By Amanda Weston
Papa John's CEO is hoping to bury the hatchet with its disgraced founder following a new $200 million strategic investment from the hedge fund Starboard Value.
"What I believe is that we made the best decision that's in the best interest of all stakeholders, our employees, our franchisees, our customers, and ultimately the shareholders, and John [Schnatter] is clearly a very large shareholder," Steve Ritchie, president and CEO of Papa John's, told Cheddar Tuesday.
Schnatter came under fire after news broke last year that he used a racial slur during a conference call. Schnatter eventually resigned as chairman of the company's board months after the incident, but has been feuding with the company ever since.
"I really believe that we'll be able to bring John along with this story. Because it's a great story and we've got a long runway ahead, a lot of work to do. It's been a challenging last year for the brand. But I'm excited about the way forward with this new partnership with Jeff /[Smith]/ and Starboard."
Ritchie, who has known the founder since he started with the company 22 years ago, said Schatter's commitment to quality has always impressed him. It was that commitment to quality that partly inspired Papa John's ($PZZA) rebranding.
"I think we basically have a combined goal that is parallel to where we want to move the business," Ritchie said.
"A lot of work that I've been doing with my team over the last year to work on a transformation of the culture of the company, we've got a fantastic story to be able to tell," Ritchie said.
That story, he added, includes a push for diversity.
"We've been working on diversity and inclusion. I hired a chief of diversity equity inclusion last year, completely revamped our executive leadership team in the last three or four months. We've got now five women on our executive leadership team, and the team has just really been leaning in to determine 'how do we tell this quality story in a more compelling way?'"
The new agreement with Starboard leaves the option for an additional $50 million investment through Mar. 29, 2019. The company plans to use about half of the proceeds to repay debt, with the remaining amount "providing financial flexibility" and enabling Papa John's to invest capital to advance its strategic priorities, according to a press release.
The Starboard deal also adds Jeffrey C. Smith, CEO of Starboard, and Anthony M. Sanfilippo, former chairman and CEO of Pinnacle Entertainment, Inc., to the Papa John's Board of Directors.
For full interview click here.