As the founder, Schnatter has been one of the biggest names in fast food.
Ritchie, 43, has been a longtime employee with Papa John's.
The company said its current president, Steve Ritchie, would replace him.
Schnatter blamed the NFL in part for the company's lagging sales as Papa John's is an official league sponsor.
"This should have been nipped in the bud a year and a half ago", Schnatter said on a conference call with investors in November.
On December 21, 2017, Schnatter announced he will step down from his position as CEO on January 1, 2018. A press release from the company said he would "pursue his personal passion for entrepreneurship, leadership development, and education".
Schnatter has stepped down from the CEO role before. He took a break from being CEO between 2005 and 2008. Schnatter argued that Obamacare would cost Papa John's $5 million-$8 million annually and ultimately drive up the price of pizza. "He has excelled at every job he's ever held at Papa John's - from being an hourly customer service rep, to a delivery driver, store general manager, director of operations, franchisee and most recently President". Papa John's shares slumped about 4.2% during the controversy, Forbes reported.
What made this more puzzling was that Papa John's third-quarter sales were pretty much in line during the hard period.
"America in 2016 is on the path to becoming what Germany was in 1867", Schnatter writes in "Papa".
Speaking with Business Insider in January, Schnatter emphasized that he believes that regulation in the USA needs to be dialed back to help businesses thrive. The CEO announcement was made after the market has closed.
Schnatter has moved away from public political discussions following the Obamacare controversy.