Papa Johns executives acknowledged the brand’s ups and downs on Thursday at the Atlanta-based pizza chain’s annual analyst and investor meeting, with new CEO Todd Penegor promising that the company will focus on improving core menu consistency and brand messaging to boost long-term performance.
“This brand is not broken by any stretch of the imagination,” Penegor said. “People know us for better people, better ingredients, better pizza. They just don't understand why we're better, and we're going to show them. We're going to bring it to life in our restaurants, in our messaging, and we're going to make sure that not only the original generation that grew up with our brand, but the next generation feels great about us.”
Papa Johns recently reported a 3.1% decline in revenue and 6% same-store sales decline in its North America market for the third quarter ended Sept. 29. CEO Todd Penegor came out of retirement to join the pizza chain, after spending eight years as Wendy’s chief executive.
Besides marketing messaging and core menu quality and consistency improvement, Papa Johns executives also touched upon increased digital technology investment, development in white space both inside and outside the U.S., and more.
Here is a breakdown of the different elements of Papa Johns’ second comeback journey:
Core menu consistency
One of the most crucial aspects of Papa Johns’ comeback strategy is getting the core product (classic crust pizza) right every time, no matter what store customers order it from. Menu innovation (like the introduction of Papadias), Penegor said, has increased complexity in the back of house, which has caused some of the basics of making pizza to suffer. One of the priorities, Penegor said, is to recalibrate pizza ovens so that each one is capable of making the same quality pizza every time.
“If you go back to 2019, medium and large original crust made up about 75% of the crust type orders, and now in 2024, we’re at just over 50% due to all of the other products that we brought in the restaurants,” Penegor said. “As I'm working in the restaurants, we're cranking out a lot of great pizzas, and then all of a sudden, some unique product or topping was put out there, and it takes us away from making a great pizza. We’re not moving away from innovation… but we need to find that right balance, because pizza continues to remain our core offering.”
Standout marketing
Although Papa Johns executives claim that the company wins against competitors in taste tests, consumers need “reminding” of the brand’s top-quality position. The best way to do that, Penegor said, is to drill down into more personalized marketing offers and brand messaging.
“We have that opportunity to tell our story around quality in unique and different ways,” Penegor said. “We have to have a fighter brand mentality, and we have to play the game different, to show up on different and unique stages, tell our story, to stand out from the competition, and to make sure that folks connect with us a little more often.”
Improved value perception
One of the top stories Papa Johns needs to tell moving forward is value perception—which the brand has mentioned before as an opportunity. Papa Johns executives mentioned that traffic and transactions declined mainly because of decreased value perception.
“Having an always-on message with Papa pairings on the value side, having some great premium innovation, like the New York style XL pizza at $10.99, and coming out with Shaqaroni at a nice price point,” Penegor said. “Our value perception is improving quickly, and that's a journey. These are good indicators of where our business can go into the future. Our brand health is strong, but we know we still have a lot of opportunities.”
Digital technology and data investment
One way to improve price and value perception is by investing more in the Papa Johns loyalty program so customers can earn more Papa Dough. The key is to allow customers to earn rewards faster, and also to create personalized offers that reward repeat guests, executives said.
“We had been sending out a lot of blanket messages for a while that weren’t personalities, so it was a huge opportunity to try something different,” Penegor said. “We had a lot of loyalty members that had not reached the $75 threshold, so we had a targeted message that went out to those customers, supplemented them with a little more Papa Dough to get them in the door, and we saw an immediate drive in behavior. This gave us the courage to revamp our loyalty program.”
Penegor added that, compared to the company’s peers, Papa Johns is lagging a little when it comes to digital technology investment. These future improvements include continued loyalty investment, app and website improvements, and adding delivery tracking.
Refranchising in select markets
Papa Johns executive leadership suggested that an “evolution” of the company’s franchisee base is necessary, perhaps including consolidation of stores and refranchising in select markets. This would give new opportunities to existing franchisees to take on new stores, as well as bring in new franchise owners to the fold.
“As we think about refranchising opportunities, we have an incredible opportunity to expand the brand and continue to take share in the Top 15 markets,” said Ravi Thanawala, Papa Johns chief financial officer.
Global development
Thanawala focused much of his prepared remarks on store development but especially internationally. The U.S. markets still have plenty of white space, but that is especially true overseas. According to Thanawala, Papa Johns will be refocusing in China and the U.K., growing in Korea and Spain, and looking to enter India and Saudi Arabia for the first time.
“We want to truly lean into the global brand that we are and know we can be,” he said.
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