Discussion of Marsha's Industry Standard: Dear (Papa) John

[Robin Garr]

Industry Standard: Insider info for those who dine out

Dear (Papa) John

By Marsha Lynch

Back in August, you told some of your shareholders that you’d need to increase the price of your pizza about 11 to 14 cents to “shallow out” the cost increases the Affordable Care Act (“Obamacare”) would burden your business with. And when the cost of business increases, ultimately prices go up, right? I can’t argue with that; although some people tried to — notably Forbes magazine, which published an article with a lot of fancy math that basically boiled down to this: The price increase you proposed would likely result in revenue for the company totaling far, far above the $5-$8 million cost increase you estimated you would be trying to offset.

I wasn’t exactly thrilled with your announcement, but then I don’t own stock in a multi-billion-dollar corporation. Everyone knows a good businessman has to maximize profits for his shareholders. And you must be a good businessman — one only has to look at the story arc of your business to know that.

I’ve heard for years that you started your business in a closet in a bar your father co-owned. And then you sold your ’71 Camaro Z28 to raise capital to buy out your dad’s business partner. Cool story. Even cooler: Later on you missed that car and had a replica built, but it just wasn’t the same, so you went about finding the original car. After a decade of searching, you eventually paid $250,000 to the person you sold it to in the first place for $2,800 in 1984 (another good businessman, obviously!). You celebrated by offering a free large pizza to other Camaro owners all over the country for one day.

But then recently you said Papa John’s franchisees would likely be “forced” to cut employee hours to under 30 a week in order to avoid having to pay ACA-mandated fines for not covering a portion of their health insurance. I’m not OK with that. You know your slogan, “Better Ingredients, Better Pizza”? It’s sort of the same idea as this one: Healthy Employees, Productive Employees, Increased Profits.

Many a screedy little rant has been posted about you on the Internet since then. People sound kind of jealous, don’t they? “He lives in a castle!” they say. Well, I looked at the aerial photos of your 40,000-square-foot home and 6,000-square-foot carriage house. And although there does seem to be moat-like body of water (and is that a drawbridge?), it doesn’t seem to completely surround the house. I mean, any Renaissance festival fantasy regiment worth its salt could probably march right up onto the limousine turntable — but then again, you could just throw the switch to turn it 180 degrees and they’d march right back the way they came.

Listen, I’m glad you’re successful. You’re kind of our “hometown boy who made it” around these parts. Most restaurateurs can only dream of such success. Last fall, you celebrated the opening of the 4,000th Papa John’s by giving away 4,000 pizzas. You gave away untold thousands of pizzas during that Super Bowl Coin Toss promotion last February — on top of the 1 million you gave away during the regular season. And now you’re giving away 120,000 free pizzas a week during the 17-week NFL season — more than 2 million pies! That’s a lot of pepperoni and cheese. You, sir, know how to celebrate.

Anyway, I digress. I wanted to ask you a question: Would you consider helping fund the sort of organization your friends in Congress are constantly telling us is the proper way to fund charity? You know, through private community- and faith-based organizations, rather than government? I know you’ve been generous to charities before.

If so, Dine Out for APRON is Tuesday, Dec. 4. Many local independent eateries are contributing 10 percent or more of their profits to APRON Inc., a nonprofit organization formed to provide temporary, limited financial relief to professional food and beverage industry workers in the Louisville area who work at locally owned establishments and who are experiencing financial distress due to illness, injury or other issues (because many of them, you see, can’t afford health insurance and need to “shallow out” their medical and other bills). Please consider dining at one of the participating restaurants; the entire list can be seen at aproninc.org.

And I hope you had a great Thanks-giving. You’ve got a lot to be thankful for. Last question: Do you guys at Chez Schnatter make turkey pizza with leftovers? Inquiring minds want to know …

Marsha Lynch has worked at many Louisville independent restaurants including Limestone, Jack Fry's, Jarfi's, L&N Wine Bar and Bistro and Cafe Lou Lou. She now works for her alma mater, Sullivan University, as sous chef of Juleps Catering.

Read it on LouisvilleHotBytes:
http://www.louisvillehotbytes.com/dear-papa-john
and in LEO Weekly:
http://leoweekly.com/dining/industry-st ... ine-out-45

Marsha- you are the best. Talk about practicing "Go Big or Go Home" philosophy.
If Mr Schnatter would like to participate he can contact me at gfox@aproninc.org and we will happily add him to our materials.
Or if he would like to give a personal donation there is a handy dandy "donate" button on our website.

Marsha, if you're "not OK" with the potential actions of Papa John's franchisees, why don't you pen an open letter titled "Dear Papa John's Franchisees" ? Why lecture the CEO on a topic over which legally he has no control?

[Robin Garr]

Why lecture the CEO on a topic over which legally he has no control?

Perhaps because he has vividly been showing his @$$ in public on this issue? Just guessing ...

Robin I suspect my interpretation of his comments and yours are somewhat divergent. Admittedly he did himself no favors by entering the political arena in the first place. But (predictably) his remarks have been consistently misconstrued, here and elsewhere once he made that move.

I haven't heard anything really new other than that Papa John's will raise food prices to cover higher Obamacare costs for corporate employees and that franchisees will avail themselves of their perfectly legal right to set hours as they see fit, something Mr. Schnatter cannot control. I presume that franchises are the majority of PJ restaurants but I really don't know the number. In any case, you can't retroactively change the law and give corporate HQ control over franchise staffing.

[Robin Garr]

Robin I suspect my interpretation of his comments and yours are somewhat divergent.

Yeah, probably. I don't know if your background is MBA or business. I'm a writer, an English major, a journalist and a seminary student.

I see this as an image thing. The public face of Papa John's - literally - is uttering political statements that resonate in the aftermath of a close (but not that close) national referendum. That matters. Corporate fine print may matter in the balance sheet or even in the courts. But in the public arena, not so much.

She did good.

He should totally jump on this and make it a really big deal. It's who he was and wants to be.

The best PR known- better than a Peyton. Every restaurant employee, worldwide, automatically loves you.

(drops his knife and walks away)

You know what would have made him a hero instead of an ass? If he instead had said that they'll have to raise the price of a pizza by 50¢ because they're giving employees good healthcare AND a retirement plan.

You know what would have made him a hero instead of an ass? If he instead had said that they'll have to raise the price of a pizza by 50¢ because they're giving employees good healthcare AND a retirement plan.

Yup. Pick a way...

Right?

Robin I suspect my interpretation of his comments and yours are somewhat divergent.

I see this as an image thing. The public face of Papa John's - literally - is uttering political statements that resonate in the aftermath of a close (but not that close) national referendum. That matters. Corporate fine print may matter in the balance sheet or even in the courts. But in the public arena, not so much.

Agree 100% with that and it seems his marketing people have had him write a column recently to clarify. Hard to put the genie back in the bottle though.

He could set up a group insurance plan for the franchisees to keep the costs lower...just a thought...

Marsha-loved the piece!

First, I totally disagree with Schnatter's original remarks and not providing employee healthcare. However, Dan has a very good point- Schnatter can't do anything about Franchisee locations. While it may appear to many as this is one company, there are actually many different companies that make up Papa Johns- the corporate stores, and all the different franchisee companies. The latter are their own companies with their own employees and they are may be unable to set-up a group health insurance policy even if they want to.
However, the public pressure seems to have already resulted in a change in statement: http://www.forbes.com/sites/rickungar/2 ... ployees/2/

Now, let's hope the franchisees fall in-line .....
Deb

LOVED the article Marsha. Nice job.

Marsha, if you're "not OK" with the potential actions of Papa John's franchisees, why don't you pen an open letter titled "Dear Papa John's Franchisees" ? Why lecture the CEO on a topic over which legally he has no control?

Well,

A: I didn't consider this a lecture; more like a gentle ribbing. I'm pretty proud of my "limousine-turntable" joke; I neither called for a boycott nor slammed his products, and

B: I spent hours researching his statements, comments, and history, to ensure I would in no way misconstrue what he said, or "take it out of context". HE told his shareholders (via a conference call, NOT at a press conference) the price of pizza would have to go up. So, raise it already! Thousands of people have said they'd gladly pay the difference to see his (and his franchisees') employees get basic healthcare.

And although he did not say he would personally cut hours to avoid either providing such a basic human need or to avoid paying the fines for avoiding it, HE definitely put himself out there by saying his franchisees would likely be forced to do so. If he, which I'm sure is true, legally has no control over his franchisees' actions, what's he doing spouting off about them? Look, I read his "walk-back" essay very, very carefully. Nothing he said there contradicts what I said here.

Anyway, the largest point is this: He's built his empire in the same town where we have now got a home-grown charity which fits, exactly, the sort of model that small-government types are constantly saying we have to go to: Community-based! No help from government! And if you read carefully, all I really did was ask him to Dine Out for APRON on 12/4, and to check our website for which restaurant to do it in. NOT to donate a portion of his profits, or write us a check directly.

Although, if he thinks about it - that single act might get him enough positive press to make up for the ill will he's garnered in the last few weeks. Win-win.

Your move, Papa.