New York (CNN Business)Papa John’s has a new CEO. But will Rob Lynch, formerly the president of red hot sandwich chain Arby’s, have the chops to turn the struggling pizza chain around?
Lynch was named CEO of Papa John’s (PZZA) Tuesday morning. He replaces Steve Ritchie, the veteran Papa John’s executive who took over in the wake of the scandal surrounding founder and former CEO John Schnatter. Schnatter was forced to resign after reports emerged that he used a racial epithet during a conference call. He also courted controversy by blaming poor sales on football players protesting the national anthem at a time when Papa John’s was the official pizza sponsor of the National Football League.Sales continued to fall in the United States even after Ritchie took over. That was one reason why activist investing firm Starboard Value, which is famous for agitating for big changes at Olive Garden owner Darden Restaurants (DRI), took a $200 million stake in Papa John’s earlier this year and pledged to turn things around. Starboard CEO Jeffrey Smith took over as Papa John’s chairman.”I am thrilled to welcome Rob to Papa John’s at this pivotal moment in the company’s history,” Smith said in a statement. “His proven record transforming organizations and realizing the growth potential of differentiated brands is ideally suited for Papa John’s as the company sets forth on its next chapter.”Read MorePapa John's lost a year. Now it's ready to stage a comeback Lynch, who was president of Arby’s since 2017, joined that chain as chief marketing officer in 2013. He’s widely credited with turning the company around thanks to its “We have the meats” ad campaign, and introducing quirky new sandwiches that included items you don’t normally find at a fast food joint, such as venison, elk and duck. “I am humbled and excited by the opportunity to work with this outstanding team to help make Papa John’s the best pizza company in the world,” Lynch said in the statement. “I absolutely believe that Papa John’s best days are ahead.”Papa John’s is slowly turning around. Although same-store sales in the United States are still falling, the pace of the decline has slowed. And since Starboard made its investment, the company has boosted its digital efforts to compete more effectively in a world where many consumers now order food using services like DoorDash, UberEats (UBER) or GrubHub (GRUB). Shares of Papa John’s, which rallied on the news of Lynch’s hiring, are up more than 10% this year. That’s better than struggling rival Domino’s (DPZ), but is lagging the performance of Pizza Hut and Taco Bell owner Yum Brands (YUM). Lynch also worked for Taco Bell before joining Arby’s. Papa John’s board would be glad if Lynch is as successful as another Taco Bell veteran was at reviving a troubled restaurant franchise. Former Taco Bell chief Brian Niccol has completely turned around Chipotle (CMG) after its E. coli nightmare, with shares even hitting a new all-time high.Papa John’s has tried to put the Schnatter scandal behind it by removing his face and other imagery from its pizza boxes, web site and restaurants. The company has also hired basketball legend Shaquille O’Neal as its new spokesman and a member of its board.Schnatter is still the company’s largest shareholder, with a more than 15% stake. But he has been steadily selling shares since he left the company.