Better sales, better retention at Papa John's

Feb. 25, 2004

LOUISVILLE, Ky.—Better results are yielding better moods among the leadership at Louisville, Ky.-based Papa John's.

In a Feb. 25 conference call discussing the number-three chain's 2003 fourth quarter and full-year results, Papa John's top brass sounded unusually optimistic about the pizza industry heading into 2004.

Despite a more-than 18 percent decline in profits in 2003 (see Papa John's 2003 was down, but '04's pizza sales are up), the company's latest sales reports are encouraging, and last year's multi-million-dollar investment in store manager retention appears to be working.

Comp-sales rose 2.2 percent in February on the heels of a 4 percent increase in January. October marked the last time the company saw such increases, when the introduction of two new barbecue chicken pizzas boosted sales 4.5 percent.

Expect more new products to come, said the chain's new marketing chief, Gary Langstaff.

"We're looking at an increased role for new products in our marketing plan," Langstaff said, admitting that the company was hesitant to broaden the menu in the past.

Founder and CEO John Schnatter, a long-time champion of lean menus, said history shows that new items jumpstart sales: "Most of our success in the last two years has come from new products."

(Though not discussed during the conference call, the company is testing take-and-bake pizza in Denver and Colorado Springs, Colo. Calls to the company to discuss the project have not been returned.)

Officials also said incentive bonuses instituted last year were effective in reducing store manager turnover. In 2002, general manager turnover was 46 percent, but it dropped to 36 percent in 2003. At the assistant manager level, 2002's turnover was 78 percent, while 2003's rate dropped to 60 percent.

Last year's flat unit growth, officials said, isn't expected to recur, as the chain's infrastructure has been beefed up and is positioned for new growth, especially in international markets.

Read related Papa John's stories by clicking here.

Topics: Operations Management , Papa John's , Public Companies

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