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    Papa John’s Comeback Slams a Big Win: Shaq

  • The NBA legend will become an ambassador for the Papa John’s brand.

    Papa John's
    Shaq also owns a Krispy Kreme in Atlanta and previously had 27 Five Guys Burgers and Fries franchises.

    Papa John’s has found a new face for its brand. And he’s impossible to miss. The pizza chain announced Friday that NBA legend and TV analyst Shaquille O’Neal is joining Papa John’s as a member of its board of directors and as an investor in nine Atlanta locations. He’s also stepping in as an ambassador for the Papa John’s brand as part of a marketing agreement, the company said.

    “I have truly enjoyed the high-quality Papa John’s product for years and am excited to be able to help Papa John’s raise their game to new heights,” O’Neal said in a statement. “This is a triple threat opportunity for me. I am excited to join the Board and to help lead from the top, while also investing in nine stores in my hometown of Atlanta and being an ambassador for the brand. I look forward to working with my colleagues on the Board and using my experience in business and community to build on the progress being made at Papa John’s. Papa John’s is building a better culture, and I want to be a part of improving the company from the inside out.”

    Past his involvement with the NBA—O’Neal is also a minority owner of the Sacramento Kings—he has restaurant experience that spans the investor and franchise sectors. He currently owns a Krispy Kreme in Atlanta and previously had 27 Five Guys Burgers and Fries franchises. Additionally, O’Neal founded and runs Big Chicken, a fast casual in Las Vegas, as well as Shaquille’s, a fine-dine restaurant in Los Angeles.

    “We are thrilled to partner with Shaquille and welcome him to the Papa John’s Board,” said Jeff Smith, chairman of the Papa John’s Board of Directors, in a statement. “Shaquille has an excellent entrepreneurial background, including as a restaurant franchise owner, and is a natural creative marketer. Shaquille has demonstrated great success through understanding the customer value proposition with product and brand differentiation. The Board and I are excited to work with Shaquille and look forward to the terrific possibilities to strengthen our position together.”’

    O’Neal joins a Papa John’s board in flux. Offering a resolution to a yearlong and ugly battle with founder John Schnatter, the former CEO and executive chairman agreed in March to a separation plan where he would depart the board in exchange for having a say in his replacement. Also, the move resolved two legal disputes between Schnatter and Papa John’s. The chain agreed to give him all the books and records pertaining to his ouster as chairman last July. Schnatter resigned following a report he used a racial slur in a May conference call arranged between Papa John’s executives and then-marketing agency Laundry Service. A Delaware Chancery Court judge in January ruled Schnatter should be able to review the documents, with some limitations.

    Schnatter also agreed to dismiss a separate lawsuit he filed seeking to invalidate a provision of the “poison pill” plan the company adopted in July.

    In addition, Papa John’s said it would drop a provision in the securities purchase deal with Starboard that required the investor to vote in favor of the company’s incumbent board members when they stand for re-election.

    Starboard invested $200 million in Papa John’s in late January. The company, known in the industry for its turnaround efforts at Darden, added two members to the chain’s board, CEO Smith, and Anthony Sanfilippo, the former chairman and CEO of Pinnacle Entertainment.

    In mid-March, the company announced that Michael Dubin, CEO and founder of Dollar Shave Club, was also joining the board. So was Jocelyn Mangan, CEO and founder of Him For Her and a former executive at Snagajob and OpenTable. Both are independent directors.

    In total, six new directors have joined Papa John’s board in 2019. This includes four new independent directors, Smith, Dubin, Mangan, and Sanfilippo, as well as Steve Ritchie, president and CEO of Papa John’s.

    Ritchie said O’Neal’s addition would reinvigorate staff members. “In addition to his business acumen, Shaquille understands how to build lasting connections with consumers and energize employees,” he said. “I look forward to working with him as a board member and brand partner to advance the many initiatives we are pursuing across the organization to create even greater success for Papa John’s and our stakeholders.”

    The ambassador note is a big score for Papa John’s, which has spent the past year separating its marketing materials from Schnatter. The company said in July it was pulling its founder’s image from marketing.

    Papa John’s since focused on a “Voices” campaign that spotlighted the faces and stories behind the brand. The employee-centric creative was intended to show Papa John’s was a company of 120,000 employees, not one.

    Schnatter remains Papa John's largest shareholder with roughly a 31 percent stake.

    Papa John’s reported its first annual sales decline since 2009 in Q1, with figures dropping 12 percent to $1.57 billion. Papa John’s reported a fourth-quarter loss of $13.8 million, although it ended the year with a small profit. It recorded net income of $4.6 million when adjusted to take out one-time costs, down from $23 million in the prior year.

    Q4 revenue dropped 20 percent to $374 million and North America same-store sales fell 8.1 percent, year-over-year. They declined 7.3 percent for the full 2018 calendar versus the comparable period.

    In addition, the company tallied up $50.7 million in charges for 2018 as it battled controversy and tried to slow domestic closings, including $15.4 million in financial assistance to franchisees; $19.5 million in legal and advisory costs; and $10 million in marketing contributions.

    Papa John’s closed 186 North America franchises and seven corporate stores, shuttering a total of 193 units while opening 89. It acquired another 62 as well to end the year with 3,337 North America restaurants (2,692 franchised and 645 corporate). There are 1,966 international locations.