Investing

Papa John's Is One Of The Most Amazing Fast Food Turnarounds In Years

Douglas A. McIntyre

Published: November 29, 2019 1:55 pm

Last Updated: January 6, 2020 12:51 am

Papa John’s founder and defrocked CEO John Schnatter continues to pummel the company’s current management for what he claims is a inferior product and weak operational skills. However, Papa John’s recent financials and its stock price show that Schnatter’s comments are based on the fact he believes he should still run a company he nearly ruined. The Papa’s John’s turnaround under new management is among the most impressive in decades.

Schnatter could have been pushed out by Papa John’s board over his own poor management. However, he owned too much of the stock to make that possible. A racial slur he made in July 2018 allowed the board to sack him. He has been bitter about the action ever since. His most recent attack was that members of the board and management “used the black community and race as a way to steal the company,”. He added that if he returned that a “day of reckoning will come”.  Based on what has happened Papa John’s, there is nothing to reckon about.

So far this year, Papa’s John’s stock price is up 53%. Shares of Domino’s Pizza are up only 19%. The stock of the largest fast food chain in the country–McDonald’s–are up only 10% over the same period.

After several quarters of falling revenue and dipping same store sales, in the most recent quarter revenue rose 4% from $404 million. North America comparable store sales were up 1%. Rob Lynch, President & CEO said “We are very pleased to have positive comparable sales in North America for the first time in two years. 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.”

He was right.