Papa John’s appoints Arby’s president Rob Lynch as CEO

Bloomberg

Struggling pizza maker Papa John’s International Inc appointed Arby’s President Rob Lynch as chief executive officer, naming an outsider as it further breaks from its controversial founder John Schnatter.
Lynch, a fast-food industry veteran, will replace Steve Ritchie. It’s the biggest shakeup since activist shareholder Starboard Value set its sights on the pizza company. In a statement, Chairman Jeff Smith cited Lynch’s “proven record transforming organisations and realising the growth potential of differentiated brands.”
Papa John’s, which operates about 5,300 locations globally, has been facing slowing sales, with revenue declining 12 percent in 2018. Schnatter, whose image had once been deeply ingrained with the company’s marketing, agreed earlier this year to resign from the board and dismiss a lawsuit related to his departure last year as chairman. Papa John’s woes grew last summer after the founder used a racial slur on a conference call, which he said was taken out of context.
Papa John’s shares rose as much as 8.7 percent in New York, the biggest intraday gain in six months. The stock had already climbed 10 percent this year, after declining the past two years.
“A new management team is usually a pretty good opportunity and you’re seeing it reflected in the stock price now,” Bloomberg Intelligence analyst Mike Halen said.
Starboard has invested $250 million in Papa John’s since February. Smith, Starboard’s CEO, became chairman of the pizza maker when it took the stake. The pizza maker’s shares fell
29 percent in 2018 and 34 percent in 2017.
The company was “run very poorly” under Ritchie, Schnatter said in a statement after the change was announced. After Ritchie took over as CEO from Schnatter in 2018, the two feuded publicly, with Schnatter filing a lawsuit at one point last year saying Ritchie sought to oust him in order to hang on to his job.
While noting his reservations about the actions of the board and its ability to fix the business, Schnatter said Lynch has “proven to be an effective marketing leader in previous roles.”
Lynch joined Inspire Brands-owned Arby’s in 2013 as the roast-beef sandwich chain’s chief marketing officer. Before that, he worked at Procter & Gamble Co and Yum! Brands Inc as vice president of brand marketing for Taco Bell. He was appointed president of Arby’s in 2017 overseeing marketing, operations and development.
At Arby’s, Lynch led the chain’s heavy meat-focused marketing and bold ad campaigns that poked fun at vegetarians. Arby’s has more than 3,300 restaurants across the world. In 2014, Arby’s struck social-media marketing gold when it started a back-and-forth with recording artist Pharrell Williams on Twitter over his hat, which resembles the restaurant chain’s logo.
“We luckily got our first big win just from being tuned in when we saw Pharrell wearing an ‘Arby’s hat’ at the Grammys!