Papa John’s embattled CEO Steve Ritchie braces for fight: 'Pizza is my life'

Andrew Wolfson | Courier Journal

Show Caption Hide Caption CEO and founder battle for top spot at Papa John's Once friends, now foes, as Steve Ritchie and John Schnatter battle for control over Papa John's

Ritchie is a Louisville native and Seneca High School grad

He never went to college

Ritiche was 38 when he was put in charge of 4,200 Papa John's in 35 countries

Papa John's founder was Ritchie's role model at one point

He bought his first pizzeria, in Hikes Point, for $16,000, when he was 18 and a senior at Seneca High School.

He skipped college altogether, instead earning what he jokingly calls a degree from “Papa John’s University.”

Starting in 1996 as a $6-an-hour worker taking phone orders at a Papa John's store in St. Matthews, he rose to manager, then multi-unit supervisor, major franchisee, director of global operations, president and chief operating officer before finally being named CEO of the world’s third-largest pizza chain on Jan. 1, 2018.

“I fell in love with the brand,” Steve Ritchie said.

Related: John Schnatter targeted his company's CEOs in the past. And wrote about it

But until Papa John’s founder John Schnatter launched a very aggressive, very public effort to oust his hand-picked successor from the troubled company, you probably never heard of the 43-year-old Louisville native who has described himself as a “very shy and introverted person outside of the workplace.”

Asked last week who his best friends are outside the company, Ritchie said he couldn't name any.

“Pizza is my life,” he said.

That life is now threatened by the man Ritchie once called his role model, John H. Schnatter.

Their battle escalated last week as the company announced miserable second quarter earnings and sales that sent the stock price plummeting.

One analyst who follows the pizza industry said the “ongoing drama” between Schnatter and current management was “destroying shareholder value. Another said "a complete separation" of Schnatter from the business "is the right thing to do," but he was "digging in his heels."

The rise and fall of John Schnatter: His mouth was his own worst enemy

It's a power struggle watched closely by Wall Street and in Louisville, the home of 1,200 Papa John's employees, including 650 employees who work in the company's headquarters.

It is more than a war of words between Schnatter and Ritchie — as the two argue over who is to blame for the decline of the company.

The long-term viability and financial health of the pizza giant could be at stake, considering it has lost half its market value over the past 12 months.

In a letter to the Courier Journal last month, Schnatter said his protégé “has not performed well,” and accused Ritchie of wrongly trying to pin Papa John’s woes on him for speaking out about NFL player protests and for other controversial public comments.

“The dog ate my homework excuse can only work so many times,” Schnatter said.

Though he was forced to step down as chairman, the 56-year-old pizza baron still owns 30 percent of the company, remains on its board and has said he’s not going away.

Ritchie, whom associates describe as soft-spoken and cool-tempered, has fired back. In an Aug. 7 earnings call, he said Schnatter’s infamous use of the N-word during a media training session in May was “very inexcusable and irresponsible” and that franchisees have expressed “overwhelming support for... our decision to remove John Schnatter as brand spokesman.”

In a private meeting in June, according to Schnatter, Ritchie insulted him. As reported by the New York Post, they were discussing hiring a new PR executive for the company and “Ritchie said, ‘Too bad she has to work for an a--hole,''' meaning Schnatter.

A spokesman for Schnatter confirmed the exchange and said Schnatter reported it to the company’s top human resources officer. A company spokesman said "as far as I know, there was no report to HR."

So far, Ritchie seems to be winning the battle with his former boss.

In a company press release Friday announcing reductions in royalties, fees and food-service pricing for beleaguered franchises in the United States and Canada, Vaughn Frey, president of the Papa John's Franchise Association, said, “We believe it is time for the founder to move on."

Frey also said gave support to Ritchie, saying he also is pursuing the "right initiatives to reinvigorate growth and recognizes the importance of working together to move forward successfully."

It is difficult to believe, but until recently, Schnatter and Ritchie were locked in a virtual love fest.

Ritchie told Louisville Business First in 2013 that Schnatter's "passion for excellence and drive to make others better has inspired me to constantly improve and strive to get the best out of everyone.”

Related: Papa John's diversity coordinator says she almost quit after 'hurtful' remarks

Schnatter reciprocated in “Papa,” his autobiography published last year.

“I am so proud of Steve — he has excelled at every job he’s ever held at Papa John’s,'' Schnatter wrote. "We couldn’t have a more proven leader to guide Papa John’s through its next stage of growth.”

Schnatter's story of starting the multi-billion-dollar company in the broom closet of Mick's Lounge in Jeffersonville, Indiana, is legend.

But outside company headquarters at 2020 Papa John’s Blvd., Ritchie is not widely known.

Unlike Schnatter, you won't see Ritchie's name or image on pizza boxes.

It is highly unlikely he will be the center of an advertising campaign for a company that spends millions annually to distinguish itself in the competitive $44 billion pizza industry.

He largely flew under the radar until July 19, when Forbes reported on the alleged “toxic culture” at Papa John’s, citing three unidentified sources who said Ritchie was present when offensive remarks were directed at female employees and “just laughed along.” Forbes said six unnamed former executives also questioned Ritchie’s qualifications for the CEO job.

Ritchie told the Courier Journal he didn’t witness any of the comments described by Forbes. And in an interview, Chief Information Officer Mike Nettles, who the company selected to talk to a reporter, said Ritchie has treated women and minorities there with respect.

Nettles, who was recruited to Papa John’s last year from Panera Bread Co., said he ranks Ritchie at "the top of the list" of a dozen CEOs he's worked for in 30 years in the restaurant industry.

That view was echoed by a former top executive who asked not to be identified and who vigorously disputed the anonymous criticism in Forbes.

“He has the heart and skills to be a CEO,” Nettles said.

Self-made pizza man

Ritchie told the Courier Journal he grew up in humble circumstances. His mother, Mary Leisa Ritchie, was 16 when he was born, and his dad, Stephen Ray Ritchie, just a few years older.

The elder Ritchie, who worked for 32 years on the assembly line at Ford Motor Co., said he offered to get his son a job there.

“I am so thankful that he took a different path, but if he took that job, he’d probably be the CEO of Ford by now,” Stephen Ray Ritchie said.

Born a few days before Christmas in 1974, Stephen Michael Ritchie, the eldest of three children, excelled in baseball and basketball, his father said, “but the main thing I saw in him with sports was his desire to be a leader of the team.”

Steve took his first job at a Burger King when he was 16, then went to work at Pizza Man, a small shop at 3431 Breckenridge Lane, where owner Richard Paulmannsaid “he showed up on time and did everything you asked.”

After the store was robbed four times, Paulmann sold it to Ritchie, whose late grandfather, Roger L. Fultz Jr., a longtime Courier Journal advertising director, provided working capital.

“Over the next two years, before joining Papa John’s, I worked 14 hours-a-day, seven days-a-week to keep that business in line and afloat,” Richie told Louisville Business First in 2013. “I learned the values of hard work, and my refusal to fail kept the business moving way longer that it really should have been capable of.”

But it never took off.

At Papa John’s, where he started in 1996, his rise was steady, with a few detours along the way.

Papa in his own words: 'I can easily fall into the category of benevolent dictator'

With Schnatter’s brother, Chuck, and Schnatter's high school buddy, Tim O’Hern, Ritchie in 2005 bought into a franchise group that at one time had as many as 28 stores, in Indiana, Kentucky, Illinois and Wisconsin. Ritchie is still part owner of eight franchises in Wisconsin.

After working as a consultant to Schnatter’s artisan sandwich restaurants, Calistoga, Ritchie rejoined Papa John’s full-time in 2010.

He was soon entrusted, at age 36, with running all 650 company-owned stores in the U.S. Two years later, he was promoted to senior vice president for global operations, responsible for 4,200 stores in 35 countries with more than $3 billion in annual revenues.

“I went from running one store at 21 years old to all of them at 38,” he said.

He was a man in a hurry – literally. From 2004 to 2014, he racked up six speeding tickets, most recently in 2014 when he was clocked going 24 mph over the limit in his BMW 750 iL, which had expired plates. He pleaded guilty to speeding and paid $143 in court costs.

In the 2013 Louisville Business First feature on 40 executives under 40, he made no secret of his ambitions when asked what he wanted to be doing by 2025.

“I love what I do at Papa John’s,” he said, “and would be honored to someday have the opportunity to take over the reins from our current founder and CEO, John Schnatter.”

He reached his goal on Jan. 1, seven years ahead of schedule, when Schnatter stepped down.

Passion, pizza and parenthood

Papa John’s has been good to Steve Ritchie.

He was paid $2.2 million last year in salary and bonuses, and he lives with his wife, the former Melissa Diggs, and their two teenage daughters in a home assessed at $2 million on the Ohio River in Oldham County.

In a written statement provided by Papa John's, Melissa Ritchie, 42, said she met Steve in 1998 when they were general managers of separate stores, she in Prospect and he in St. Matthews.

“I immediately knew this guy was the one, and even told my parents after our first date — not because we shared the same passion for the brand, but because he was so genuine and heartfelt with every interaction we shared,” she wrote.

“Steve will say he was the better GM, but I definitely make a better-looking pizza, always have,'' said Melissa, who began working for Papa John’s at age 15.

She said she “stepped away from the brand” for a few years to start their family and returned in 2006. She started as a culinary innovation specialist before working her way up to senior director of research and development for North America, where she was paid $170,000 last year, according to the company’s annual report.

She said the family orders out for pizza – “we eat a lot of Papa John’s” – but also supports local pizzerias, which she said is important for product development work. Although the couple shares household duties, she takes the lead at dinner time.

“The kids love to make fun of their dad’s cooking skills — or lack thereof,” she wrote.

Ritchie claims no hobbies but said he is a huge University of Louisville sports fan.

“In my family, if you even thought of wearing blue, you’d be in trouble,” he said.

Around the office, he's more comfortable in a Papa John’s shirt and blue jeans than a suit, said Nettles, who described him as even-keeled and unintimidating.

“You don’t have to be super crisp when you’re making a presentation” to him, Nettles said, adding that he has never heard Ritchie raise his voice.

Nettles said Ritchie seems happiest during store visits, when he almost immediately dons an apron and kneads some dough. During a recent trip, he got flour all over his suit, Nettles said.

J. Jude Thompson, former president and co-CEO of Papa John’s, said Ritchie was good both behind a restaurant counter and an executive’s desk, and nobody ever was better at training managers and employees to run a store.

“He knew you needed different staffing on a Tuesday night than a Friday night,” Thompson said.

More: Stockholders may be ready to sue Papa John's for securities fraud

In his book, Schnatter described Ritchie as the ultimate team player.

“He’s the first one in the building every day and the last one out,” Schnatter wrote. “He’s a model of what a leader should be. His single-greatest asset is his ability to put others before himself. Steve wants others to succeed and will go to great lengths to help them get ahead. The team is everything for him, and it shows.”

Melissa Ritchie calls her husband the most driven business person she’s ever known.

“He is a very humble and participative leader who has always cared more about others than himself,” she said. “I find myself reminding Steve he cannot possibly make everyone happy, but he relentlessly strives to do everything he can for the better of our Papa John’s family.”

Nettles said Ritchie is disheartened by the drama now swirling around the company.

“Steve sees the pain on the faces of employees and franchisees,” he said. “There has been an enormous toll on management.”

Nettles said he is disappointing that Schnatter has turned on his protégé. But Ritchie seems undeterred to the criticism.

“I have seen moments when he has a bit of extra weight on his shoulders, but he doesn’t look like he’s breaking,” Nettles said.

“He has pretty big shoulders.”

Andrew Wolfson: 502-582-7189; awolfson@courier-journal.com; Twitter: @adwolfson. Support strong local journalism by subscribing today: www.courier-journal.com/andreww

Who is to blame for Papa John’s precipitous decline?