IPG Mediabrands-owned media agency Initiative said Thursday afternoon it is resigning the Papa John's business, after originally saying it would continue to work with the struggling pizza chain amid controversy around its founder John Schnatter.
With Initiative dropping the business, Papa John's now has no media, creative or PR agencies of record. (UPDATE: Powell Tate, a specialty public affairs unit of IPG's Weber Shandwick, is working on communications strategy for Papa John's, the agency said Thursday evening.)
Amy Armstrong, the agency's U.S. CEO, said in a statement that although Initiative had originally agreed to continue as the pizza chain's agency, it reversed course because "additional information" had come to light.
Earlier on Thursday, Forbes published a widely-shared story titled "The Inside Story Of Papa John's Toxic Culture." That report came just over a week after a Forbes article revealed that Schnatter had used the "n-word" during a training call in May with Laundry Service, Papa John's creative agency at the time.
"Last week, Initiative agreed to continue as Papa John's agency, based on direct assurances from the company's CEO that an egregious, recent incident that had been in the news was isolated to their founder, and not representative of their corporate culture," Armstrong said in an emailed statement to Ad Age. "We were also told that the company would make significant investments in programs to promote a more inclusive workplace. These assurances, as well as the swift departure of the founder, were discussed at an agency town hall meeting, at which we collectively decided to continue working with the client, in order to support their commitment to doing better."
"This morning, additional information has come to light that calls into question those assurances and indicates broader cultural issues that run directly counter to our own values," the statement continues. "We have since informed the client of our decision to resign the business."
"Initiative has a talented team and we wish them the best," Papa John's said in a statement. The company's comment was nearly identical to the one it issued when commenting Wednesday on the departure of creative agency Fallon, which worked on the account for about a month.
The Forbes story posted on Thursday presents an in-depth look into Papa John's corporate culture, and outlines Schnatter's close ties to Steve Ritchie, who took over as CEO on Jan. 1. "John got Steve to where he is," it quotes an unidentified former senior executive saying. "Steve is not going to do anything to turn on John."
The article also describes a culture in which inappropriate remarks were common, and Ritchie "just laughed along."
Asked for comment on the new Forbes report, Papa John's said it is examining its corporate culture. "As previously announced, a special committee of the Board of Directors, comprised solely of independent directors, has retained an outside firm to oversee an audit and investigation of the culture at the company and to make recommendations for whatever changes may be necessary," it said in a statement. "We take this matter seriously. If anything is found to be wrong, we are determined to take appropriate action."
Initiative's departure is the latest in a series for Papa John's. Laundry Service's breakup with the pizza chain was announced July 11 in the original Forbes report on Schnatter using the "n-word" on a May training call with the agency. PR agency Olson Engage said July 12 that it had resigned the account on July 11. And on Wednesday, Publicis Groupe's Fallon said that while it began working with Papa John's in mid-June, it was leaving the account after hearing about the incident with Laundry Service.
This past Friday, Papa John's founder John Schnatter accused the pizza chain's former agency, referring to Laundry Service, of trying to extort him out of $6 million over his use of the n-word on the May call.
Forbes says Ritchie did not respond to a request for comment.