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The Shaq deal is a slam dunk for Papa John’s

Adding the well-liked personality to the board and its marketing gives the chain positive buzz for the first time in a while, says RB’s The Bottom Line.
Photograph: Shutterstock

the bottom line

People are talking about Papa John’s—in a good way, this time.

In that sense alone, the partnership with former NBA star Shaquille O’Neal is a slam dunk: The move alone created positive buzz and energy around the brand for the first time in at least 18 months. And probably a lot longer.

That’s important for any brand. But for Papa John’s it is vital. The pizza chain’s brand has been tied to an anchor since its founder and former spokesman, John Schnatter, blamed NFL player protests for the chain’s sales problems in November 2017—and then sunk deeper with his admission in July that he used a racial slur during a conference call.

“Let me say this,” O’Neal said on CNBC on Friday. “That is not acceptable. But now we have new leadership. The first thing they wanted to do was diversify our leadership roles.”

O’Neal gives Papa John’s a well-known, well-loved brand ambassador and its first African-American board member, all in one, very large package. He will join the company as a board member and brand ambassador and is investing in nine Papa John’s locations in Atlanta.

“It’s a great opportunity,” he told CNBC in an interview along with Papa John’s CEO Steve Ritchie and Chairman Jeff Smith. “We want to create a culture where people are loved, welcomed and accepted.”

For Papa John’s, the opportunity came to them. O’Neal said he was the one who approached the brand, and not the other way around, saying that he has loved the pizza since the late 1990s and wanted to become a franchisee.

Ritchie said that the initial idea was to bring O’Neal aboard as an operator, but discussions ultimately evolved toward a broader role.

“Shaq obviously brings the fun,” Ritchie said. “This was a really comprehensive way to tell the brand story going forward.”

O’Neal is the sixth highest-paid retired athlete, according to Forbes. He has deals with Icy Hot, The General, Gold Bond, Carnival Cruises, Buick and Monster headphones, among others. He said last year that he has made more per year in endorsements since he retired than he did actually playing basketball.

He has carefully crafted a reputation for being a fun-loving big man who tries to make others laugh. “I want to be the one guy to make you laugh and help you forget about all of your stresses,” O’Neal said.

He is now bringing that reputation to a brand badly in need of an injection of fun.

Papa John’s has struggled for much of the past year. Its brand reputation took a massive hit with Schnatter’s initial comments—which generated a firestorm on social media.

It worsened with his July departure. Same-store sales have deteriorated for much of the past year, and operators have closed restaurants.

But the company has been making some aggressive moves in recent months to get back on track.

Papa John’s received a $200 million lifeline from activist investor Starboard Value, whose CEO, Smith, is now Papa John’s chairman. It has added a half-dozen new board members, including Dollar Shave Club founder Michael Dubin and Him for Her founder Jocelyn Mangan.

It also announced a national deal with third-party delivery service DoorDash to supplement the chain’s own delivery, particularly in rural and suburban areas.

But the O’Neal deal specifically tackles the chain’s marketing and image—its biggest problem over the past year.

“We’re used to getting involved in companies needing operational improvements,” Smith said, noting that Papa John’s has some operational needs, too. “But we also have to move past a marketing challenge and an image challenge. We can handle that well. We’re going to break through that challenge.”

Smith, whose firm is involved as an activist in numerous situations, such as Bristol-Myers Squibb, said that he is “spending most of my time on this.”

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