The search for Shake Shack’s next CEO ended Thursday as the burger brand tapped Papa Johns’ Rob Lynch. Lynch, who was serving as president and CEO of the pizza giant, will officially take over May 20. He will join the board as well and remain with Papa Johns until April 30 as a strategic adviser.
Ravi Thanawala, Papa Johns current CFO, was named interim CEO Thursday. Prior to joining Papa Johns in 2023, Thanawala served as CFO of Nike North America, Nike Inc.’s largest division. The Board said it’s a conducting a “comprehensive search process” to identify Lynch’s successor.
Lynch came to Papa Johns in August 2019 during a pivotal time in the brand’s history. He replaced Steve Ritchie, who was promoted to CEO the previous January. Ritchie’s appointment arrived as founder John Schnatter stepped down in the wake of controversial comments regarding the NFL’s handling of national anthem protests.
Lynch was previously the president of Arby’s and was known for his marketing acumen and ability to drive turnarounds. PR Week named Lynch its 2017 Outstanding Marketer of the Year. He was labeled the 2017 Content Marketer of the Year by Digiday and picked by AdAge as the 2015 Marketer of the Year.
During his time at Arby’s, he directed its transformation into a “Fast-Crafted” brand and watched as the company posted 16 consecutive quarters of same-store sales growth up to record sales and profits. He had held that title since 2017, leading operations, marketing, culinary, and development, as well as digital initiatives (Lynch first joined Arby’s in 2013 as CMO and spearheaded the “We Have the Meats” campaign). Additionally, Lynch was president of Arb’ys franchise association. Before, he held leadership roles at Taco Bell, HJ Heinz Company, and Procter & Gamble.
When Lynch arrived at Papa Johns, sales had dropped 12 percent in fiscal 2018, which marked the first annual decline in nine years. In North America, 128 locations shuttered in 2018 versus 79 opens. A year earlier, 186 franchises closed, along with seven corporate stores. At one point, same-store sales reported negative for seven consecutive quarters (Q4 2017 to Q2 2019).
He took a product-innovation forward approach to the brand and scrapped some of its plans to go forward with a value architecture. Instead, Papa Johns would go on to launch six new products in 2020, right through the pandemic, and earn QSR’s Transformational Brand of the Year distinction.
The brand ultimately eclipsed record global systemwide sales of more than $5 billion across 5,900 units during Lynch’s tenure. Papa Johns in 2023 delivered its fourth consecutive run of positive North America same-store sales.
Last year, the chain opened 57 net new restaurants in North America. In 2024, it expects 20 percent higher growth, which would be about 70 net new units. North America same-store sales rose 1.8 percent in Q4 and 0.8 percent in 2023.
Papa Johns finished 2023 with 5,906 locations systemwide, including 3,433 in North America and 2,473 internationally.
Full-year North America comps
- 2023: 0.8 percent
- 2022: 1 percent
- 2021: 11.8 percent
- 2022: 17. 6 percent
Papa Johns announced in January a “Back to Better 2.0” plan that expects to ramp up marketing and accelerate growth through the largest development incentive in system history. The brand is also going through a rationalization of its U.K. footprint.
“Rob’s appointment as CEO marks the beginning of our next chapter of growth as we seek to further elevate Shake Shack as a leading global brand,” Danny Meyer, Shake Shack’s founder and chairman of the board, said in a statement. “Rob’s deep leadership experience with several well-established global brands will serve us well in executing on our long-term strategic priorities as we enter the next phase of our company’s growth. Rob’s leadership style is also a wonderful fit to advance Shake Shack’s culture of ‘Enlightened Hospitality,’ and we are thrilled to welcome him to the team.”
Shake Shack’s current CEO, Randy Garutti, will continue through May 20, which will also be his final day serving on the board. He’ll then transition to an adviser position through the end of the year.
Garutti, who has been with Shake Shack for two-plus decades, announced his retirement plans in December. He joined Meyer’s Union Square Hospitality Group 24 years ago as its youngest GM in company history, working at Tabla and Union Square Café. Garutti rose to director of operations for USHG’s fine-dining portfolio. In 2001, Shake Shack hit the market as a hot dog cart from Eleven Madison Park’s kitchen. Three years later, when it evolved into a permanent kiosk, Garutti asked to lead the project. He directed expansion nearly five years later into a multi-unit fast casual that exited 2023 with 518 restaurants, including 334 in the U.S. It opened a record 85 units last year and another 80 or so outlets are planned for 2024.
“I also want to express my heartfelt gratitude to Randy for the exceptional impact, leadership and dedication he has brought to Shake Shack since its inception as a hot dog cart in Madison Square Park to what it has become today— a beloved brand with over 520 restaurants across the world,” Meyer added. “Randy’s commitment to this brand for over 20 years, including during this time of transition, will be an enduring part of Shake Shack’s success story.”
Lynch said in a statement he was eager to help Shake Shack “grow into its greatest potential.”
“Shake Shack is special in the restaurant space—I love the food, the thoughtful Shack designs, and the soul of the brand,” he said in a statement. “As I have learned more about the company, I have also gained tremendous respect for the strong culture that has been an integral part of the company’s success since its founding. I’m honored to have the opportunity to lead Shake Shack into the next phase of growth and I look forward to working with the board, our leadership team, and our licensed partners to realize the brand’s full potential.”
“It’s been my honor and privilege to serve as Papa Johns CEO for the past five years,” Lynch added in a separate statement. “I could not be more proud of the work our executive leadership team, team members, and franchisees have done to grow and transform this brand. This was an incredibly difficult decision for me, as I see all of the upside potential that exists for this great company. That being said, I feel good about this decision knowing that Papa Johns is very well positioned for both the short and long term. I am certain that Papa Johns’ incredible leaders, franchisees and team members will continue to do what only Papa Johns can: deliver better pizza to the world.”
Shake Shack’s same-store sales increased 2.8 percent in Q4 year-over-year, led by 1.4 percent traffic growth across in-store and digital channels. Average weekly sales were flat at $76,000 per store per week, or about $4 million in annualized AUV.
“The CEO search committee recognized Rob’s proven track record in leading scaled brands globally while delivering strong results for stakeholders,” said Jeff Lawrence, a member of the CEO search committee and an independent board director. “His deep and demonstrated experience in marketing, data analytics, technology and four-wall economics gives us great confidence that he is the right leader to take Shake Shack to even greater heights. Above all, the committee found Rob’s leadership style and focus on fostering great workplace culture to be an ideal fit for Shake Shack’s cherished people-first hospitality ethos.”
Lawrence was joined on the CEO search committee by independent board directors Lori George, Chuck Chapman, and Josh Silverman.
There are some growth levers potentially ahead for Lynch that he has a track record in. Shake Shack has about 30 drive-thrus today, with plans for more. The brand also doesn’t boast a loyalty program (Papa Johns has gone from 12 million to north of 32 million members in the last five years for its rewards arm) and has a marketing spend of about 1 percent at the moment, generally lower than much of the sector (Chipotle is at 3 percent, for one example). The company has spoken about potentially growing this as it seeks to raise awareness in new markets as it expands.
“Lynch’s experience in marketing and with much larger organizations should benefit Shake Shack as it continues to scale, and we are particularly intrigued by Lynch applying his marketing prowess at Shake Shack, which has recently begun to delve into marketing as a more important driver of traffic and brand awareness,” William Blair research analyst Sharon Zackfia said in a note. “Lynch also has expertise in data analytics and technology that should translate well, while his history with franchised concepts begs the question of whether any change could occur in the future to Shake Shack’s company-owned model in the U.S.”
