The past year has been a tough one for Papa John’s, the pizza-restaurant chain that was plunged into controversy after its founder John Schnatter made racist comments on a conference call. Now the company is reportedly soliciting bids from others willing to take it over.
According to Reuters, Papa John’s sent out word this week about an auction it’s arranging for the company to possibly be sold to another company or a private equity firm. Papa John’s is hoping to either find a buyer by the end of October or arrange alternative financing, such as a partial investment.
The news caused Papa John’s stock to rise 9% to $50.14 a share Wednesday. Before today’s gains, Papa John’s stock was down 37% in the past year, versus a 16% gain in the benchmark S&P 500 Index.
Schnatter stepped down as Papa John’s CEO last December after he criticized the National Football League’s leadership over national anthem protests by players. In July, Schnatter stepped down as the company’s board chairman after reports that he used the n-word and spoke in graphic terms about lynchings during a marketing conference call in May.
Schnatter has insisted the comments were “mischaracterized,” but Papa John’s board took a harder line, pulling Schnatter’s image from its logo, TV ads, and other marketing programs to distance itself from its founder.
In recent weeks, the bad blood between Papa John’s board and its largest shareholder—Schnatter still owns about 30% of the company’s stock—has continued on a slow simmer. The company dropped the apostrophe in its name during a random moment of rebranding. Schnatter, meanwhile, has sought to regain control of the company he founded, Reuters says.
The negative press that Schnatter and Papa John’s has endured during the past year appears to be taking a toll on the company’s financials. In August, Papa John’s same-store sales fell by 6.1% year over year, prompting the company to cut its revenue forecast in future quarters. The company cited the continued fallout from the its rift with Schnatter as a reason for the decline.