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Papa John’s preparing to appoint Arby’s President Rob Lynch as its CEO
[CHICAGO] Struggling pizza maker Papa John's International Inc is preparing to appoint Arby's President Rob Lynch as its new chief executive officer, a person with knowledge of the matter said.
Mr Lynch, a fast-food industry veteran, will replace Steve Ritchie, said the person, who asked not to be identified because the information isn't yet public. It's the biggest shakeup yet since activist shareholder Starboard Value set its sights on the pizza company.
Papa John's, which operates about 5,300 locations globally, has been facing slowing sales, with revenue declining 12 per cent in 2018. Founder John 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.
The change in Papa John's management will be made as soon as Tuesday, the person said. Representatives for Papa John's, Arby's and Starboard didn't immediately respond to requests for comment.
Starboard has invested US$250 million in Papa John's since February. Jeff Smith, Starboard's CEO, became chairman of the pizza maker when they took the stake. The pizza maker's shares fell 29 per cent in 2018 and 34 per cent in 2017.
Mr 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, Mr 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 hit social-media marketing gold when it started a back-and-forth with recording artist Pharrell Williams over 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! We quickly sent a tweet to Pharrell, and our conversation went viral," Mr Lynch said in an interview with Marketing Land.
Starboard is known for its turnaround of Olive Garden owner Darden Restaurants Inc. Mr Smith's proxy fight to replace Darden's directors included a nearly 300-page Power Point presentation that called for several specific changes at the Italian-dining chain, including adding salt to the water when cooking pasta. Mr Smith took over as chairman of Darden and the company embarked on an effort to improve its lagging performance that included spinning off its real-estate portfolio.
Mr Ritchie, Mr Schnatter's one-time protege, took over the role of Papa John's CEO in January 2018 when his boss stepped down. That came a few months after Mr Schnatter went after the NFL for its handling of football players dropping to one knee in protest during the national anthem.
Papa John's, battered by steep competition from pizza competitors and the explosion of food delivery options, recently announced former NBA star Shaquille O'Neal as an investor. Same-store sales fell 5.7 per cent in the latest quarter in North America. To keep struggling franchisees from going out of business, the company has been offering them royalty reductions and funding for advertising.
Mr Schnatter, long the largest shareholder, has been reducing his stake in Papa John's.