A return to company standards needed within Papa John's, says Schnatter

April 10, 2002

NEW YORK -- Papa John's International, the industry's fastest-growing company throughout the 1990s, won't return to such an expansion pace until current stores begin doing what got them there, said John Schnatter, the company's founder, CEO and president.

According to Dow Jones Newswires, Schnatter said via a Webcast of Papa John's presentation at an investors conference in New York, that Papa John's isn't in a "a big hurry to open a bunch of stores ... because we need to fix what we've got."

The company will instead open between 150 and 200 stores this year, in addition to closing as many as 100.

The company must improve the customer experience at the store level, he added, and operators need to stick to company standards to ensure that.

"We don't have as much control as we like," said Schnatter, referring to the fact that nearly 75 percent of Papa John's stores are franchised. "The top 40 percent really get it. Another 20 percent waver back and forth from running the stores right to trying to make a buck. And 30 percent of the system is looking for financial returns, and those folks don't work well in our system at all. ... We need to get them up to our standards or get aggressive in getting rid of them."

Referring to the company's ongoing sales slide, Schnatter said some franchisees "got into the fat-and-happy phase, and now they're into the fat-and-unhappy phase."

Still, Schnatter said he believes Papa John's system can support 3,300 restaurants in the U.S., and 1,500 international stores. Currently it has 2,925 stores, including 183 Perfect Pizza outlets in the U.K., which are due for conversion to the Papa John's brand.

Topics: Public Companies

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