2 Rival CEOs Have More in Common Than Usual

The battle for pizza supremacy being fought between Pizza Hut and Papa John’s is being directed by two forceful chief executives who live in the same Louisville neighborhood, pray at the same church and relax at the same exclusive golf course.

David Novak, chairman of Tricon Global Restaurants, Pizza Hut’s corporate parent, can’t help but bump into Papa John’s founder and Chief Executive John Schnatter.

“He lives a half-mile from my house,” Schnatter said. “We go to Bible study together once or twice a month. We see each other at Valhalla,” a nearby country club.

But vibrations generated by Pizza Hut’s lawsuit that scuttled Papa John’s successful “Better ingredients. Better pizza” slogan have been anything but neighborly. The two men insist that they’re only protecting their business interests.

Schnatter maintains that Novak has said “he’s going to kick Papa John’s out of Louisville. . . . He’s said that the big fish always eat the little fish. But the fact that we didn’t go away, that we didn’t just roll over is frustrating him. I think the lawsuit is just part of David Novak’s win-at-all-costs strategy.”

Pizza Hut President Mike Rawlings bristles at the suggestion that the lawsuit is driven by anything other than good business.

“This myth that has been created is very sexy for reporters, but the idea that this has anything to do with personalities is 180 degrees in the wrong direction,” the Dallas-based executive said. “David [Novak] was my predecessor at Pizza Hut, and when he became president of Tricon, he was very cautious about my bringing this lawsuit. But, once I decided to do it, he supported me 100%.”

In internal documents, Pizza Hut, the nation’s largest pizza chain, called its battle with Papa John’s, one of the nation’s fastest-growing restaurant chains, a “pizza holy war.”

Both sides have used their doughboys to help wage this food fight.

* Pizza Hut once posted a camera crew outside of a Papa John’s processing plant and rummaged through Papa John’s trash bins for potential evidence in the court case. Pizza Hut employees have surreptitiously followed Papa John’s deliverymen to stuff coupons for their pies into customers’ hands.

* Papa John’s employees have parked their trucks in front of Pizza Hut restaurants, dishing out free pizzas to customers entering its rival’s stores.

* Papa John’s enlisted Pizza Hut founder Frank Carney--now a prosperous Papa John’s franchisee--to star in its commercials. Pizza Hut countered by inserting footage of Schnatter into one of its own spots, prompting a lawsuit by Schnatter.

The trial of Pizza Hut’s suit offered an unusual glimpse into the cutthroat pizza business.

As Papa John’s market share grew, Pizza Hut launched an advertising campaign designed to blunt the challenger’s success. Court documents note that one marketing thrust, code-named “Stoppa the Papa,” included an effort to recruit Papa John’s delivery drivers.

In a memo made public during the Dallas trial, Novak, referring to Pizza Hut executives, asked: “How much longer are we going to let them run their false advertising claims? How much longer are they going to have better service? How much longer are they going to kick our butts in sales?”

Rawlings said Pizza Hut’s legal assault on Papa John’s is working. He said that in the last year Pizza Hut’s same-store sales have climbed at the expense of Papa John’s.