Papa John’s on Tuesday named former Arby’s President Rob Lynch its new CEO, opting to change leadership following 18 months of turmoil.
Arby’s, meanwhile, named Chief Marketing Officer Jim Taylor as Lynch’s replacement as president.
Lynch replaces Steve Ritchie, who guided the Louisville, Ky.-based pizza chain through a period that saw the company roiled in a dispute with former CEO and founder/spokesman John Schnatter after he admitted making a racial slur during a conference call.
But the replacement also comes months after Papa John’s took a $250 million investment from activist investor Starboard Value, appointing its CEO Jeff Smith as chairman. The company then brought in Shaquille O’Neal as a director and spokesman.
Lynch’s “proven record transforming organizations and realizing the growth potential of differentiated brands is ideally suited for Papa John’s as the company sets forth on its next chapter,” Smith said in a statement.
He added that “Papa John’s is stronger today because of Steve’s good work stabilizing the company, and our business continues to perform to plan.”
The company said that Lynch’s priority will be to “focus the company and its franchisees on the brand’s tremendous future potential.”
It will look to tap into Lynch’s experience with Arby’s, which engineered an incredible turnaround over the past decade after its split from Wendy’s and sale to Roark Capital, a turnaround that culminated in its purchase of Buffalo Wild Wings to create Inspire Brands.
The brand generated 16 straight quarters of same-store sales growth and generated record sales and profits for the year.
He called Papa John’s “the most loved pizza in the industry,” with “dedicated team members and franchisees that have proven their resilience and commitment.”
Lynch takes over a 5,300-unit chain that at one point was one of the most consistent performers in the restaurant industry, having generated years of same-store sales growth. Those sales began falling late in 2017, prompting Schnatter to blame NFL player protests during the national anthem for the problems, which embroiled the company in controversy.
Problems worsened with the racial slur, which prompted his ultimate departure as chairman, spokesman and company director. Schnatter is currently selling his stock, having reduced his holdings from 31% to 16%.
Papa John’s said Tuesday that its company is on track to meet its sales and earnings guidance. Same-store sales in North America are expected to finish the year down 1% to 4%, while earnings per share are expected to range from $1 to $1.20 per share.
The same-store sales number for the full year suggests Papa John’s is on track to generate stronger results in the second half as it laps easier comparisons from the previous year, and as its marketing and other strategies begin to take hold. Same-store sales declined 5.7% in the second quarter.
In addition to bringing in O’Neal and Starboard, Papa John’s has invested in marketing, given royalty relief to franchisees and inked a deal with third-party delivery company DoorDash.
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