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Papa John's cleans house amidst 1st sales gain in 2 years
The long-troubled Papa John's brand reported its first quarterly same-store sales gains in 2 years, beating analysts estimates. But the good news was tempered with bad news for three brand leaders who are leaving the company.
November 6, 2019 by S.A. Whitehead — Food Editor, Net World Media Group
On the heels of an encouraging third-quarter financial report, Papa John's announced that it has essentially cleaned house with some of the key members of its management team, as recently named CEO Rob Lynch said the company makes its move to a more streamlined model of leadership.
As a result of the changes, the company said that CFO Joe Smith, Chief Operating and Growth Officer Mike Nettles and CMO Karlin Linhardt are leaving Papa John's. A new former transformation officer at PPG Industries is assuming an expanded CMO role, while a couple of other in-house promotions are taking place to fill the international and North America COO functions.
First though, the brand released its quarterly earnings on a decided high note, since results show nice same-store sales gains that beat analysts estimates.
In North America, the brand posted a 1% same-store sales gain, versus Bloomberg's estimates of -0.6%, while international sales for the company were even with estimates at a gain of 1.6%, according to numbers released to the media this morning.
Other key results for the quarter that ended Sept. 29, include:
- Revenue: $403.7 million vs. $384.6 million expected
- Adjust EPS per diluted share of 21 cents vs. 19 cents in last year's Q3.
- Ten-cent quarterly loss per diluted share versus 42-cent loss last year's quarter.
- International franchise sales increase of 10.1%, excluding the impact of foreign currency
- Refranchised 44 restaurants in Q3 and Q4.
"We are very pleased to have positive comparable sales in North America for the first time in two years," President and CEO Rob Lynch said in the report, after just two months in the leadership role at the brand.
"I have spent a large part of my first two months meeting with our franchisees, team members and other key stakeholders. We are all focused on the right things - reinforcing the quality of our food, improving our unit economics and promoting a company culture that sets us up to win for years to come.
"While there is much work to do, we have put in place a clear strategic roadmap to align the interests of our customers, employees, franchisees, and shareholders. Our strategic priorities will guide our path to a brighter future."
Part of that strategic roadmap is, of course, today's leadership changes which Lynch said are designed to build a more efficient brand from the top down. Today's leadership changes include a key new hire, as well as several promotions and role expansions for several current executives at the Louisville, Kentucky-based company.
"Today I'm announcing a new management structure that will be the foundation on which we build our future," Lynch said in a news release about the changes. "As we introduce a more focused plan and strategic priorities for the company, we are realigning Papa John's senior management, promoting leaders within the company and adding proven talent.
"The strong, streamlined team has more clearly defined responsibilities and priorities, which I believe will empower our senior leaders to make quicker, better decisions, collaborate more effectively and focus investment and effort on the key drivers of Papa John's future growth and success."
Key changes include:
- New chief commercial and marketing officer: In about a week's time, former PPG Industries Chief Transformation Officer and Vice President of Consumer Brands Max Wetzel assumes the role of chief commercial and marketing officer, responsible for marketing, menu strategy, product innovation, customer experience and a new project management office.
- New COO, North America: Promotion of former senior vice president and chief of restaurant operations, Jim Norberg, to COO, North America.
- New COO, International: Jack Swaysland takes over the role of COO, International.
"I'm very excited to welcome Max Wetzel to the Papa John's team," Lynch said. "A transformational leader, Max earned a reputation as a strategic and growth-oriented consumer marketer during his career at H.J. Heinz and most recently, PPG.
"Now, as our new chief commercial and marketing officer, he will lead the company's efforts to reestablish the superiority of our pizza with consumers across our various customer platforms."
As a result of the reorganization, Chief Operating and Growth Officer Mike Nettles and CMO Karlin Linhardt will leave the company after a short transition period, a news release said. CFO Joe Smith will also leave next year after the fiscal 2019 year-end and the company's search for a new CFO.
"On behalf of the entire Papa John's team, I want to express gratitude to Joe Smith for his dedication to the company, his commitment to a smooth transition and the big impact he has made in the many important roles he has served here, including as CFO since April 2018," Lynch said in the release. "I also want to thank Mike Nettles and Karlin Linhardt for the significant contributions they have made to Papa John's and wish them the best in their future endeavors."
Aside from the aforementioned appointments, Papa John's executive leadership team also includes:
- Marvin Boakye, chief people and diversity officer.
- Madeline Chadwick, promoted to senior vice president, Communications and Corporate Affairs.
- Justin Falciola, chief insights and technology officer.
- Shane Hutchins, chief supply chain officer.
- Caroline Oyler, chief legal and risk officer.
About S.A. Whitehead
Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.
