytime soon! Another good reason to Eat Local!
    Brenda Ellison-MyInfoSnap

  3. Thanks for your feedback Mike. Personally, I eat at Whole Foods. Unfortunately, those who are in the media, business or investing world have heard about it since August. Regardless of any political affiliation for any business owner, it is important to recognize a clear message must be provided to the public as a business owner. This is something no one can get around. But thank you for your feedback, it is helpful to hear from those not familiar with the topic or the industry.

  4. Local is the preferred method. Although many franchise owners are local in their community, you’re correct, he does not have the best image.

    At first I thought the media was spinning his words, but to go back and read what he said in August and then his words in November. He has caused way too much confusion and is hurting his brand.

  5. I never understand one’s need to name call when the point of view does not reflect their own. Sad. I’d heard about these comments & I agree, there needs to be clarification of what he plans to do for the very people who actually make these pizzas, deliver these pizzas and take in the money so he can donate to the party of his choice. I don’t eat Dominos or Papa Johns Pizza, I’m that chick that supports the local guy around the corner from me….his pizza is better than the big chains as well as his customer service just for clarification.

  6. That was the suggestion. He needed to pick a side. Unfortunately, the world doesn’t operate in republican vs democrat vs independents. When it comes to hunger and the dollar, all parties are targeted.

    However, I think a lot of local guys are going to see some of the revenue that Papa John’s was seeing unless the owner does a serious pr campaign to fix it.

  7. Lisa Burns says:

    Not a big Papa John’s fan to begin with, I too prefer local pizza or restaurants over chains, the point I take from your discussion is business, no matter how larger or small, should never mix business with politics. There will always be someone who does not agree with your beliefs and will make a point to let others know they do not agree. I do not believe the old saying; “All publicity is good publicity”.

  8. Yes. I think in another post, I should write on the importance of confidentiality within business. If it weren’t for whoever leaking the shareholders meeting, this would be a non-issue for Papa John’s.

    But it’s a lesson for business owners to make a decision to not mix the emotions of politics with business.

  9. Whether it’s raising costs or cutting employee hours, I don’t think it’s anyone’s business how John runs his business. Problem is that he opened the door for criticism by making pubic remarks – hopefully he’ll learn something from that. And I agree with your thinking, he should now make one last, clear statement about what they’re doing in order to resolve any questions. I would hope, that no matter where he stands on the healthcare issue, that he doesn’t try to ride the fence – just stick to his beliefs and be done with it.

  10. Thanks for reading and commenting. A clear stance is needed. This will blow over soon. Every person has a right to run their company and express themselves how they see fit. Consumers can purchase or not purchase, or voice their opinions as well as they see fit. It’s just the cost of business.

  11. I’m already officially boycotting Papa John’s and have encouraged others to do the same. People who suggest that Obamacare is bad for America and American business are insensitive to the health, well-being, and needs of ALL Americans in my opinion. I’m glad president Obama won, I’m glad we have what “they” now affectionately call Obamacare, and I am glad that the supreme court of the United States upheld its constitutionality. As for Papa John, I never liked his pizza anyway and I think Jon Stewart makes the point best here: http://front.moveon.org/jon-stewart-on-papa-johns-and-what-watching-fox-news-is-easier-than/?rc=dtwcap.

  12. The late night shows have been having a field day over this topic. Thanks for reading DJ I AM!

  13. There is a human syndrome, whereby a certain degree of success and wealth lead to a change in one’s perceptions. There are many examples. People begin to think that the rules don’t apply to them (how much time did you spend on personal emails, General?). People begin to think that they ‘need’ 6 star hotels.

    Papa John probably needs a week with a family who is barely making it, some down-and-dirty housework (yard work will do) to remind him that he’s just a normal human being. He could try living on pizza delivery/maker wages himself for that time, and have none of his usual resources or yes-sir staff around. Some follow-up, voluntary community service would be a helpful regime.

    This usually fixes the illusion that one is so important and special that one can sulk and rant if a national election doesn’t go one’s way (should he have more than one vote?). He might also become more grounded about more collaborative management. Everyone needs for help to think rigorously about strategy, wording, branding and policy in a world of complexity, where adult and disciplined thought is needed at all times.

  14. Sounds like a suggestion for the show “Undercover Boss” to do an episode with John.

    Excellent points on strategy and branding!

    Thanks for reading and commenting!

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