- Papa John’s announced Tuesday that Arby’s president Rob Lynch will be its new CEO.
- Shares of the pizza chain rose as much as 8% on the news.
- The leadership change comes after a rough year for the pizza chain after a shakeup on its board of directors following founder John Schnatter’s use of a racial slur on a conference call.
- Watch shares of Papa John’s trade live on Markets Insider.
There’s a new leader at the helm of Papa John’s.
Shares of the pizza chain surged as much as 8% in early trading Tuesday after the company confirmed that Arby’s president Rob Lynch would be its new chief executive officer. That marked a roughly $100 million market cap increase for Papa John’s.
After six years at Arby’s, Lynch will replace Steve Ritchie as CEO, who has been running the pizza chain since 2018. The leadership change is the biggest event for Papa John’s since Starboard Value, an activist shareholder, invested $200 million in the company in February in an attempt to turn around the floundering chain.
Lynch is no stranger to bringing back a struggling brand. At Arby’s, he led a dramatic transformation that brought the chain back to strong growth and profitability.
"His proven record transforming organizations and realizing the growth potential of differentiated brands is ideally suited for Papa John’s," said Jeff Smith, chairman of the Papa John’s board of directors, in a press release. Papa John’s sales declined 12% last year across its 5,300 global locations. Last year, the company explored a sale of itself.
The announcement comes a few months after issues with Papa John’s founder John Schnatter reached a breaking point. Schnatter resigned as the chairman of Papa John’s board in July 2018 after apologizing for using a racial slur during a conference call in May 2018, but remained a member of the board and the largest shareholder.
That prompted the company to adopt a so-called poison pill strategy to keep Schnatter from a hostile takeover. In response, he sued multiple times and only agreed to leave the board entirely if he could choose a successor. He left the board in March and agreed to drop two lawsuits against the company.
Shares of Papa John’s are now up more than 15% year-to-date.
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