What happened

Shares of Papa John's International (NASDAQ:PZZA) jumped on Monday after the struggling restaurant chain closed an investment deal with Starboard Value. The deal concludes the strategic review the company began in September. That review began a few months after founder John Schnatter resigned as chairman of the board following reports that he used a racial slur during a practice conference call.

Papa John's stock was up about 11.3% at 12:10 p.m. EST.

Two Papa John's pizzas.

Image source: Papa John's.

So what

Papa John's announced a $200 million strategic investment from Starboard Value on Monday. Starboard will have an option to invest an additional $50 million in the company on or before March 29, 2019.

As part of the deal, Papa John's is adding two new independent directors to its board of directors. Jeffrey C. Smith, CEO of Starboard, will become the chairman of the board, and Anthony M. Sanfilippo, CEO of Pinnacle Entertainment, will come on as a director.

Papa John's will use about half of the proceeds to repay debt.

Check out the latest Papa John's earnings call transcript. 

Now what

Papa John's reported preliminary fourth-quarter and January 2019 results along with the announcement, and the numbers make it clear that the company has a lot of work to do. Systemwide North American comparable sales dropped 8.1% in the fourth quarter, and they tumbled 10.5% in January. Fourth-quarter adjusted earnings per share are now expected to come in at the low end of the company's guidance range of $1.30 to $1.60.

The company blamed consumer sentiment challenges around the brand, its new loyalty program, and ineffective promotions in a competitive environment for the weak results.

"These results are disappointing to all of us, but we have a strong foundation built on quality and are confident in the great growth potential for the brand, particularly with the support of our new partners," said Papa John's CEO Steve Ritchie.