Papa John's hopes to 'breakaway' from value-focused competition

Feb. 27, 2014 | by Alicia Kelso
Papa John's hopes to 'breakaway' from value-focused competition

Papa John's scored a touchdown with its marketing initiatives, including its partnership with Peyton Manning, as well as its premium price point, technology initiatives and strong LTO pipeline.

The brand announced its Q4 and 2013 results in a call Wednesday, including comp sales of 9 percent for North America, and 7 percent for international on the quarter, and 4 percent for North America, and 7.5 percent for international on the year.

The company opened 132 net global units during Q4, and 265 net global units on the year — of which 183 were international and 82 were in North America.

2014 a 'transformational' year for marketing

Marketing was a big driver in the chain's results, especially its continuation of a "premium" positioning.

"Our LTO offerings have served as a springboard for introducing more high quality and innovative products in 2014, including our Double Cheeseburger Pizza, which continues to be very popular and, at a $12 price point, proves that consumers are willing to pay a premium for quality," founder/CEO John Schnatter said during the call.

Papa John's will continue to leverage these types of premium promotions to separate itself from the competition. Tony Thompson, president and COO, said such a strategy will help 2014 be a "transformational" year for the brand.

"We're still in a very competitive environment with value-seeking consumers. We know we're the premium leader. We're also just starting on a price point standpoint — we think (2014) is a really good opportunity to break away from being viewed in a grouping of pizza restaurants that are typically value and price oriented," he said.

Bob Kraut, CMO, reiterated that goal, saying this year, with the help of the company's new agency Grey, Papa John's will "consciously pull forward a strategy to maintain our premium pricing by reducing pass-throughs and reinvestments in the form of discounts."

Also to remain competitive, Papa John's will focus on creating a "stronger emotional connection" for customers, which will give them a reason to pay and retain pay for those premium products.

The power of Peyton

Also during the call, Schnatter outlined the benefits of having a strong NFL sponsorship presence and Peyton Manning as part of the brand's marketing campaign.

"In 2013, we enjoyed another solid year as the official pizza sponsor of the NFL and did a better job than ever in activating that sponsorship," he said. "Peyton has been a big part of our success."

In Q4, Schnatter added, a large competitor outspent Papa John's three to one and also leveraged a pro NFL quarterback.

"We are very keen on the association and the success we're having with Peyton. When we first got involved with Peyton, the market capital of Papa John's was $900 million. Today it's over $2.2 billion. Anyone that has an opportunity to get involved with Peyton Manning should jump all over it," he said.

Digital priorities

This year, Papa John's will also shift some of its total spend to digital and social media channels, in addition to TV. These efforts have thus far led to 45 percent of domestic sales coming from digital channels. The company has topped the $5 billion mark in all-time digital sales.

"We are well on our way to becoming the first national pizza chain to achieve a domestic systemwide digital sales mix of 50 percent," Thompson said.

Complementing its focus on digital is the company's impending rollout of a new POS system, called FOCUS. The new system is a "technologically advanced system designed specifically and uniquely for our model and will continue to support store-level productivity and profitability," Thompson explained.

The system features touchscreen technology that is expected to drive speed and order accuracy. Executives said the system will be "largely complete" across 3,600 restaurants by the end of this year.

Topics: Food & Beverage, Marketing / Branding / Promotion, Online / Mobile / Social, Operations Management, Papa John's, POS

Alicia Kelso
Alicia has been a professional journalist for 15 years. Her work with, and has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, and Franchise Asia magazine. View Alicia Kelso's profile on LinkedIn

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