Reuters: Papa John's asks for takeover bids

LOUISVILLE, Ky. (WDRB) – Three top executives at Louisville-based Papa John’s International will leave the company as new CEO Rob Lynch shuffles the deck.

And in a hopeful sign, the pizza company reported that sales increased from the prior year in the July-September period – breaking a string of seven negative quarters.

The company said Wednesday that its chief marketing officer, chief operating officer and chief financial officer – all holdovers from the era when founder John Schnatter ran the company – are out as Lynch puts in his own team.

Lynch, who came to Papa John’s in August after leading the private Arby’s chain, told Wall Street analysts on his first earnings call that the C-suite shakeup would yield “a much more refined leadership team with refined priorities.”

Papa John’s said sales rose 1% in the quarter at its U.S. and Canadian restaurants – the company’s most closely watched metric. However, that’s compared to the tumultuous period in 2018 when Schnatter admitted to using racial language and the company’s board ostracized him.

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Still, the increase was better than some analysts projected.

"We believe this was ahead of most investors' expectations and it provides a promising outlook for a quick turnaround," said Stifel analyst Chris O'Cull wrote in a note to clients. 

BTIG analyst Peter Saleh wrote that the results "demonstrate the turnaround is unfolding with the first positive (comparable sales) in two years." 

Lynch said the company’s new marketing campaign centered on Shaquille O’Neal, the former NBA star who is now the face of Papa John’s, has led to improvements in all of the company’s metrics for consumer sentiment.

“We are very happy with the impact the Shaq work has had on the brand,” he said.

O'Cull said the sales lift generated by the Shaq commercials "is encouraging should the company switch to advertisements with a greater 'call to action'."

Lynch added that one area of “low-hanging fruit” for the company is to embrace third-party delivery services like Door Dash, Uber Eats and Postmates, integrating them into each restaurant’s ordering system.

He dismissed concerns that other restaurant chains and analysts have expressed about losing access to customer data when deliveries are not handled by in-house drivers.

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2019 WDRB Media. All rights reserved.