Papa John’s International Inc. chief marketing officer Brandon Rhoten will step down at the end of May, president and CEO Steve Ritchie told investors on Tuesday.
Rhoten joined Papa John’s last May after serving as vice president of media and digital/social at The Wendy’s Co.
“Through his research and analysis over the past year, Brandon Rhoten has helped us better understand our challenges and assisted the team in the development of a comprehensive strategic plan to take the brand forward,” Ritchie told investors during a first-quarter earnings call.
Ritchie will act as interim CMO while the Louisville, Ky.-based pizza chain searches for a replacement.
“We will be initiating a search for a new marketing leader that has the necessary skills to execute our strategy with urgency and agility. … We need to be faster in improving how we communicate and connect with consumers to improve results,” he said.
For the first quarter ended April 1, Papa John’s reported a 5.3-percent same-store sales decline at North American locations, compared with 3-percent growth the previous year. International same-store sales rose 0.3 percent, compared with an increase of 6 percent the previous year.
Net income was $16.7 million, or 50 cents per share, a decrease of 41.1 percent, from $28.4 million, or 77 cents per share, the previous year. Revenue was $427.4 million, falling 4.9 percent from $449.3 million the previous year.
Papa John’s repurchased 2 million shares during the quarter.
The company closed a net 17 locations in North America and opened a net 30 units overseas, closing the quarter with 5,212 locations, of which 3,424 are in North America and 679 are company-owned.
With overseas operations driving sales, Ritchie announced the promotion of Timothy O’Hern to president of the international division. He remains senior vice president and chief development officer. Jack Swaysland was promoted to senior vice president and chief operating officer of the international division.
“Both Tim and Jack’s 40-plus years of service to our brand, as well as their experience and understanding of international business operations, make them uniquely qualified for these very important roles,” Ritchie said.
Papa John’s is still transitioning to a new strategy emphasizing the chain’s longstanding “Better Ingredients, Better Pizza” slogan.
“In the near future, you’ll begin seeing creative that brings the meaning back and explains how we define ‘better,’” Ritchie said. “Things such as fresh, original dough, fresh packed sauce, meat without fillers and pizzas with no artificial flavors or colors.”
The company is also working to improve value perception with moves such as the launch of a $12.99 Papa’s Meal Deal, which includes a large one-topping pizza, choice of a breadstick side dish and a two-liter soda.
“We’re just a month in and we’re already starting to see value perception improvements from the work,” Ritchie said, adding that other deals would be tested in North America and the United Kingdom.
“The combination of ‘better’ plus ‘accessible value’ will drive differentiation and access to the brand in 2018, which will result in improved comps and transactions,” he said.
He told investors to expect other value-oriented tests, as well as new menu items, without going into details.
Papa John’s needs to respond as other segments besides pizza offer delivery, Ritchie said.
“We have to look at diversification and variety within our menu, in addition to many other things, to be competitive in the overall space, and this is much broader than the pizza category now,” he said. “As you think about aggregators broadening the accessibility of delivery … we do not want to have the veto vote against Papa John’s.”
Contact Bret Thorn at [email protected]
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