Coverage: Shaq joins the Papa John’s team

Papa John’s International Inc. added former basketball star Shaquille O’Neal to its board as the pizza chain works to repair its image following controversies tied to its founder and former chief executive.

Jacob Bunge and Micah Maidenberg of The Wall Street Journal had the news:

Mr. O’Neal will also participate in Papa John’s marketing efforts and has invested in nine of the chain’s restaurants in the Atlanta area, the company said.

Papa John’s Chief Executive Steve Ritchie said in an interview that Mr. O’Neal’s appointment to Papa John’s board furthers efforts to diversify the company’s leadership, board and community involvement.

“He will make a meaningful difference to the way some consumers might think about the brand,” Mr. Ritchie said.

Shares in Papa John’s, which have fallen 14% over the past year, rose 4.3% on Friday.

The Louisville, Ky.-based chain is trying to stem falling sales after a year of tumult surrounding John Schnatter, the former CEO who founded the company and steered its growth for decades. Mr. Schnatter drew controversy in November 2017 for blaming slowing sales growth on the National Football League’s handling of player protests during the U.S. national anthem, which some interpreted as criticizing the protests themselves.

Lizzy Saxe of Forbes.com reported that the company is making a strong statement:

This rebranding, while perhaps not quite as political in itself as, say, the recent Gillette ad about toxic masculinity, is in line with the strong statements many companies have made to establish themselves as upholding the progressive values that young Americans care about. In a time when the news makes it easy to feel like 2019 is an unending hellscape of sociopathy and incompetence, moves like this make it clear that the American people are informed and as such disinterested in putting their dollars toward businesses that don’t align with our values. As such, Papa John’s needs white supremacists to buy its pizza about as much as Gillette needs the disgruntled trolls who made displays out of getting rid of their razors after that Superbowl commercial.

Shaq’s charm, celebrity, and business acumen make him a perfect choice for this pivot, which already seems to be paying off for the brand. It remains to be seen how this deal will ultimately shake out, but as Shaq said to CNBC, “Pizza is fun, and I’m in the fun business.”

Lauren Hirsch and Amelia Lucas of CNBC.com reported that the company wants to do more in diversity:

O’Neal, who initially approached Papa John’s, will serve as the board’s first African American director, as well as an investor in nine Papa John’s restaurants in Atlanta. Over time, customers may see him endorsing the brand in commercials, as well as social and digital integrations.

Ritchie said that O’Neal is not the only diverse voice that Papa John’s is trying to bring to the company.

“We are working through diversity not only on the board, but also the leadership team, franchise base and supplier base,” he said.

The three-year endorsement deal will net him $8.25 million, paid half in cash and half in Papa John’s stock. That’s on top of the $5.8 million on reimaging costs that the chain spent last year. Because of O’Neal’s role as an endorser and franchisee, Papa John’s does not expect that he will be considered an independent director under Nasdaq rules.