This month’s Brand Chump has to be John Schnatter of Papa John’s Pizza. Schnatter jumped headfirst into the NFL National Anthem Debate at the end of last year, sparking controversy and lighting the fuse for what would eventually be his, and Papa John’s Pizza’s, downfall. It was only in May, however, when he was recorded on a conference call making racially charged statements, that he really started to put his company in jeopardy.
The ensuing fallout has been massive.
The whole idea around being a Brand Champion is that you live for your brand and everything that it represents, emulating the positive attributes of your company at every available opportunity, especially when that company depends entirely on your name and likeness.
When a situation like this unfolds, when a beloved CEO is consistently, unwittingly, and unrepentantly embarrassing, it can wreak havoc on a company’s reputation.
Of course, we’ve seen other business leaders make similar mistakes and overcome them, but they only do so after they have admitted to them, owned them, apologized, and taken measures to rectify those mistakes. It took Schnatter longer than most to do so, and while he could have and should have “fallen on his sword” to make amends, he chose to hang on to his personal pride while the company tanked.
When Brand Champions (or Brand Chumps) screw up as badly as Schnatter, it really affects the brand and its results, and the fallout for this pizza company becomes obvious when you examine the figures.
- Since hitting an all-time high of $90.49 per share in December 2016, Papa John’s stock has lost more than half its value on disappointing same-store sales growth.
- Papa John’s lowered its outlook for same-store sales, expecting sales at current stores to fall between 7 percent and 10 percent this year.
- The “ongoing drama” between Schnatter and current management was “destroying shareholder value,” BTIG analyst Peter Saleh said.
- Same-store sales between July 2 and July 29 were down about 10.5 percent, which current CEO Steve Ritchie blamed on founder John Schnatter‘s most recent media blunder
Take a look at how shockingly it has affected Papa John’s Pizza’s stock value over the last year:
It has gotten so bad for some stores that Papa John’s is planning to cut food costs and royalties, providing increased marketing funds to franchisees to help them weather the N-word scandal that has plagued their ever-falling sales figures. Many have lost up to half their revenue since John Schnatter’s apology.
The Louisville-based company reportedly plans to spend $30 million to $50 million to re-brand their entire corporation and aid North American franchisees.
Make sure not to make the same brand chump mistakes that John Schnatter has made, because the consequences can be truly devastating to your company, as well as your personal brand.
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