Papa Johns CEO Todd Penegor — who just completed his first full quarter at the company in December — aims to course correct after the company reported multiple earnings periods in a row of declining sales.
On Monday, the Atlanta-based pizza reported a continued downward sales trend in its preliminary results for the full year and fourth quarter of 2024, ended Dec. 29, with same-store sales down 4%, driven by lower traffic and ticket, although international same-store sales ticked up 2% for the period.
Penegor spoke on Tuesday at the ICR conference in Orlando, Fla. about fixing some of the mistakes the company made under previous leadership, including the move to increase national advertising commitments for franchisees, while simultaneously making the 3% local marketing expenditure commitment optional. This change, in turn, caused local franchise co-ops to disappear.
“Not having the co-ops there to actually bring the franchise community together in the communities that we serve… is a big miss, especially in a business like pizza that’s very regional and localized,” Penegor said. “So, there may be some investments we are going to have to front run in some company markets to prove a strong business case moving forward.”
Besides focusing on local marketing strategies, Penegor said that he also wants to “get back to basics,” which for Papa Johns, means focusing more on — as the brand slogan says — “better ingredients, better pizza,” and less on complex menu items that make operations more challenging.
“We’ve made our restaurants really tough to operate,” he said. “We’ve added a lot of SKUs over the last few years, and a lot of rhythm-breakers. We’ll take a look at some of the lower-moving SKUs and pull them out of the rotation. We want to sprinkle in some great innovation around the core menu…We really need to get back to being the best pizzamakers in the business.”
Penegor said that he did not think the company completed its “Back to Better 1.0 initiative” and wants to take the time to rethink core aspects of kitchen operations like improving the cheese flavor profile, taking a look at the dough recipe, and retraining restaurant staff.
He also wants Papa Johns to be a leader in technology again, which the company has not been for a long time. Penegor said he knows the brand needs to play “catch up on the technology front,” and will be making significant investments in digital technology so that the pizza brand can be more on the cutting edge of what’s possible for a quick-service pizza chain.
“We've got a ton of customer data, but we’ve just under-leveraged it,” he said. “We have a lot of testing going on with the CRM [customer relationship management] database and we’re starting to see that resonate with customers. We revamped our app, though we still have some work to do…and we’ll continue to push that piece of the puzzle.”
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