Everyone loves an American comeback story. Papa John’s is long overdue for a comeback and hope may be on the horizon.

The company is in a difficult position because the Board of Directors has been asleep at the wheel as evidenced by years of mismanagement and poor oversight. As Mark Twain famously explained, “It’s easier to fool people than convince them that they have been fooled.” Shareholders and franchisees have been played, as I forewarned years ago.

The new CEO Todd Penegor, seems to understand the severity of the situation, but has tough odds to save the company, as the task at hand will be very difficult. To do so, he must solve six major aspects of the business: the balance sheet, food quality, customer experience, traffic count, comparable store sales, and net store growth.

Currently, with all six key levers being negative, the cost of cheese rising above $2.00 per pound, and the cost to fill a multitude of C-suite positions, earnings per share will be negative year-over-year through the second half of 2025.

Failing to address any of these six levers will mean failing to fix Papa John’s, resulting in countless store closures, and effectively “rearranging deck chairs on this pizza Titanic.”

While its main competitors thrive, my namesake is languishing. Over the past year, Pizza Hut has opened 622 net stores and Domino’s has opened 725 net stores. In the last six months, Papa John’s has closed 23 net stores.

In May 2022, former CEO Rob Lynch projected that Papa John’s would open nearly 2,000 new stores by the end of 2025, but clearly failed to deliver. He revised that downward (to between 1,150 and 1,400 stores) in the next quarter’s earnings call, and then stopped mentioning the projection altogether. Clearly, he failed to deliver. Domino’s is currently facing a class action lawsuit by shareholders for similar misguidance.

Papa John’s also saw North American comparable store sales decrease by 4% last quarter, contributing to a 19% decrease in operating profit compared to Q2 2023. It’s no surprise that Axios recently ranked Papa John’s among the biggest “losers” in the fast-food industry.

The stock price (PZZA) says it all: Papa John’s has been on a steep downward trajectory even in the midst of a bull market, falling from about $141 to $52. Simple math suggests the stock price will most likely be closer to starting with a 3 versus a 5.

Fixing Papa John’s will take time – and a lot of money from the company in franchise incentives, upgrading outdated technology, and filling the C-suite positions, thus hurting EPS over the next nine months.

As I’ve mentioned previously, the warnings have been there for years. It breaks my heart to see this, because the people who are suffering most are the franchisees and team members – hard working folks who have nothing to do with the decisions that have harmed the brand.

The shareholders and franchisees were misled, misinformed, and left holding the bag by former Chairman Jeff Smith, former CEO Rob Lynch, and the current Board of Directors. The litmus test: Smith bailed out at $82 per share, knowing the company was in bad shape while approving company communications stating the opposite.

The franchisees are all small business owners, and some of the best people I’ve ever worked with. Sadly, their hard work has been undermined by the poor and short-sighted approach of the company’s former leadership team. They were misled with bad strategy and hidden, disastrous information.

The company is in this situation because leadership abandoned our product differentiation of quality, leading to subpar products and service.

Quality was the fundamental premise of the Papa John’s brand from day one in 1984. In recent years, however, management commoditized the brand and tried to compete on price and mediocre food quality. This has been harmful to store-level unit economics, putting our franchisees in a bind from which they cannot escape without fundamental changes at the corporate level.

One example of the mismanagement is how the company’s earnings per share have been boosted by leaving many high-paying and important C-suite general and administrative positions (including marketing, IT, and procurement) unfilled, resulting in lower near-term future EPS when those positions are filled. Also needed is a huge, long overdue investment in point-of-sale technology.

The Board of Directors has been in denial, thinking superficial changes will right this ship quickly, but the truth is that Papa John’s is in dire need of a complete turnaround. Achieving a healthy balance sheet, superior food quality, improved customer experience, higher traffic count, higher comp sales, and more new store builds will require an investment of tens of millions of dollars from Papa John’s International and a lot of time to execute.

This will be a massive, arduous undertaking, but new CEO Todd Penegor may be the right guy for the task if he has the fortitude, tenacity, persistence, and backbone to get the job done. A corporate guy won’t be able to stomach this. The company needs an inspirational, entrepreneurial leader. In the meantime, EPS will have to go backwards for the health of the Papa John’s system to go forward.

I am emotionally committed to the franchisees and the brand and will always want what’s the best for the franchise family, employees, shareholders, and communities.

As someone who has pulled Papa John’s out of this kind of ditch several times before, most recently in 2009-2016 (see charts below), I know what it takes.

I sincerely hope Mr. Penegor has the stomach for what needs to be done, because it’s not going to be easy, and it’s not going to be cheap. He certainly seems like an excellent choice as CEO and at least realizes how dire the situation is. But it will be a Herculean task, and he will need the Board of Directors to support him.

If the Board and the new CEO agree to go “all-in” and work together, they can turn this ship around and usher in a new era of prosperity at Papa John’s.

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Papa John Schnatter is the founder and former Chairman and CEO of Papa John’s International.