Recently, embattled pizza chain company Papa John’s announced that the company will be taking a $200 million investment from Starboard Value LP. As part of the deal the investment companies Chief Executive Officer Jeffrey Smith will sit on the board of directors right along with current CEO of Papa John’s Steve Ritchie. Papa John’s has been under the leadership of newly appointed CEO Steve Ritchie since his appointment in early 2018.
The acceptance of the investment by Starboard comes at a time when the company has been declining similar investments by other outside entities formally associated with the company. Initially, the accepted investment from Starboard is thought to be because of the investment companies experience in the restaurant business. In 2014 the investment company was able to successfully replace over 12 board member seats including the CEO at Olive Garden. The move was done due to specific changes laid out by Starboard in their initial investment contract.
Today Starboard will seek to turnaround Papa John’s due to their underperformance in their fourth-quarter earnings report. The decline in sales was already showing before the internal scandals hit the company, therefore, it is understandable that other areas are at play to be changed.
Papa John’s has stated that they will use the $200 million investment to pay down their current depth and invest back into the company with the remaining funds. After the announcement of the investment, Papa John’s Pizza stock increased by 13%, their biggest jump since July.
Steve Ritchie stated that the focus for the company moving forward is to invest in making more sales rather than assisting franchisees. The plan as they call it will be rolled out across 5 months and will have a primary focus on better positioning the company to experience growth that will benefit the investors, stakeholders and the company as a whole.
Find out more about Steve Ritchie: http://stevemritchie.com/