Papa John's founder rips into his former company

Coronavirus leads companies to compete for top delivery status

Domino’s, Chipotle and other fast dining chains are coming out as winners amid coronavirus. FOX Business’ Lauren Simonetti with more.

John Schnatter, the former CEO of Papa John's, says that the company he founded is looking at a downturn soon due to poor food quality, bad management, and a host of other factors unless they change things.

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The coronavirus pandemic has been a boon for restaurants that cater to convenience, and Papa John's hasn't missed out, as the company's stock is up 23% year to date.

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But Schnatter writes in Seeking Alpha that his former company, which he founded in 1984, is buoyed by the demand for quick and easy delivery during the pandemic.

The article he wrote Tuesday was a response to another bearish take on Papa John's that says the franchise "has benefited from a rising tide this year, not its own execution."

He argues that the problems include "lackluster pizza quality, limited pizza experience among leadership, the loosening of COVID restrictions on other competing dining options in the coming year, food cost pressures (as recently noted in Domino’s Q3 earnings release), and negative store growth in the U.S."

According to Schnatter, when the economy returns to normalcy following the coronavirus pandemic, these problems could cause the bottom to fall out.

"COVID-related sales increases beginning in March have been masking the deficiencies I noted above," Schnatter writes. "And when our economy, and more importantly the dining sector, likely returns to some sort of normalcy in 2021, it’s very likely these recent sales gains will fall by the wayside just as the virus itself likely will."

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Despite Schnatter's predictions, Papa John's is confident it can keep its record sales up moving forward. The company brought in nearly $870.5 million in total revenue in the first half of 2020, eclipsing the $798 million it raked in during the same time period in 2019.

“With strong momentum and our potential expanding every day, we are investing in capabilities for future innovation and global growth, improving efficiencies, and better aligning our organization around the strategies that are driving our near- and long-term success," Rob Lynch, Papa John's president & CEO, said in a recent statement.

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Papa John's did not respond to a request for comment Tuesday.

Schnatter was forced out of the company two years ago for allegedly using a racial slur during a conference call. He wrote Tuesday that "the meaning of the comments I made against racism in 2018 were reversed and completely mischaracterized in the media."

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This is far from the first time that Schnatter has taken aim at Papa John's since he left the company.

Last November, he sold 1.9 million shares worth about $107.5 million, telling FOX Business at the time that the “unit economics are not good“ and the company had "abandoned its fundamental principles."

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