Revamping Papa John’s Recipe for Success
Papa John’s, the iconic pizza chain, is facing a crisis. After reaching an all-time high of $138.53 in 2021, its shares have plummeted by a staggering 75%. The company’s missteps in value messaging, marketing, tech innovation, and loyalty programs have led to a significant decline in sales.
A Shift in Focus
Todd Penegor, appointed CEO last August, acknowledges that the company lost its way. “We got way out of position on the value proposition,” he admits. The Better Get You Some campaign, which featured higher price points than competitors, failed to resonate with consumers.
Slumping Sales
Papa John’s same-store sales in North America fell 4% in the fourth quarter, with foot traffic and ticket size declining by 2% each. For the full fiscal year, same-store sales dropped 4%, driven by a 3% decline in foot traffic and a 1% drop in ticket size.
A Recipe for Disaster
BTIG analyst Peter Saleh believes that increasing menu prices instead of focusing on order size was a mistake. “Operators that are winning in this market, like Darden, Texas Roadhouse, and Wingstop, are taking less pricing and driving transactions,” he notes.
Rebuilding Value
Penegor emphasizes the need to drive awareness of Papa John’s value offerings, such as Papa pairings, which allow customers to pair a medium one-topping pizza with a side for $6.99. By getting more customers through the door, the company can encourage them to trade up to more expensive items.
A Seamless Experience
Penegor, formerly CEO of Wendy’s, stresses that value is not just about the price; it’s about the entire experience. He has brought in Kevin Vasconi, a former Wendy’s executive, to lead the charge as chief digital and technology officer, with a focus on improving the app’s user experience.
International Growth
While international same-store sales growth was down less than 1% for the full fiscal year, it rose 2% in the fourth quarter, offering a glimmer of hope for 2025.
Competitor Insights
Domino’s, a key competitor, has seen its stock rise only 1% in the last year. However, Citi analyst Jon Tower believes it remains the leader in the category, as long as value remains a top priority for customers.
A New Strategy
Papa John’s is rethinking its approach, shifting from a national advertising focus to a balanced strategy that includes both national and local marketing efforts. Penegor believes this will drive in customers and increase profit for both the company and franchisees.
Time for a Turnaround
With a new strategy in place, Papa John’s is poised for a comeback. By refocusing on value, improving the customer experience, and driving awareness of its offerings, the company can regain its footing in the competitive pizza market.
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