During the past year, the pizza restaurant chain Papa Johns has been dealing with a major sales slump. After the founder of the company made some controversial remarks, there was a public backlash. Both customers and sponsors expressed their displeasure which forced Schnatter to resign as a member of the company board. Due to slumping sales, the company chief executive officer Steve Ritchie has teamed up with an investor to help infuse funding into Papa Johns. This investment from Starboard Value LP will likely help Papa Johns remain in operation and work towards increasing their sales.
With an impressive track record of providing funds for major companies, Steve Ritchie has looked to enlist the assistance of Starboard Value LP to turn around Papa Johns. Once Starboard Value LP invested in Papa Johns, the top executive of Starboard Value has become a board member of Papa Johns. Over the past few months, Papa Johns and Starboard Value have looked for a buyer for the company. The founder John Schnatter has looked to buy the company back, but Starboard and the management of Papa Johns rejected his proposal. As a result, John Schnatter owns 30 percent of the company and is gradually being shunned away from Papa Johns.
As well as getting funds from investors such as Starboard Value, Papa Johns CEO Steve Ritchie is looking to make changes to the strategy of the company. One of these changes in strategy is to shift the focus from helping franchisees to increasing sales. He found out that the company must significantly increase its sales so that it can become profitable again. Another strategy is to restore the company’s reputation. Steve Ritchie spent a lot of time visiting franchise owners to talk about how they can help improve the company’s image among consumers. Ritchie has also suggested that the company offer more community outreach as well. As the company increases its sales, Steve Ritchie will look to pay off the debt from the capital provided by investors. These efforts will hopefully enable Papa Johns to regain its status as the leading pizza restaurant chain.