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Papa John's POS rollout to be completed by Q1

The company remains bullish on North China and is focused on shifting its marketing and menu strategies to support growth in the market.

November 5, 2014 by Alicia Kelso — Editor, QSRWeb.com

Papa John's turn in a comp sales increase of 7 percent for its North American system during the third quarter. These results, announced this morning, were achieved despite strong commodity headwinds that affected much of the restaurant industry.

CEO/Founder John Schnatter said the lift was driven by a number of factors, including a demand for quality, service and operations executions, distribution, marketing and digital.

"All these areas continue to get better," he said.

Digital inches toward 50 percent

Schnatter said the company is setting the pace in the digital space, with just under 50 percent of domestic sales coming from this channel.

"But reaching 50-percent digital mix and beyond really isn't the main story. A relentless focus on delivering the best possible pizza experience to our customers is the real point and we believe our easy to use digital ordering channels combined with a highest quality ingredient and demonstrably superior service are elevating Papa John's in the minds of consumers," he said.

COO Steve Ritchie said consumers have responded favorably to the company's Papa Rewards loyalty program, mostly because of its simplicity and free pizza reward. The company will continue to make digital investments, he said, including the continued rollout of its new POS system, called FOCUS. The deployment is now 50 percent complete and is expected to be completed by the end of the first quarter 2015. Ritchie added that, once in place, the system will continue to enhance the customer experience.

He also added that local marketing initiatives and "good LTOs" helped Papa John's navigate an intense competitive environment in which much of the pizza category embraced aggressive pricing and value offers.

Execuvites avoided specifics about taking any pricing to navigate record-high commodities. CFO Lance Tucker did say some pricing strategies were "altered," however.

"We are pricing more frequently, so we are pricing monthly… We are going to try to remove the good bit of volatility that you have seen over the last several quarters," he said.

International

During Q3, Papa John's opened 59 net global units, split nearly equally between US and international. On the international side of the business, comp sales were up 5.5 percent during the quarter. Ritchie said these results were driven by strong performances in the UK, Russia, the Middle East and Latin America.

The China supply chain crisis that affected numerous other brands also had somewhat of a negative effect on Papa John's. Executives are in Beijing this week to "assess our overall operation and make further enhancements to marketing, menu and model," Ritchie said.

The company remains committed to having a strong North China presence and remains bullish on the long-term prospects in this market.

Ritchie said from a financial perspective, for this to happen, some improvements are needed in the market. Papa John's main priority in achieving this is to "turnaround some of the challenges we have from the marketing, menu and model standpoint," he said. This is why China is the only international market that Papa John's owns corporately. 

_{Photo provided by Wikimedia.}

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