LOUISVILLE, Ky. (WDRB) -- Papa John's International's recovery from its 2018 turmoil could end up coming at a high cost to its hometown.
The company said Thursday that it's opening "a new global headquarters" in the metro Atlanta area in 2021, where many, but not all, corporate functions currently based in Louisville will shift.
Papa John's will continue to also call Louisville a "headquarters," though its role will be scaled back.
The company said "IT (information technology), supply chain, and legal teams" will remain in Louisville, but "menu innovation; marketing; customer experience; HR (human resources); diversity, equity and inclusion; communications; and development functions" will shift to Atlanta.
CEO Rob Lynch will move back to the Atlanta area, where he ran the Arby's sandwich chain before joining Papa John's in August 2019.
"The Louisville headquarters – Papa John’s home for 36 years – remains essential to the company’s success and we look forward to continuing to be a great corporate partner in the Commonwealth of Kentucky," Lynch said in the release.
The company declined to make Lynch or other executives available for an interview.
Papa John's employs about 750 non-restaurant workers in Louisville between its corporate headquarters and Quality Control Center.
The Atlanta office will have about 200 employees, with 100 to 150 of those jobs representing positions currently in Louisville, according a source familiar with the company's plans.
The source said plans are in flux ahead of the 2021 move as the company determines which employees will opt to relocate and where each position will be located. Those who chose not to move to Atlanta will be offered severance packages, the source said.
Louisville Mayor Greg Fischer framed the news positively in a tweet, saying, "Though some of their jobs are moving to Atlanta, Papa John’s President & CEO Rob Lynch has emphasized that Louisville, as the largest of three corporate headquarters, is positioned to benefit from future growth." (Papa John's' international headquarters is near London in the United Kingdom.)
But Louisville officials were blindsided by the news and not given a chance to change the company's decision, according to a source.
'Defining differences' between cities
Mary Ellen Wierderwohl, chief of Louisville Forward, Louisville Metro's economic development agency. Sept. 17, 2020
Mary Ellen Wiederwohl, chief of Louisville Forward, Metro government's economic development agency, said it's good news that the city will retain Papa John's information technology jobs, maintaining an industry cluster that includes other Louisville companies such as Appriss, Waystar and El Toro.
But she acknowledged the overall blow to Louisville.
"It does hurt," Wiederwohl said. "It’s a local company in which we have a lot of pride."
Wiederwohl said the decision underscores "the defining differences between midsize cities and truly large cities."
Papa John's said Atlanta offers "access to a broader talent pool and to a world-class airport connecting it to the domestic and international markets."
Business leaders have long griped about the lack of direct flights from Louisville Muhammad Ali International Airport, and the airport has won some new domestic routes in recent years.
But despite its name, it has no international passenger flights. Atlanta, on the other hand, has the busiest passenger airport in the world.
Wiederwohl said the decision highlights another challenge for Louisville: The city needs more young, educated professionals of color. Louisville stacks up poorly compared to other cities in "professional Black and brown talent," she said.
"We need our professional ranks in this community to be reflective of this entire community," she said. "This is a challenge we have talking about a lot in the 100 days of (racial justice) protests in this community, and we need to talk about it more."
New decision-makers at Papa John's
Under Lynch, Papa John's' sales have rebounded in the last six months, fueling a rally in its stock price.
Lynch's hire came after Starboard Value invested $250 million in the company in early 2019, an infusion that allowed the activist hedge fund to begin calling the shots.
At the time, Papa John's was reeling from a sales slump and staving off store closures following its messy break with founder and former chairman John Schnatter in 2018.
Schnatter, who started the company from a broom closet in Jeffersonville, Ind. in 1984, would go on to sell almost all of his sizable slice of Papa John's after being ousted from any official role with the firm.
Schnatter owned about 31% of the company in late 2018, and his stake was down to less than 4% as of March, according to securities filings.
In a written statement, Schnatter said he was "saddened" by Thursday's announcement.
"Despite pledging to maintain a company presence in Louisville, I’m concerned that the relationship won’t be the same as it was for three successful decades," Schnatter said. "While this is disappointing, I offer my best regards to my friends and colleagues in Louisville, hopeful that a new generation of entrepreneurs will create the next business success stories in the Louisville community."
