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Crisis Experts Debate Future of Papa John’s


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Eight months into the rolling catastrophe formerly known as Papa John’s, it appears the franchised pizza giant and PJ himself have not yet reached the bottom of this murky barrel. Three crisis management experts shared their thoughts on mistakes made, along with best practices to follow if your brand ever finds itself in similarly dire straits.

Oddities and missed opportunities

Rick Van Warner, president of Parquet Crisis Management, has advised companies, executives and their leadership teams through a variety of ugly situations, including the Twin Peaks biker gang shootout in Waco, Texas, in 2015. Asked for his insight on Papa John’s founder John Schnatter and the future of the brand and its franchisees, he pointed to several oddities and missed opportunities as the corporation remained notably silent in the crucial hours following leaked news of Schnatter using the N-word in—of all settings—an executive training session.

Two days later—an eternity in a major corporate calamity—Papa John’s new CEO Steve Ritchie put out a statement underscoring that “Papa John’s is not an individual” and that racism and insensitive language “simply cannot and will not be tolerated at any level of our company.” Strong words, but Van Warner noted Ritchie should have been more direct in addressing Schnatter’s words and actions.

Adding that it’s easy to “Monday morning quarterback” such situations, he said the corporation’s delayed response is “the biggest red flag” and that this outburst occurring back in May should have given the company’s leadership ample time to prepare a proper, thorough response to Schnatter’s resignation as chairman of the Papa John’s board as soon as the initial news story was published.

“In a world where everything is tweetable in seconds and minutes, you have to at least have a holding statement on a problem out within an hour or so, because otherwise people will assume you’re ducking,” Van Warner said.

Parsing Ritchie’s statement, he said the company should have gone further, directly apologizing for Schnatter’s words and actions.

“When a founder owns a third of a public company and is the absolute face of the brand, much like Dave Thomas was to Wendy’s, to separate the founder’s actions from the brand itself is almost impossible.”

Opening the door to scandal

Deb Gabor is CEO of Sol Marketing, a brand strategy consultancy that has led brand strategy engagement for organizations including Dell, Microsoft and NBC Universal. She said it’s unclear whether Papa John’s as a brand can be saved.

“It’s been ailing since long before this incident—with some of that trouble caused by Schnatter himself, and a troubled relationship with the NFL, and some of it related to marketing, pricing, distribution and quality problems,” she said. “This incident may just be the final nail in the Papa John’s coffin, but I’m not in a position to see into the future.”

Listing examples of recent corporate incidents, including United Airlines where a passenger was literally assaulted, she added that many brands are capable of weathering serious situations, including some of the most widely disliked brands.

Gabor underscored Van Warner about the “quite conspicuous” silence of the brand in the hours following the Forbes story that ignited the social and traditional media firestorm.

“When the company isn’t in control of the narrative,” she said, “they leave the door open for the public to drive the story.”

As Papa John’s moves from reaction to repairing the damage, Gabor said the company needs to use the crisis as an opportunity to “authentically convey the positive values and beliefs that the organization does stand for” and share with stakeholders how it plans to reinforce those values through its actions.

Referencing past situations like Subway-Jared Fogle and brands that continue to be defined by a single individual, Gabor said, “Any time a brand aligns itself with a spokesperson—whether that’s the company’s founder, a celebrity spokesperson or any other kind of endorser—it puts itself at serious risk for damage.”

Check out my past thoughts on that topic in the wake of the Jared Fogle incident HERE, and make sure your brand isn’t so personally exposed for the benefit of all stakeholders.

Many consumers are likely to forget and move on from any given scandal in today’s raging wildfire of an ongoing news cycle, but Gabor said such personal failings are especially damaging with brands that evoke deep loyalty.

“When consumers choose particular brands, they’re using those brands to help construct and tell the story of their lives,” she added. “The cars we drive, the sodas we drink, the restaurants we patronize all say something about people to ourselves and to others.”

Don't be that guy/brand

Brad Ritter, founder and namesake of his own company, Ritter Communications & Real World Media Training, said using a high-profile spokesperson can still be a good strategy, but cautioned there are lessons to be learned from this scandal.

“Especially since brands are now so often employing social media influencers, it’s critical that potential spokespersons be carefully vetted, almost the same way politicians do research on opposing candidates,” he said.

Any brands using social media influencers or celebrity endorsements should include moral clauses that can limit the company’s exposure if their brand face soon becomes a brand pariah.

Acknowledging that Papa John’s now has to reassure its major investors and shareholders, Ritter added that communicating with employees and franchisees directly should be a significant part of the plan going forward.

“In crisis situations, companies often focus on external audiences, when communicating with internal audiences is even more important,” he said.

Given Schnatter’s past, Ritter said company morale could hold up just fine unless “management is viewed as ill-prepared and incompetent.”

If you’re in a position of power of a major brand, never forget: Only you can prevent forest fires.

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Tom KaiserTom Kaiser is senior editor of Franchise Times. He can be reached at 612.767.3209, or send story ideas to tkaiser@franchisetimes.com.
 
Beth EwenBeth Ewen is editor-in-chief of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
 
Nicholas UptonNicholas Upton is restaurants editor at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
 
Laura MichaelsLaura Michaels is managing editor of Franchise Times. She can be reached at 612.767.3210, or send story ideas to lmichaels@franchisetimes.com.
 
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
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