Papa John’s Pizza founder and chief executive John Schnatter hasn’t taken many days off since returning to day-to-day operations in late 2008. Since then he has led the 3,687-unit chain to gains in market share and its stock price, as well as its most recent 6.1-percent gain in first-quarter U.S. same-store sales. But some days he likes to lead by not showing up at the office at all.
“There are days when I intentionally don’t come in to make my executive leadership team think critically and make decisions,” Schnatter said just days after a trip to Papa John’s international markets. “They’ve got to know how I’m going to think.”
After the April resignation of co-CEO Jude Thompson, Schnatter is now sole chief executive of the concept he started 27 years ago. He is tasked with maintaining sales and unit growth domestically and breaking through abroad — things he feels are best driven from the inside out.
People outside of the company will get a taste of Schnatter’s leadership style and business strategies, too, when he delivers a keynote address at the upcoming Winning Ideas from Successful Entrepreneurs Summit. The event, presented by Restaurant Hospitality with Nation’s Restaurant News, and industry veteran Gov. John Y. Brown, aims to showcase the secrets to success of the industry’s notable entrepreneurs.
HOMETOWN: Jeffersonville, Ind.
EDUCATION: bachelor's degree, Ball State University
PERSONAL: married, three children
BIRTHDATE: Nov. 23, 1961
How is Papa John’s more entrepreneurial now that you’re back running the show?
Our balance sheet is cleaner. Even in this high commodity market we’re approaching records for profitability. Wall Street understands that we’re making inroads in scale, pipeline, market share and unit economics.
I understand the business model and the scaffolding that holds this place together, but a vision’s worthless unless you bring people along. We do things differently around here, and that’s why I’m big on promoting from within. People from outside don’t understand the Papa John’s way. We’ve brought in professional management from the outside before, but I just haven’t been impressed.
If you just have a so-called professional management team with so-called good corporate governance, you’re aligned for failure. We have world-class governance here, but you’ve got to have an entrepreneurial spirit in there, too.
What gave you confidence on your international visits?
We went through the school of hard knocks, tolerating pain for growth. For the first four years we were miserably unsuccessful. Franchisees wanted to do something that wasn’t the Papa John’s way and would say, “This is how we do it down here.”
Just in the last 30 months … they’re following our lead with ingredients, branding, sourcing and the use of my image. It’s taken 10 years, but now I see a product that’s world-class and tastes the same in Chile as it does in Chicago.
The company had franchise incentives in place but now is asking for higher royalty contributions. How do you get franchisees to buy in?
Unit economics are something we look at on a daily basis, and when our food, labor and mileage costs go up, I know when franchisees will get restless. [But] they’re not going to help themselves if it’s not collaborative. I know we need to push money into the system, but let’s earn it. The franchisees will get rebates, but they have to earn them through sales goals.
Your “Better ingredients, better pizza” positioning gives Papa John’s a strong quality claim, but how do you drive market share when consumers still need value?
The consumer knows we’re better, and we can get a little bit more for our pizza, and that’s helpful. But the government has blown $2 trillion, and that’s going to cause inflationary pressure and a horrendous commodity market. But with our slogan, we’re not going to cut corners on quality or portioning.
We’re going to be fundamentally sound and stick to our guns. A [competitor’s] $10 any-pizza deal is going to set parameters for what you can get [a pizza for], but we have incentives in place with franchisees to drive their transactions and promote their online business.
Contact Mark Brandau at mark.brandau@penton.com.
