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Papa John's may be secretly testing a Shaq pizza

Brian Sozzi
Editor-at-Large

Papa John’s (PZZA) CEO Steve Ritchie doesn’t rule out NBA Hall of Famer turn Papa John’s franchisee and board member Shaquille O’Neil getting his very own Shaqeroni pizza in the not too distant future.

“Shaq’s favorite pizza is an extra large pizza with sausage and extra cheese,” Ritchie told Yahoo Finance in an interview. The quicker Papa John’s could get that Instagram photo friendly pizza on the market — with the backing of its biggest celebrity endorser — the better.

Papa John’s said Tuesday after the close of trading that North America and international same-store sales fell 6.9%% and 0.1%, respectively, in the first quarter. The North America sales decline marked an improvement from an 8.1% drop in the fourth quarter as Papa John’s offered more $6 pizzas and rolled out several new flavors.

On an adjusted basis, Papa John’s earnings of 31 cents a share beat analyst forecasts by 7 cents.

Papa John’s reiterated its 2019 earnings guidance in a range of $1 to $1.20 a share. The company still sees North America same-store sales falling in a range of 1% to 5% for the year.

Shares rose 2% on Wednesday’s session. Papa John’s managed to show progress on its turnaround in the first quarter. And that appears to have been enough for investors.

“We are making progress on the turnaround,” Ritchie said, adding that it will take more time for brand perception to improve following ousted founder John Schnatter’s insensitive racial remarks in 2018.

Enter Papa John’s newest friends.

Starboard with an assist

Activist investor Jeff Smith’s Starboard Value disclosed a $200 million investment in Papa John’s in February. It recently exercised an option to buy $50 million more in Papa John’s stock. Smith is now chairman of Papa John’s, joined by O’Neil following a new tie-up.

Ritchie told Yahoo Finance that Shaq — a well-known fast-food restauranteur — has already been in the company’s kitchens tossing out new food ideas. He has also begun doing outreach to communities in a bid to repair Papa John’s image.

“Shaq is all in,” Ritchie says.

Ritchie declined to comment on reports that Schnatter is looking to divest his 31% stake in Papa John’s.

Brian Sozzi is an editor-at-large and co-host of ‘The First Trade’ at Yahoo Finance. Follow Brian Sozzi him on Twitter @BrianSozzi

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