Papa John’s competes for ‘cautious’ consumers

Papa John’s International Inc. said competition for cautious consumers remains intense, but that it is positioned to build on the double-digit growth in profit and revenue it achieved in fiscal 2012, company officials said in a fourth-quarter earnings call.

Consumer spending is still far from robust, noted founder and chief executive John Schnatter, meaning Papa John’s would have to continue to market quality to differentiate itself from competitors.

“We’re seeing a cautious consumer right now,” Thompson said. “From the beginning of the year, the tax holiday expiring, fuel prices and the delay in income tax returns all are playing into consumer confidence. Value and choice are going to remain for some time, but the pizza category not only is resilient, but also a great value in an environment like this, and we believe a quality positioning will continue to serve us well. People are going to make a choice for something that’s better.”

Chief marketing officer Andrew Varga said Papa John’s would continue to price its products just above its main competitors, Pizza Hut and Domino’s Pizza. The chain is currently promoting an $11 Steak and Cheese specialty pizza, only $1 above the $10 price point where competitors have advertised their large pizzas.

Still, Papa John’s reported same-store sales gains for fiscal 2012, marking the ninth consecutive year its same-store sales were positive or flat. The company also opened 280 net locations worldwide, its largest increase in unit count in more than 10 years.

“Given the global climate we’re operating in during the quarter and the year, I honestly am very impressed with these results,” Schnatter said. “We certainly expect this continued growth to keep happening. Today we’re approaching 4,200 restaurants globally, with a strong global development pipeline with agreements in place to open approximately 1,400 restaurants over the next six years.”

NFL partnership goes into overtime

Papa John’s also signed an extension with the National Football League to continue its sponsorship of the league and the Super Bowl. The company just completed the third year of an initial three-year partnership.

Varga would not disclose the length of the new deal, but said, “Suffice it to say, we’ve been thrilled with the first three years of our partnership.”

The executives also noted the marketing coup of signing Denver Broncos quarterback Peyton Manning first as a spokesperson and then as a Denver-area franchisee.

“It gives us such a fantastic brand-building platform with some of the most intense pizza consumers in the United States, and in some cases around the world,” Varga said. “Adding Peyton Manning into the mix with our founder just provides enormous authenticity for the brand as we go to communicate using this platform.”

Papa John’s also continues to drive incremental adoption of its online-ordering system.

“We continue to improve our online sales mix,” Varga said. “I think we’ve said in the past that we’ve been north of 40 percent, and we continue to believe that online is just critical, not only for the customer experience but just in general for being able to drive more top-line sales. We love the progress we’re making there.”