John Schnatter: A Broom Closet Oven, a Puffery Win and the Papa Johns Exit

Got something to say to this podcast? Send a voicemail, and you might hear yourself on the next episode!

In 1984 John Schnatter sold his 1971 Camaro Z28 for $1,600, bought used pizza equipment and set it up in a converted broom closet at the back of his father's tavern in Jeffersonville, Indiana. The bar's patrons were his first customers, and within a year he took over an adjoining space. A free cup of garlic dipping sauce with every order set Papa John's apart from older chains. The company went public on the NASDAQ in 1993 under the ticker PZZA, reached 500 stores by 1994 and 1,500 by 1997, and advertised better ingredients and better pizza. Pizza Hut sued for false advertising in 1997 and a federal court ordered the campaign pulled, but in 2000 an appeals court overturned the ruling, finding the slogan was puffery: subjective boasting, not a measurable claim.

Schnatter made himself the face of the brand, appearing in its commercials. In 2009 he offered a $250,000 reward to find his old Camaro and bought it back. In late 2017, with the company the NFL's official pizza sponsor, he blamed the league's handling of national anthem protests for weak franchisee sales on an earnings call; the sponsorship ended early and he stepped down as CEO on January 1, 2018, staying on as chairman. In July 2018 he confirmed reports that he had used a racial slur during a media training call and resigned as chairman the same day. In 2019 activist fund Starboard Value invested $200 million, its CEO became chairman, and Schnatter agreed to leave the board permanently and drop his lawsuits.

• Schnatter gave $5 million for naming rights to the University of Louisville football stadium and another $10 million for its expansion, with naming rights through 2040.
• The University of Louisville removed his name from the stadium after the July 2018 report.
• Starting in May 2019, he sold shares over 12 months until his stake was down to 4 percent.
• In November 2021 a rebrand redesigned the stores and logo and dropped the apostrophe from the company name.
• The chain has grown to more than 5,400 locations in 50 countries.