Can Former Arby’s CEO Turn It Around For Papa John’s?

After a somewhat frustrating year for the national pizza chain, Papa Johns is hoping that new leadership will help turn things around.  

You may be aware that founder and former CEO John Schnatter was recently forced to step down after reports surfaced indicating he had used a racial slur during a conference call.  This was actually just the latest controversy to complicate the company’s success as he had, at one point, blamed poor sales on professional football players protesting the national anthem. This, of course, was at a time when Papa John’s was the official pizza sponsor of the NFL. They were soon replaced with Pizza Hut.

With Schnatter out of the picture so quickly, veteran Papa John’s executive Steve Ritchie took his place.  However, the company has recently named Rob Lynch—former president of sandwich chain Arby’s—as the new CEO.  This major move comes after Starboard Value took a $200 million stake in the pizza chain, coupled with a promise to turn things around.  Starboard, of course, is perhaps most well-known for doing this very thing with Olive Garden owner Darden Restaurants.  

That in mind, it makes sense that Starboard CEO Jeffrey Smith now occupies the chairman seat for Papa John’s.  He comments, “I am thrilled to welcome Rob to Papa John’s at this pivotal moment in the company’s history.  His 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.”

Lynch, of course, has been president of Arby’s since 2017, starting out as chief marketing officer in 2013.  In fact, he is widely credited for initiating the company’s turnaround by introducing the now-famous “We have the meats” advertising campaign.  He is also responsible for adding some much-needed diversity to the firm’s line of sandwiches, particularly unorthodox animal protein sources like duck, elk, and venison. 

All this said, Papa John’s has already demonstrated a turnaround may be inevitable.  While same store sales in the US continue to fall, the decline is slowing; this could be the beginning of the recovery.  More importantly, since Starboard’s initial investment, the company has been able to boost its digital footprint in order to compete more effectively in the on-demand food ordering service marketplace. 

Finally, shares of the pizza chain rallied this week on news of Lynch’s hiring.  So far, the stock is up 10 percent on the year.