LOUISVILLE, Ky. – Papa John’s announcement Thursday that it’s creating a new global headquarters in Atlanta came with assurances to allay fears that, yet again, another corporation headquartered in Louisville is heading for greener pastures.
The homegrown pizza chain said Georgia’s biggest city will become Papa John’s second base of U.S. operations with key departments, including marketing and franchise development, heading south.
That drew a worried response from John Schnatter, the company founder who said he was “saddened” by the decision. Despite pledging to maintain a presence in Louisville, “I’m concerned that the relationship won’t be the same as it was for three successful decades,” Schnatter said in a statement.
The company said about 550 of its 750 corporate jobs would remain in Kentucky, a decision that chief executive Rob Lynch insisted speaks volumes about the company’s continuing commitment to Louisville.
“We’re happy and excited to maintain a large corporate presence here,” he told The Courier Journal. “We love Louisville … The reality is we’re going to have three distinct headquarter hubs. Louisville will be our biggest.”
Election 2020: Can the stock market predict the next president?
Anticipating the questions, Lynch asserted that Papa John’s isn’t abandoning Louisville. “Our intention is to continue to grow in Louisville,” he said.
Then why Atlanta? Executives said it’s a mecca for fast-food chains and restaurant innovation. The company is restructuring, and part of its growth plans rely on access to a larger airport with routes to domestic and international markets and a larger pool talent.
It’s also Papa John’s largest corporate-owned restaurant market and home to the company’s newest QCC, or quality control center. Such amenities, Lynch said, “are key to our brand’s future.”
The company still must sort out how many people from Louisville will shift to Atlanta. Everyone with a department moving to Georgia will get an offer to relocate or the option to accept a severance package.
Georgia Gov. Brian Kemp and state economic development leaders welcomed the company and touted the state as business-friendly and a hotbed for restaurant innovation: “I’m confident that Papa John’s will continue finding success in Georgia, and I look forward to seeing the exceptional opportunities this brings to hardworking Georgians across metro Atlanta,” Kemp said in a statement.
Louisville Mayor Greg Fischer congratulated Papa John’s and stressed the positives: While “some of their jobs are moving to Atlanta,” Lynch’s pledge to maintain Louisville as the largest of three corporate headquarters is a welcome development, the mayor tweeted early Thursday morning.
Louisville has been home to major headquarters, but mergers and consolidations have drastically thinned the ranks of companies over the decades that are still based here, among them Brown and Williamson Tobacco and L&N Railroad, which was bought by CSX.
Papa John’s transition, along with other organizational changes, is expected to wrap up by summer 2021 and won’t impact Papa John’s company-owned or franchised stores, as well as a nationwide network of quality control centers, which are commissary operations, according a press release.
Several functions — menu innovation, marketing, human resources, communications, diversity and inclusion, customer experience and new franchise development — will shift to Atlanta from Louisville.
Information technology, the company’s largest group of employees, plus legal and supply chain teams, will remain in Louisville. Employees were told about the changes after the announcement.
The company has 2,063 stores in 47 countries, and 3,284 in North America, with plans to grow both aggressively.
The last year has seen a dramatic turnaround for a chain roiled by controversy in July 2018 after Schnatter, who launched the business in 1984 in a broom closet of his dad’s Jeffersonville, Indiana, tavern, apologized for using a racial slur during a media training conference call.
News of his remarks ignited a firestorm that sent the business with 100,000 employees into a tailspin. The stock plummeted. Many Black customers pledged to boycott the brand. Several organizations withdrew from sponsorships linked to Papa John’s and Schnatter.
The founder eventually sold his one-third share of the company and left the board of directors, which had already begun replacing top executives. Lynch replaced CEO Steve Ritchie in August 2019.
When he was hired away from Arby’s, Lynch said, the stock price had dipped to $42, a low not seen for many years during the company’s 36-year history.
But it shot over $101 earlier this month and has settled at about $84 in recent trading. Many analysts credit the focus on shoring up online ordering and customer loyalty programs, as well as the star power of ex-NBA star and pitchman Shaquille O’Neal.
O’Neal has been the face of the company as it introduced the Papadia, a lunch fold-over pizza sandwich, and a massive new pizza. The player-turned-entrepreneur has a stake in several Atlanta-area stores and a seat on the company’s board.
The company has gotten a lot of help from the pandemic, which has fueled a pizza industry built on customers ordering from home and receiving deliveries at their doorsteps.
At Papa John’s, which began offering monthly financial updates during the COVID-19 crisis, an early estimate of North American same-store sales showed an increase of 24% during August. Second-quarter North American same-store sales, a key metric in the fast food and quick-serve segment, increased 28%.
Executives have said repeatedly the key to survival in the hyper-competitive pizza delivery chain industry is to keep growing the footprint. This month it announced that franchisee HB Restaurant Group will open 49 new locations in New Jersey and the Philadelphia metropolitan area within the next eight years. The company sees a huge opportunity to add more stores internationally, Lynch said.
Papa John’s said it’s still deciding on a potential location in the Metro Atlanta area and expects to complete the selection process late this year. Georgia economic development officials provided no details on proposed incentives to lure the headquarters. “This project remain active” so no comments are being provided about it, spokeswoman Marie Hodge Gordon said in an email.
Lynch, who lives in Atlanta with his family and took an apartment in Louisville, said all top managers over various divisions will live where he or she supervises a team.
YUM Brands also has kept it headquarters in Louisville, but several top executives relocated to Plano, Texas, in early 2016. That’s where the company’s global operations team and its subsidiary Pizza Hut are located. Yum owns KFC, Pizza Hut and Taco Bell.
This article originally appeared on Louisville Courier Journal: Papa John’s is creating a new global headquarters in Atlanta