Papa John's tops pizza segment in service three years running

Feb. 19, 2002

LOUISVILLE, Ky. -- It appears that soft sales in the pizza segment have only hardened Papa John's resolve to focus on customer service.

For the third year in a row, the company has led the category in customer service, according to The American Customer Satisfaction Index (ACSI).

The report is an extensive study of the preferences of 16,000 Americans conducted throughout 2001 by The National Quality Research Center at the University of Michigan Business School.

Papa John's, the industry's number-three pizza chain, received 78 out of a possible 100 points on the survey, followed by Domino's Pizza at 73 (up 5.8 percent from last year), Pizza Hut at 71 (a 1.7 percent jump over 2001), and Little Caesars at 70 (up 1.7 percent).

Chris Sternberg, vice president of investor relations for the 2,900-store chain, said the company is pleased with the news, but not ecstatic.

"Were not really satisfied with a 78, because we think we need to do better," said Sternberg. "It says we're not doing a good job with one out of four customers. It means we have to continue to get better and keep a full-court press on product quality and customer experience."

Sternberg doesn't believe the company is doing anything special to receive top honors three times running, rather that it's covering the basics consistently.

"A lot of that includes order accuracy, delivering pizzas on time, making sure our drivers are courteous -- that they have a smile on their face when they come to the door," he said. "Product quality is a big part of that, too ... and it's the thousand other little things we do that leads to high customer satisfaction. We never waver on that."

In a comment of particular interest to pizzeria operators, Claes Fornell, professor of business and director of the University of Michigan Business School's National Quality Research Center, which compiles and analyzes the ACSI data, said a low product price isn't always the best means of luring customers.

"Customer satisfaction based on low price is often fragile and highly dependent on the company's cost structure and price concessions from suppliers," said Fornell, in an ACSI release.

Sternberg said Fornell's assessment aligns with his company's core marketing strategies.

"We think that the type of customer satisfaction achieved in 2001 was quality driven and not price driven," he said. "In a price-intensive environment where transactions are slowing because the category is soft, it's very difficult to run strong comp sales if you're not willing to heavily discount product to drive short-term transactions.

Sternberg added that such a decision may cost the company in the short term, but that as sales rebound, customers will know where to go.

"We hope that if we focus on the things we can control, like quality and the customer experience, then over time the comp sales will come back," he said.

Topics: Public Companies

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