Shake Shack hires CEO from Papa John's after its stock lagged the pizza chain for a half-decade
By Steve Gelsi
Shake Shack is a bigger company, but its stock has not measured up to Papa John's performance
Shake Shack Inc. on Thursday said it has hired as its new chief executive an executive who's led pizza chain Papa John's to a better stock performance over much of the past five years.
Shake Shack (SHAK) said Rob Lynch, who has led Papa John's International Inc. (PZZA) since a move from Arby's in 2019, will take the reins as chief executive on May 20.
Shake Shack's stock rose 0.3% as Wall Street welcomed the move.
"We are optimistic that Lynch's marketing/ops experience in the limited service segment will be valuable to the company in its next phase of growth," Raymond James analyst Brian Vaccaro said.
Lynch, who has 25 years of experience in the restaurant and consumer-packaged-goods sectors, helped launch the "We have the meats" advertising campaign that has boosted Arby's brand.
Shake Shack credited Lynch with achievements at Papa John's including "record global system-wide sales" and the building of a "track record in leading scaled brands globally while delivering strong results for stakeholders."
Those results included a stronger stock performance for Papa John's over the past five years, since Lynch joined Papa John's, than that of Shake Shack. (See chart below.)
Shake Shack's stock has been hotter in recent months, on its stronger-than-expected results in February, as well as news that CEO Randy Garutti planned to retire after 20 years at the company including about a dozen years as chief executive.
Papa John's, meanwhile, named its finance chief, Ravi Thanawala, as interim chief executive, with Lynch set to remain at the company until April 30 in an advisory role. Papa John's said it has launched a process to find a permanent chief executive.
Papa John's stock fell 5.6% on Thursday. The stock is down 11.1% so far in 2024, while Shake Shack shares are up 47.5%. The S&P 500 SPX is up 10.2% to date in 2024.
Shake Shack has a market capitalization of $4.6 billion, compared with $2.4 billion for Papa John's.
-Steve Gelsi
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03-21-24 1404ET
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