Having words with John Schnatter, founder and chief executive, Papa John’s International

Having words with John Schnatter, founder and chief executive, Papa John’s International

What a long, fulfilling trip it’s been for Papa John’s [3] founder and chief executive John Schnatter. Since selling his 1972 Z28 Camaro 25 years ago to fund his business, Schnatter has grown Louisville, Ky.-based Papa John’s into the country’s third-largest pizza chain, boasting more than 3,400 locations worldwide. To celebrate, he’s on a cross-country tour in a brand-new Camaro, visiting customers and employees for the “Papa’s in the House” campaign. Since the campaign began in late May, he has visited seven cities.

What have you been hearing most from people on your trip?

The thing we hear is, “I love your pizza,” and when I hear that, then I go, “Job well done.” At the end of the day, it’s all about the food. We spend a lot of time and a lot of money to make that pizza better, and when people take notice and become loyal customers, again, that’s a job well done.

You’ve been aggressive in helping franchisees.

We’ve pushed, easy, $12 million to $16 million back out into the system this year. I’m a young guy, so I like to look 10 years to 15 years out. The shareholders have to win, the employees have to win, and the franchisees have to win.

How’s their access to capital now?

Credit’s tight, but the good operators are not having problems opening their stores. Seventy-five percent of stores come from existing franchisees, but we have an incentive this year where you don’t pay royalties for a year, you don’t pay any fees, and if you get your store open early, I’ll pay you $10,000.

FAST FACTS

BIRTH DATE: Nov. 23, 1961HOMETOWN: Jeffersonville, Ind.PERSONAL: married, three childrenEDUCATION: bachelor’s degree, Ball State University

How long can you afford to do that?

I look at a franchisee as a partner. Once that franchisee is up and going, if you take the average unit, they’re paying us about $35,000 a year. Well, that’s an annuity I have for the rest of my life, so why would I charge them to pay me? Why wouldn’t I pay them to get in business, get open and get successful?

What about your competition? Take-and-bake brands are doing well because people want something a little faster and easier.

Take-and-bake and frozen pizza are increasing. Last quarter the whole [pizza] category was about negative 7 [in same-store sales]. We were actually positive, so we bucked the category every week for the whole quarter. I wish the category were healthier, but we are staying positive in a negative category, which is still pretty good.

Your two big competitors launched smart-phone applications. Is that in the works at Papa John’s?

I think the world’s moving toward smart phones. All the channels, from smart phones to Blackberries to any type of mobile channel, you have to have the capability to handle that.

What’s been your favorite part of the road trip?

There was an autistic child in St. Louis that touched my heart. There also was an 8-year-old boy selling soda pops out on the corner, an entrepreneur. I got to spend 10 minutes with him, and he reminded me of myself when I was young. Then this other young man with autism, he was a 21-year-old guy, and he had a big smile on his face, and I took him for a ride in the car. That touched my heart.