Troubled pizza brand plans investment in marketing efforts
Papa John’s International Inc. on Wednesday announced it would be putting another $80 million toward financial assistance for troubled domestic franchisees as well as investments in marketing the brand, particularly around promoting its new brand ambassador, NBA all-star and Atlanta franchisee Shaquille O’Neal.
The Louisville, Ky.-based pizza chain had announced last year that it would cut royalties and other fees charged to franchisees in response to flagging sales in the wake of public disputes between management and founder and former chairman and CEO John Schnatter.
On Wednesday, Papa John’s committed to extending that assistance through 2020 in the form of lower royalties as well as “royalty-based service incentives and targeted relief,” the company said in a statement without providing further details.
“This announcement enhances the partnership between the company and franchisees by delivering needed investment in the brand and providing franchisees with certainty on the schedule of remaining royalty relief,” the company said.
President and CEO Steve Ritchie said corporate investment in the brand and support of franchisees were crucial to the chain’s future.
“The strength of our brand and of our franchisees are both critical to Papa John’s long-term success,” he said in a statement. “We’re pleased to announce that Papa John’s will make a significant investment in the exciting future of our brand. This is an important shared moment for Papa John’s and our committed franchisee base.”
Bill Green, chairman of Papa John’s Franchise Advisory Council, said, “We appreciate the company’s continued investment in the Papa John’s brand, marketing initiatives and overall franchisee support. We look forward to enjoying the continued benefits of our long-term, successful partnership and to winning together.”
In the agreement with franchisees, Papa John’s also has committed making investments in marketing starting in the third quarter “to amplify the brand’s differentiated position and activate its new ambassador, Shaquille O’Neal,” it said.
Schnatter had long been the face of the chain and its brand ambassador until his fall from grace last year amid accusations of using a racial slur and making other inflammatory comments. Since then he has stepped down as CEO and board chair and has reduced his ownership of the company from 31% to 19%.
The pizza chain has continued to struggle, with domestic same-store sales in the quarter ended March 31 declining by 6.9%.
As of March 31, Papa John’s had 5,336 locations worldwide.
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