Papa John’s seeks to improve corporate culture after founder’s failure

Papa John’s International Inc.

is working to improve its internal culture following a series of reputational blows, including revelations last year that the founder of the pizza chain used a racial slur at a conference telephone.

The Louisville, Kentucky-based company, which on Tuesday reported its first annual drop in sales in nearly a decade, said it hired outside experts to conduct a cultural audit, held a seven-hour diversity workshop , equity and inclusion for businesses. office workers and created a managerial position to oversee human resources.

“The more you can work on the internal culture, the more this result will translate into a better overall consumer sentiment for the brand,” company chief executive Steve Ritchie said on the analyst conference call on Tuesday.

Corporate culture is increasingly becoming a point of contact for investors and customers, who increasingly take corporate behavior into consideration when choosing products or services, and when using social media to express their opinions on a company, according to culture experts and analysts.

“It’s about our societal culture, what’s important to them and their personal values ​​in their day-to-day lives,” said Carrie Duarte, a partner who leads the workforce transformation consulting practice at PricewaterhouseCoopers LLC. “Collectively, it’s having an impact we’ve never seen before. “

Papa John’s has sought to sever ties with founder John Schnatter, the company’s public face for years, who has been embroiled in controversy.

Mr Schnatter stepped down as general manager in December 2017 after publicly criticizing the National Football League for failing to address the issue of football players protesting the national anthem at NFL games. Some customers took to social media to disapprove of his views, while a group of white supremacists praised them. The company then apologized for these statements.

Mr Schnatter resigned as president in July after admitting to using a racial slur during a conference call in May. Mr. Schnatter is still the largest shareholder in the company, owning around 30% of the capital, according to FactSet.

The backlash made matters worse for the pizza chain, whose same-store sales growth was already slowing, said Peter Saleh, analyst covering restaurants at financial services firm BTIG LLC.

A spokesperson for Mr Schnatter declined to comment on Friday. Its representatives said in 2018 that Papa John’s management “was using Mr. Schnatter as a scapegoat to cover up his own shortcomings and failures.”

Cultural assessments vary from organization to organization, but they often assess communication practices, behavior and the results of engagement surveys and exit surveys, Ms. Duarte said.

Workshops and cultural assessments help reinforce an organization’s core values ​​for employees, but the key to improvement is a performance and reward system that is consistent with those values, said Jim DeLoach, CEO of the management consulting firm Protiviti Inc.

Starbucks Corp.

closed more than 8,000 US coffee shops operated by the company for an afternoon in May to conduct anti-bacterial training after public outcry arose amid allegations that store workers mistreated black customers.

Papa John’s investment in cultural enhancement will be worth it if it is to compete in the industry, Saleh said, but some consumers may take longer to forgive the brand.

“The investment they are now making in the business, in cultural training, is just the basic foundation they need to make to move the business forward,” Saleh said.

Write to Mengqi Sun at [email protected]

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