Papa John’s pins turnaround efforts on Shaq, Starboard investment
Starboard Value LLP invests additional $50M amid another challenging quarter for the brand
Joanna Fantozzi, Nation's Restaurant News
May 08, 2019
Papa John’s International, Inc. cited an improved outlook during an earnings call Tuesday, announcing a new $50 million investment from hedge fund Starboard Value LLP, even as it reported another quarter of declining sales.
The struggling pizza chain reported a 6.9% decrease in domestic same-store sales for the quarter ended March 31, though results did beat investor expectations, buoyed by international same-store sales, which saw a 0.1% decrease.
Starboard Value LLP initially announced its $200 million investment in the Louisville, Ky.-based chain in February, with the additional option of $50 million at the end of March.
“Our new chairman, Jeff Smith, is actively engaged in the business, leveraging his turnaround experience in the restaurant and retail space and keeping us focused on what matters most: the quality of our pizza and our connection with our customers,” CEO Steve Ritchie said during the call. “We'll carefully allocate this capital in addition to the original $200 million investment to strengthen our balance sheet and make strategic investments to reinforce our brand market position and drive long term performance.”
Ritchie cited a tough January affected primarily by ineffective promotions and customer conversion to the company’s new loyalty program launched in December.
He added that although the company still has a long way to go, Papa John’s saw marked improvements through February and March, driven by the Starboard investment and new board appointments, including the new partnership with NBA legend and entrepreneur Shaquille O’Neal, who will also serve as a brand ambassador. Ritchie hinted that the company would use O’Neal’s public persona in marketing and advertising plans moving forward.
“Shaquille is already very engaged in the board and making an impact on the company, not only in his industry advice and ideas for what we might be doing strategically in the areas of marketing, store design, operations, things connected with the consumer impact of the Foundation,” Ritchie said during Tuesday’s call...