Newly released audio and transcript files reveal a shameful story of corporate cancel culture run amok.
Newly released audio and transcript files reveal a shameful story of corporate cancel culture run amok.
I f you get asked in a corporate setting to “role play” or to have an honest conversation about “diversity” or racism, make sure you have your own recording or transcript. Or, better yet: Don’t play along. That is one lesson from the continuing saga of John Schnatter, the founder and “Papa John” of Papa John’s Pizza. Schnatter is still trying to rebuild his reputation after what increasingly looks like a vindictive smear campaign three years ago engineered by the ad agency hired by his own company. Only now, after a court order unsealing evidence in Schnatter’s lawsuit against the ad agency, can the public review a recording and transcript of the private conference call that sank Schnatter’s career and destroyed his good name.
With the newly released evidence, we can now get an inside look at a saga of culture clash and betrayal. This is a story of corporate cancel culture run amok, and the only thing that makes it different is that the target was a guy big enough to fight back. If Schnatter were anything but the founder, chairman of the board, and largest shareholder of the company, what chance would he stand?
The Founder
Papa John’s wasn’t just where Schnatter worked; it was his company, and he was its public face. As an unsympathetic 2018 profile in The Ringer acknowledged:
[Schnatter] really did build the company from modest origins. When Schnatter was just out of college [at age 22], his father, Robert Schnatter, invested in a failing bar, Mick’s Lounge [among other businesses], and Schnatter fils, who’d worked in pizza joints throughout high school and college, set up some used kitchen equipment in a converted broom closet and within months had his own booming pizza business, which eventually grew into a multibillion-dollar company . . .
A 2009 Associated Press article says Schnatter sold his beloved Camaro in 1983 for $2,800 and “the money helped save his father’s tavern in Jeffersonville, and he used the rest to start what would become the worldwide pizza business.” . . . The sale of the Camaro funded only part of Schnatter’s nascent pizza empire — he needed a $3,500 bank loan, cosigned by a wealthy uncle, to buy out the Mick of Mick’s Lounge and start his pizza empire. Building Papa John’s, even with that leg up, was still an impressive feat of entrepreneurship . . .
On that fateful conference call, Schnatter described the building of his business:
When I get the pizza wrong, they don’t eat it. When we get the pizza wrong, they don’t sell it, then our people don’t make their bonus. . . . You ought to close a restaurant at 2:00 in the morning and try to get $5,000 to the bank without getting robbed. . . . You never forget the fact that you go home with burns on your arms and that you have to make the pizza, you know, cook the pizza, and deliver the pizza because the guy had a crash or had a wreck or didn’t show up. . . . Everything we do in the stores is just hard. I mean, fresh packed sauce is harder than paste. I mean, milking cows is hard. Slapping dough is hard. Delivering pizzas is hard.
The Target
Schnatter became a high-value target in the culture wars a decade ago. In 2011, he pulled Papa John’s ads from Wonkette after the site mocked Sarah Palin’s then-toddler son for having Down syndrome, making Schnatter a long-running butt of retaliatory attacks by Wonkette’s sister websites in the Gawker Media universe, such as Deadspin. In 2012, Schnatter criticized Obamacare as bad for his business, and some Papa John’s fans rallied in support after he came under fire for that position. Schnatter was also a multimillion-dollar donor to Americans for Prosperity and other Koch brothers pro–free-market initiatives, teaming with them to endow scholars at the University of Kentucky and the University of Louisville. Schnatter himself valued his total donations to Koch-related projects at $53 million.
In November 2017, after a disappointing quarter for the company, Schnatter complained on a quarterly earnings conference call with analysts that he felt that the NFL had damaged itself by the lingering “debacle” of controversy over national-anthem protests led by Colin Kaepernick:
Now to the NFL, the NFL is hurting, and more importantly by not resolving the current debacle to the player and owners’ satisfaction, NFL leadership has hurt Papa John’s shareholders. Let me explain. The NFL has been a long and valued partner over the years, but we are certainly disappointed that [the] NFL and its leadership did not resolve the ongoing situation to the satisfaction of all parties long ago. This should have been nipped in the bud a year and a half ago. Like many sponsors, we are in contact with [the] NFL, and once the issues [are] resolved between the players and the owners, we are optimistic that [the] NFL’s best years are ahead, but good or bad, leadership starts at the top. And this is an example of poor leadership.
You need to look exactly how the ratings are going backwards. Last year, the ratings for the NFL went backwards because of the elections. This year, the ratings have gone backwards because of the controversy. And so, the controversy is polarizing the customer, polarizing the country, and that’s the big difference here.
At the time, Papa John’s was a major sponsor of the league — the “official pizza of the NFL” — and spent a quarter of the company’s advertising budget, some $40 million a year, on its NFL sponsorship. It was not unreasonable, then, for the nearly double-digit declines in TV viewership for NFL games in two successive seasons from 2015–16 to be a serious business concern for Papa John’s. As Jim Geraghty noted of the counter-reaction at the time:
Within hours of Papa John’s pizza founder and CEO John Schnatter claiming that declining NFL ratings were to blame for the company’s poor quarter, the company became the latest . . . well, political football. Deadspin labeled him a “crybaby loser,” and Slate declares the contention is “not really an idea anyone should ever express out loud.” . . . Deadspin’s rant about Schnatter includes a lengthy denunciation of the quality of Papa John’s pizza.
In February 2018, with its stock price down by a third, the company dropped its sponsorship of the NFL. Its competitor Pizza Hut stepped in to replace it.
Being active in hot-button culture-war fights while heading a publicly traded company is not a great idea, but aside from the Trig Palin controversy, most of Schnatter’s political profile was directly related to free markets and his business interests. In the Obamacare battle, Schnatter was commenting on legislation that directly affected his company’s bottom-line. In the case of the NFL protests, he was briefing investors on one of his company’s most important business relationships. And his public comments on the anthem protests, for which he was broiled by left-wing media, did not even take aim at the protesting players so much as at the league.
The Explosion
In July 2018, a bombshell story broke. Schnatter had resigned as the company’s chairman after he “used the N-word on a conference call in May” with Papa John’s ad agency, Forbes announced in a story titled “Papa John’s Founder Used N-Word On Conference Call.” Much of the press coverage, which followed the Forbes story, was similar. German Lopez of Vox wrote, “Not using the n-word is a basic show of restraint and respect — the kind of restraint and respect consistently demanded of black people in American society. That Schnatter couldn’t live up to even this bare minimum is a strong sign that he shouldn’t be representing a big pizza chain that’s trying to repair its image.”
Schnatter was forced to resign as a trustee of the University of Louisville, under fire from the local NAACP. His wife of 32 years filed for divorce. The fallout for both the company and its founder (who held nearly a third of its shares and a seat on the board) was ugly:
Same-store sales fell 7.3 percent in 2018, the company’s shares plummeted, and it lost big partnerships with Major League Baseball and several sports teams. . . . After the incident, Papa John’s scrubbed Schnatter from promotional materials and the company logo. His name was removed from the Center for Free Enterprise at the University of Louisville, and the Papa John’s name was removed from the school’s football stadium.
Was this justice done to a bigot, a politically correct overreaction, or something more sinister? Unlike a lot of targets of cancel culture, John Schnatter has a lot of money, plenty of free time on his hands, and a combative enough nature to fight back. He launched lawsuits and a coordinated public-relations push of his own: “In a 61-page letter sent after his resignation, Schnatter accused Papa John’s senior executives of ‘frat club’ behavior, including sexual harassment and bigotry.” He set up websites to get his side of the story out. He ate 40 Papa John’s pizzas in a month, in a publicity stunt to critique the state of the company’s product after his departure. He donated $1 million to a historically black college in Kentucky.
Now that we finally have a public record of what transpired on the entire call, it is clear that Schnatter — who had no prior record of racial incidents — has been the victim of character assassination. It appears that the Forbes article may have been revenge by his ad agency after Schnatter fired them. Schnatter alleges, not without reason, that the whole thing was an ambush from the beginning, as the agency was already on thin ice with the company. Either way, the reactions by the ad-agency personnel on the call are symptomatic of people too saturated in left-wing political assumptions to see Schnatter with any measure of fairness or perspective.
The Ambush
Early in 2018, Papa John’s hired Laundry Service, a Brooklyn-based ad agency owned indirectly by Casey Wasserman, the grandson of legendary Hollywood mogul Lew Wasserman. Laundry Service’s assignment was to manage some of the public-relations blowback from Schnatter’s NFL “debacle” comments. Schnatter now says that the relationship never went well, and that Laundry Service was in over its head on such a large account. The company parted ways with the ad agency in June 2018, after the call and before the Forbes article was published. Schnatter says that he fired them. Forbes, which apparently drew its report from Laundry Service sources, claims that it was the ad agency that ended the relationship. The facts of the story appear to support Schnatter on that score:
The NFL incident forced Schnatter to lie low, and Papa John’s diminished his prominence in advertisements. That change did not sit well with Schnatter. He personally hired a marketing agency (not Laundry Service) to create ads featuring him that would air in key markets, a source close to the company told Forbes. Then, in May, he pushed out Papa John’s CMO Brandon Rhoten, who lobbied to keep Schnatter off the airwaves, multiple insiders say. With Rhoten gone, Papa John’s tasked Laundry Service with helping to manage Schnatter’s comeback. . . . [In July 2018,], Laundry Service laid off 10% of its workforce in response to financial pressure, attributable in part to its revocation of the Papa John’s contract.
Schnatter, in his lawsuit, says that Laundry Service actually wanted to run an ad campaign replacing Schnatter with Kanye West — not the first person you’d identify with stilling the waters and steering away from controversy. Ironically, according to Schnatter, he vetoed that choice in part because Kanye’s songs use the N-word.
The conference call at issue took place on May 22, 2018. According to a report prepared by former FBI director Louis Freeh’s firm (working for Schnatter’s lawyers), Schnatter expected the call to address new marketing initiatives, but “instead, when the call commenced, Mr. Schnatter was informed that the focus of the call would be ‘diversity training,’ and would include ‘role-playing exercises’ to foster a discussion of race and diversity.” The recording and transcript do not mention either “diversity training” or “role playing,” but they do reflect that Schnatter had been sent a document just before the call that he had complained of having little time to review, he was asked, “Do you want to do this exercise now?” and he went along. The call then focused entirely on how Schnatter could handle interviews with sports journalists Stephen A. Smith, Darren Rovell, or Bill Simmons about the anthem protests and race.
Jason Stein, then the CEO of Laundry Service, told Schnatter that “the goal is . . . to clear the air and John’s name to as many consumers as possible in as broad a way as possible as quickly as possible. So that’s the point of this sort of small media blitz tour,” which he proposed starting with Smith because “we like him because he’s black and he agreed with John’s comments” and felt he would give a fair hearing. The other participants on the call besides Schnatter and Stein were Papa John’s CEO Steve Ritchie, Papa John’s marketing and advertising vice president Katie Wollrich, and Tim Polder of Laundry Service. A few other unidentified Laundry Service personnel seem to have been listening in, and were caught in a hot-mic incident at the end.
The setting of the call was a frank conversation among senior people and public-relations professionals about managing the image and communications of the company chairman: What to say, what not to say. Any lawyer or PR person who has ever done witness preparation or media training will know the drill. The whole point of this sort of thing is to candidly hash out a message that is true without creating trouble. People getting walked through such paces are invariably going to vent some of their frustrations about being in this situation. It was not a management setting or a public event. It was supposed to be a situation of trust. The call is, in several places, amusing for Schnatter’s bluntness, which the Laundry Service people found unsettling.
The call transcript gives some sense of Schnatter’s sentiments about the anthem protests. Schnatter expressed a businessman’s concern that the players were harming themselves economically by continuing the protests, but acknowledged that this was not a safe opinion to air in public:
I don’t think the players are going to let up. And I say that because when I did talk to the players, I think I talked to the guy from Philadelphia. I talked to somebody who was a direct source to the players, and I said, “do you know, do you realize they’re going to destroy their future income,” and the guy said “the players don’t care.” I’m like “whoa, whoa, whoa. You know, when the stands are half full and sponsorships go down 50 percent, that’s going to affect the players.” He said “they don’t care.” That shocked me. When I was going through this it absolutely shocked me that I said “hey, they’re shooting themselves in the foot, don’t they know that, and they don’t care.” I hope for the country and for the league they get it resolved, but I’m hesitant. . . . I think it’s not healthy for them to protest. Because it’s not really getting to the cause. I think it’s unhealthy. I think it’s just making things more divisive. I won’t say that because I don’t want to give you guys a heart attack, but I think the kneeling has made things worse for everybody.
That said, Schnatter reserved his real anger for NFL commissioner Roger Goodell and for Donald Trump. Here is Schnatter’s take on Goodell and the NFL owners:
You know, I just attacked Goodell to get it resolved because it was hurting our business. I mean, it was hurting everybody’s response to the NFL business . . . there was nothing in there that was racist, I mean, or attacking the players. It was like I think this is the wrong venue. I think you’re hurting yourself, and then the Goodell guy, I mean, I’ve never met a bigger coward. I mean, what he’s doing, he’s destroying these players’ bodies, he’s destroying these players’ minds. They’re all beating their wives up. He’s destroying their families. They’re all on steroids or pot, and now he’s going to let them protest, he’s going to destroy their future income. I mean, there’s nobody doing more harm to the players than Roger Goodell. I don’t think I can say that [in public]. . . . Looking back on it, I wish I would have called Goodell out by name because then I would have solidified who I was attacking.
I’m trying to give them advice . . . because Jerry [Jones] said “well, if they don’t kneel, they don’t play.” I said “whoa, slow down here a little bit, Hoss, because you’re going to further divide the situation.” That was my counsel to both Jones and [Dan] Snyder. . . . When I talked to Fred Smith, Peyton Manning, the Redskins, the Cowboys, I said “listen, you guys are going to lose, lose, lose, lose, lose — this is no good for anybody, any of us.” And then . . . I said “we’ve got to find, you know, eight or nine leaders in the country that are level-headed and not going to fly off that will sit down with the players and, you know, get them what they want. At the same time, you know, not destroy the league, destroy the players’ future income, destroy sponsors, destroy the fan base, et cetera.
In Trump, Schnatter did not find “level-headed” leadership. In fact, he blamed the president for sabotaging his effort to resolve the anthem controversy collaboratively:
If you really look at it, Trump did with the NFL what he’s done with the whole country. He’s the one who set all this sh** up. He’s the one that got everybody inflamed. . . . Why I’m hesitant to even answer the questions in the first place is because it wasn’t intentional to be insensitive to police brutality. I mean, that wasn’t even in my mind or, you know, to be anti-supportive . . .
I had the head of PepsiCo, head of Fed Ex, we asked for the player association, we had Mike Pence. . . . Before all that went down, I tried to get everyone in the room and say, “hey, can we resolve this to everybody’s satisfaction.” And the owner of the Cowboys . . . I didn’t want Jerry there because Jerry would blow it, but I wanted Charlotte Anderson there because she’s level-headed, Fred Smith with Fed Ex, Indra Nooyi [the CEO of Pepsi].
I had a bunch of people that I felt like were level-headed and to get this done with the unions and Pence. We were going to meet at the White House on a Friday. And this was 90 percent put together, and Trump shot his mouth off and screwed it up all up. See, once Trump put his hand in the pie, then there was really no way to meet at the White House and get this resolved.
Schnatter was, plainly, frustrated at how he was being portrayed in the media and the difficulty of proving he’s not a racist in today’s media environment — a charge that seems to have been aired in the Laundry Service memo he was sent:
When you put this in front of me 12 minutes ago, John, you’re a racist, well, it’s going to take me awhile to get out of my shell because this is brutal if you’re me and you’ve been called a bigot for six and a half months. That’s why I need to study it . . .
Especially something that is this delicate. I mean, this is like threading three needles at the same time. It’s like I didn’t say anything racist, but you can’t say I didn’t say anything racist.
In response to a question about distancing himself from online racists, Schnatter pointed to the absurdity of this by describing real, vicious racism that horrified him growing up in Indiana:
It’s such a bizarre question. It just was not the way — we had a town outside of Jeffersonville called Utica, and there’s a sign going into Utica in the ‘60s and ‘70s that says if you’re black don’t come into Utica after dark, and that was really frowned on not only in our community but in our family, so we grew up with this bullsh**. You know, they used to drag black people behind a pickup truck until they were dead. I mean, the question’s kind of way out of line just how gruesome these alt-right members are. And I don’t think I want to say that, but anyway, I think you get the gist of how I feel about it.
Stein and his team pressed Schnatter to distance himself from a $1,000 donation to Trump. Schnatter noted that he was really a Mike Pence guy, not a Trump guy, and that $1,000 is not a big deal to a man who put $53 million into the Koch network:
SCHNATTER: The Trump thing, I don’t know how that guy got a thousand bucks, I really don’t.
STEIN: You can say that. You should say I must have had too much to drink that night. That’s it.
SCHNATTER: I feel like I probably did it as a joke. Now that I think about it, that’s probably what I did because I’m friends with Mike Pence, real good friends, and he was governor of Indiana. He never called me unless he wanted money. That’s okay. I like the guy. I like what he stands for. . . . He’s too religious for me and he wears it on his sleeve. . . . Policies actually are very healthy and very good for America. But I think they were pounding on me to give Trump money, and I said, you know, “here’s a thousand bucks, get off my ass.” That’s what I think I did, knowing me. . . .
If I was — if Trump was really my guy in this election against Hillary Clinton, well sh**, I probably would have given the guy two million bucks. . . . I was half drunk. I sent the guy a thousand bucks, whatever you want me to say, however you want me to say it. I have a feeling that was probably the truth.
The Word
As the call wound down, it appears from the recording and transcript that Schnatter (unmuted) began venting to his team about the situation he was in, while Stein (on mute) started venting to his team about their shared loathing of Schnatter, and the Laundry Service team recorded both conversations. Schnatter complained about prior PR and ad agencies refusing to let him talk, and that’s when he said this to Ritchie and Wollrich:
I got to tell you, heaven forbid this company if they’re not going to use me at all. After I’ve looked at this research, I mean, I’m just not seeing how you’re not going to tell the Papa John story and let them – what bothers me is Colonel Sanders called blacks n******. I’m like, I’ve never used that word. And they get away with it. [UNINTELLIGIBLE CROSSTALK] Yet we use the word debacle and we get framed in the same genre. It’s crazy. The whole thing’s crazy.
Should Schnatter have used that word, in quoting what somebody else said? Not in a public setting, surely — and maybe not wisely here, either. But his whole point was that this was an example of a bad thing he wouldn’t say. Who among us, even those of us who would never use that word, has not described something bad to make a contrast? This is like what the New York Times did to Donald McNeil, but worse, because there isn’t even the excuse that Schnatter was talking to kids.
Stein and his team, meanwhile, immediately lit into Schnatter even before the “N-word” was uttered. You can listen here to the highlights:
STEIN: I think by Sunday John won’t be working . . . [UNINTELLIGIBLE] anymore. . . . This is what happens when a sociopath spirals. [FEMALE LAUGHTER]. . . . I hope he gets f****n’ sent out to the pasture on this shit. I really, really f****n’ do.
UNIDENTIFIED FEMALE SPEAKER: All of his answers just said a lot about him. They were very revealing.
STEIN: Yeah. I mean I already, that’s already all been revealed to me. That’s why I just want him to go out and talk.
You need to read the rant session by the Laundry Service team at some length to truly taste their open contempt for their Midwestern client and their incomprehension of how someone could not regurgitate corporate woke-speak. Some of this is just Blue America and Red America not understanding one another, but Stein’s musings about how to sabotage Schnatter reveal the difference: It’s Blue America that is out to get Red America fired:
UNIDENTIFIED FEMALE SPEAKER: Because he can’t even take the most, like, simple, like just acknowledge . . . why they’re doing this protest, like he wouldn’t even pick up on that.
UNIDENTIFIED FEMALE SPEAKER: Yeah, he’s really not in touch.
UNIDENTIFIED MALE SPEAKER: But [CROSSTALK] — he’s like the players don’t care. They’re going to still protest because that’s more important to me.
STEIN: He’s a racist.
FEMALE SPEAKER: Then he’s a racist.
STEIN: He has no problem saying that black people were dragged behind a car, using the N-word just now, but he can’t just f****ing say that.
FEMALE SPEAKER: Did he actually use the N-word? . . .
JASON STEIN: He said — he called them N word and he’s fine, but all I did was say debacle. He has no problem saying that but he can’t say that he said anything wrong.
TIM POLDER: Yep, it’s crazy.
JASON STEIN: He’s racist.
UNIDENTIFIED MALE SPEAKER: He’s racist.
UNIDENTIFIED FEMALE SPEAKER: But the thing is he’s all about like money and to me the players saying that they’re still going to protest is because they’re saying this is a real issue, it’s not about the money. It’s not about us throwing our salaries. It’s not about us, not having . . .
POLDER: But values don’t mean anything if they don’t cost you anything, and that’s what the players are proving, why they keep on protesting. Colin Kaepernick, there’s only one reason he’s not playing right now. It’s not because he sucks.
UNIDENTIFIED FEMALE SPEAKER: I think the most uncomfortable part of this whole thing beyond all the uncomfortable parts were that when we said are you racist and he first read that question he had to ask the rest of the . . . team if he’s still working with a certain, like, community or committee still . . .
POLDER: That’s the CEO’s equivalent of “I’ve got a black friend,” and then he added “I’ve got a black bodyguard.”
UNIDENTIFIED FEMALE SPEAKER: Before I was like yeah, it’s money driven. But now I’m like he’s actually very much, in fact, a racist from a lot of the answers he gave. It’s like a lack of self-awareness and a lack of curiosity, and a lack of trying to like change his view, or attack it in his life, because if you just want to live in this box, then that is the ingredient to racism.
POLDER: Okay. Devil’s advocate. Despite the plan, the plan’s the plan. No one, no one has said to him, “dude, are you really not getting it? You are out of touch.” Everyone, including us, are pandering a little bit to him. No one is saying to him, “you are actually out of touch. You cannot say these things. I get your empathy note about that you find it horrible that . . .”
STEIN: He knows. He knows . . .
In the world of “woke capitalism,” anything less than 100 percent support for Kaepernick is seen as ideological treason and irrefutable proof of being a racist. Anything Schnatter said to defend himself was taken as evidence against him. Then, we get to the part where Stein and his team openly suggest that they should set up Schnatter with a hostile interview:
STEIN: I just want him to go and speak the truth, and I want him — write down the bullet points, and then go f***ing — just have to make sure it’s an hour-long conversation, so that he says sh** like he said here. It’s gonna come out. He can’t control it.
UNIDENTIFIED FEMALE SPEAKER: I want the person interviewing him to know even though he knows to not say those specific answers, I want that sh** to come out too.
UNIDENTIFIED FEMALE SPEAKER: Well, it’s going to come out now because even now he started spiraling.
UNIDENTIFIED FEMALE SPEAKER: Like, I want whatever we recorded to be like the actual interview.
STEIN: I already spoke to Darren Rovell who said he gets it, and he said he’ll only do it if he can ask all the hard questions and really talk about all the hard issues and he’ll do it for an hour on Twitter live and he’ll let people ask questions. So, we just have to make sure he does that. You can’t give a five-minute sound bite. And Bill Simmons will do it too. I’ll call Bill and ask.
Finally, they started grumbling about Schnatter being tied to Pence and Koch, in case you had any illusions that these sorts of people merely hate the Donald Trumps of the world:
UNIDENTIFIED FEMALE SPEAKER: Americans For Prosperity . . .
MALE SPEAKER: That’s a f***ing super right wing, like crazy . . .
JASON STEIN: Thank you. Hang in there, guys. Sorry you had to hear that crap.
POLDER: So, he’s BFFs with Pence, Koch.
These people worked for Schnatter. His company had hired them to help him, and when they couldn’t do that, they appear to have leaked a selectively presented account of the conversation to the press to destroy him. Only because they saved the recording can we hear the whole thing now.
Maybe there was more: Schnatter alleges that Laundry Service held up Papa John’s for $6 million before going to Forbes, and he also alleges that Ritchie, his own CEO, “has admitted privately that he launched a false and defamatory campaign against Mr. Schnatter, falsely accusing him of racism, for the sad and simple reason that Mr. Ritchie learned that he was going to lose his job.” Thus far, however, public accounts do not offer any evidence of whether or not Schnatter can back up either of those allegations. Laundry Service has been laying low, not offering anything but the most boilerplate public defenses. Representatives for Schnatter and Laundry Service did not respond to requests for comment for this story.
Telling your close associates in senior management, on a private call, that you disapprove of somebody else using the N-word should not be a firing offense and a reputation-destroying incident in a country of adults. The mere fact that this has to be explained is a sign of the madness that has gripped corporate America.