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Shaq Joins Papa John's As Board Member, Brand Ambassador, As Domino's Eyes Huge Expansion

Basketball legend Shaquille O’Neal has struck a deal with pizza chain Papa John's International in which the basketball great will join the company's board of directors, invest in nine of the chain's restaurants in greater Atlanta, and be the face of the restaurant in commercials and public appearances.

Shaquille O'Neal

Papa John’s plans to pay O’Neal $8.3M in cash and stock over three years for his endorsements, according to a Securities and Exchange Commission filing. O'Neal's investment will be about a 30% interest in company-owned stores. 

O'Neal is no stranger to the restaurant business or real estate. The four-time NBA champion and television sports analyst currently owns a Krispy Kreme Doughnuts franchise in Atlanta and previously owned 27 Five Guys Burgers and Fries franchises.

He is also the founder and owner of Big Chicken, a fast-casual fried chicken restaurant in Las Vegas, and Shaquille’s, a fine dining restaurant in Los Angeles. O'Neal is also a minority owner of the Sacramento Kings NBA franchise.

The NBA superstar partnered last year with Boraie Development of New Brunswick, New Jersey, to develop an apartment tower in his hometown of Newark, and O'Neal is an investor in Steady, an app that allows users to find part-time and flexible work opportunities.

The Papa John's deal comes not long after the Louisville, Kentucky-based company, which has about 5,200 locations in 45 countries and territories, reported its first annual sales loss in a decade. Last year, sales were down 12% year over year, coming in at about $3.7B.

Besides lagging sales, Papa John's' image has taken a beating recently. Company founder John Schnatter drew criticism in 2017 because of comments he made about NFL player protests, and in 2018 he stepped down as board chairman after reports that he had used a racial epithet during a conference call.

More fundamentally, a legal struggle broke out between Schnatter, who owns about 30% of the company, and the board of directors over who would run Papa John's. Last summer, the board adopted a poison pill to prevent Schnatter from acquiring a majority stake in the company.

Early this month, Schnatter agreed to leave the board as part of a settlement with the company. Papa John's has since accepted an investment of as much as $250M from hedge fund Starboard in return for a nearly 10% stake. The fund's CEO, Jeffrey Smith, has become Papa John's new chairman.

Papa John's is currently the No. 4 pizza chain in the United States by sales as well as by number of units, trailing Domino's, Pizza Hut and Little Caesar's. Pizza is a $45.1B industry, with more than 75,200 pizzerias nationally.

Top pizza chain Domino's said earlier this year that it will pursue aggressive expansion by adding about 2,000 new locations domestically by 2025.

Its goal is to carve an even deeper niche in the saturated U.S. market by driving out competitors. Currently, the company has more than 14,800 units worldwide.

“There’s a competitor out there that exists because we stopped growing stores in the 1990s,” Domino's USA President Russell Weiner said, Restaurant Business reports.