Previously, he held leadership positions at Taco Bell, HJ Heinz Company, and Procter & Gamble, and has 20 years combined experience in quick-service and consumer packaged goods.
Notably, PR Week named Lynch its 2017 Outstanding Marketer of the Year. He was called the 2017 Content Marketer of the Year by Digiday and was picked by AdAge as the 2015 Marketer of the Year.
It fit recent changes. When Starboard made a strategic investment in February—a move that included placing its CEO Jeff Smith as chairman—Papa John’s said it would use up to half of the initial proceeds, or $100 million, to advance its turnaround priorities. Of that amount, $40 million headed to marketing. And half was spent in the second half of 2019.
Additionally, it joined a 25 basis-point increase in Papa John’s national marketing fund contribution rate to 5 percent of restaurant sales in 2020 (to Saleh’s earlier point).
That measures as roughly $20 million to support a campaign featuring fresh brand ambassador Shaquille O’Neal. The NBA legend is set to break through Papa John’s materials in early September.
In November, Lynch added chief commercial and marketing officer Max Wetzel, previously the vice president of consumer brands and chief transformation officer at materials supplier PPG Industries. Wetzel will oversee Papa John’s marketing, menu strategy, product innovation, and customer experience. Additionally, company veteran Jack Swaysland was promoted to chief operating officer, International, while Jim Norberg—a long-time McDonald’s executive who joined Papa John’s this summer as chief of restaurant operations—assumed the title of chief operating officer, North America.
Three execs departed: chief operating and growth officer Mike Nettles, chief marketing officer Karlin Linhardt, and chief financial officer Joe Smith.
And Papa John’s took some same-store sales momentum into the final fiscal quarter of the year:
- Q2 2016: 4.8 percent
- Q3 2016: 5.5 percent
- Q4 2016: 3.8 percent
- Q1 2017: 2 percent
- Q2 2017: 1.4 percent
- Q3 2017: 1 percent
- Q4 2017: -3.9 percent
- Q1 2018: -5.3 percent
- Q2 2018: –6.1 percent
- Q3 2018: –9.8 percent
- Q4 2018: –8.1 percent
- Q1 2019: –6.9 percent
- Q2 2019: –5.7 percent
- Q3 2019: 1 percent
This is all welcomed news following a painful split with founder John Schnatter, who exited in 2018 following a report he used a racial slur in a conference call with then-marketing agency Laundry Service. He’s since filed suit against the firm.
Saleh said there are other reasons to like Papa John’s in 2020, too.
“We expect the change in leadership to drive fresh ideas including menu innovation and improved operations as we began to see in 3Q19 with company-operated restaurant margins improving by 490 basis points from last year,” he said.
Better labor efficiency, lower advertising, and favorable auto insurance due to the implementation of Drivosity GPS tracking, which is helping reduce driver accidents, all helped.
Also, corporate stores, of which just 621 of 3,296 North America units are company run, continue to have nearly 200 basis points higher insurance costs than franchisees, “suggest further gains are possible,” Saleh said.
“... Jim Norberg could help Papa John’s corporate stores close the 200-basis-point gap with franchisees on insurance costs, which have doubled in the past five years,” he added.
Saleh predicts that 200 basis points of restaurant-level margin equates to about $13 million in annual EBITDA, or 31 cents earnings per share.
Franchisee margins improved in Q3 for the first time in more than two years, thanks in part to the slightly positive same-store sales.
In terms of future sales drivers, Saleh said, menu innovation and an increase in marketing spend from incremental company contributions draws the framework. “We believe the governors on menu innovation have been removed with the appointment of new leadership, allowing for faster, more streamlined innovation such as new pizza crusts which were previously considered sacred cows,” he said. “Additionally, we would not be surprised to see Papa John’s introduce menu innovation tailored to compete at lunch with lower price points.”
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January 04, 2020 at 05:09AM
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