Papa John's gets $200 million investment from Starboard

Starboard Value CEO Jeffrey C. Smith is joining Papa John's as board chairman as part of a deal for the investment firm to invest $200 million in the troubled pizza chain.

The Louisville, Kentucky, company has struggled since the messy departure of its founder John Schnatter in late 2017.

In its most recent quarter, Papa John's International Inc. reported losses of $13 million and revenue tumbled 16 percent. The company has been struggling to distance itself from Schnatter, while also fending off rivals such as Domino's. On Monday, Papa John's said it now expects its annual profit will be at the low-end of its prior forecast.

Starboard's investment "represents a strong vote of confidence" in the pizza chain, said Olivia Kirtley, a member of the Special Committee and most recently chairman of the Papa John's Board. 

Papa John's CEO Steve Ritchie has been appointed to the board, the company said. Anthony M. Sanfilippo, former CEO of Pinnacle Entertainment, also gained a board seat.

The board changes sent company shares up 6 percent before the opening bell.

Who is Starboard? 

Starboard, which can make an additional $50 million investment through March 29, is known for its activist investments in companies such as Yahoo and Darden Restaurants, the owner of Olive Garden. 

Starboard's role in Darden involved creating a 300-page blueprint for how to fix the restaurant chain's ailing health. The plan included a stinging assessment of how Olive Garden's breadsticks and salads had changed for the worse, as well as criticism that the Italian food chain had stopped salting water when boiling pasta. 

Starboard successfully waged a proxy fight against Darden, installing its own board members and pushing the chain to update its menu and technology. Olive Garden's sales have since rebounded, as well as Darden's stock.