Papa John’s New CEO Trims Management as Results Improve

(Bloomberg) -- Papa John’s International Inc. accompanied its better-than-expected sales report with a slew of management changes, including the impending departure of its chief financial officer.

• CFO Joe Smith will leave the company in 2020, Papa John’s said, and the search for a replacement has begun. Meanwhile, the chain reported that North American systemwide same-store sales -- a key metric for restaurants -- increased 1% last quarter, beating the average estimate from Consensus Metrix and breaking a string of seven straight declines. Read more here.

Key Insights

• The upbeat report marks the first with new Chief Executive Officer Rob Lynch at the helm, and its clear he’s making his mark on management. Formerly with Arby’s, Lynch joined the pizza maker in August, more than halfway through the quarter that just ended. Lynch said the company is “realigning Papa John’s senior management, promoting leaders within the company and adding proven talent.”
• Papa John’s also announced the departure of its chief operating and growth officer and its chief marketing officer. Max Wetzel, a former executive at PPG Industries, will take over as chief commercial and marketing officer. The company also named new chief operating officers for its North America and International divisions.
• The results give investors fresh insight into a restaurant chain that former leader John Schnatter continues to argue is being badly run without him. Schnatter, still a major shareholder himself, wrote a scathing editorial last week questioning employee morale and accusing management of emphasizing cost-cutting over quality. The quarterly results suggest his rabble-rousing is just that.
• Revenue of $403.7 million also outpaced estimates. The company now sees North America same-store sales falling 1.5% to 3.5% this year, narrower than the previous range of a 1% to 4% decline.

Market Reaction

• The shares rose as much as 8.2% in New York trading on Wednesday, the most in more than two months and hitting the highest level since May 2018. They were up 44% year to date through Tuesday, about double the gain in the S&P 500 Index.

--With assistance from Cécile Daurat.

To contact the reporter on this story: Anne Riley Moffat in New York at ariley17@bloomberg.net

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Jonathan Roeder, Lisa Wolfson

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