Papa John's breaks with top 3 chains' comps momentum

 
Nov. 3, 2010 | by Jennifer Litz

Papa John's has announced its Q3 2010 earnings for the period ended Sept. 26, with a less-than-lustrous same store domestic sales decrease of almost 1 percent. That’s a dip from the company's second quarter domestic comps, which had increased .4 percent.

The news is especially disconcerting because it breaks with the upward trajectory of the No. 3 pizza chain’s two closest competitors. Pizza Hut and Domino’s have both experienced same-store sales gains for at least this past quarter – the latter with a whopping 12 percent comps growth.

A couple of conspicuous differences between each chain's marketing message could explain the discrepancy. First, while Domino’s and Pizza Hut have successfully promoted price-oriented features – two $5.99 mediums and $8, $10, $12 price points, respectively – Papa John’s actually expressed a moving away from playing $10 pizza politics after its last earnings report. Perhaps the public isn’t ready.

Pizza Hut and Domino’s have continued honing their marketing messages on TV along the proven resonant lines of price point, and transparency, respectively. Papa John’s spots have had no such sticking points, though they’ve invested in NFL spots and, most recently for this quarter, a revamped online ordering platform.

The numbers:

Income and revenues were a mixed bag for the company. Net income for the third quarter of 2010 was $7.8 million, compared to 2009 third-quarter net income of $11.7 million, a decrease of 33 percent. Year to date, net income for the nine months ended September 26 was $37.9 million, compared to net income of $43.8 million for the comparable period of 2009, a 13 percent decrease.

Revenues looked better: $273.1 million for the third quarter of 2010, representing an increase of 6.5 percent from revenues of $256.3 million for the third quarter of 2009. Revenues were $839.6 million for the nine months ended September 26, 2010, representing an increase of 4.2 percent from revenues of $805.8 million for the same period in 2009.

President Jude Thompson diffused the unstable numbers with the brand’s international growth picture and new, yet unproven rollouts.

“The Papa John’s brand continues to grow, with 67 worldwide net unit openings during the quarter,” Thompson said. “And with over 1,500 units in our worldwide development pipeline, we are positioned to continue solid unit growth going forward. In addition, as the leader in online pizza sales, we are excited about the launch of our revamped online ordering site at www.papajohns.com. The site features enhanced graphics and upgraded features that make it easier and faster for customers to order, and offers the only national online pizza loyalty program.”

 


Topics: Business Strategy and Profitability , Franchising & Growth , Operations Management , Papa John's


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