Dive Brief:

• Papa John's plans to add a call center to manage orders that come to stores via phone. Phone orders account for about 30% of all orders at a typical Papa John's store, Restaurant Business reports. 
• The objective of the call center, dubbed Papa Call, is to free up employees so they have more time to make pizzas or fulfill deliveries. The chain expects the system to be in place systemwide by the end of 2020.
• CEO Rob Lynch told Restaurant Business that taking calls is a secondary piece of the operating model: "It can be something that takes away from what a driver is supposed to be doing and it can increase delivery time by a few minutes. Or it may increase the time it takes to get a pizza in the oven. This removes all that."

Dive Insight:

Across the industry, the percentage of phone orders has been decreasing as mobile orders grow. Digital orders are expected to continue on a double-digit growth trajectory, increasing 23% between 2014 and 2019, representing $26.8 billion, according to the NPD Group. This means freeing up calls from employees' to-do lists should be a minor disruption operationally, while also enabling them to generate more throughput. 

Further, during the company's Q4 call last week, Lynch said tests have indicated that this shift "should have a meaningful impact," in driving incremental transactions, increasing efficiencies and improving customer experience.  

"That will eliminate the need for our people in the restaurants to answer the phones, which can be a very distracting and challenging dynamic at your busiest time. So it will allow us to more effectively utilize our labor and will result in a better customer experience and fewer dropped calls because people will not have to be put on hold anymore," he said. 

Such efficiencies are the name of the game now in the cutthroat pizza segment, particularly as a growing demand for delivery — and a historically tight labor market — has challenged operations. As such, the company is also testing a new dough spinner, expected to be rolled out to company-owned units this year,. This equipment reduces preparation time by up to 40 seconds, according to Restaurant Business, and frees employees up from pounding out the dough and prepping it for the make line, which Lynch called "the most difficult task in the restaurant" during the earnings call. 

Increased throughput and more efficient labor distributions should yield more profitability for franchisees, which is likely welcomed news for the system that has experienced two years of sharply declining sales stemming from a public fallout with founder John Schnatter.

The chain has already started to show signs of a turnaround. In its most recent earnings report, Papa John's reported 3.5% comp sales growth for North America and a 5% increase in revenue for Q4 2019. Importantly, Lynch said during that call that franchisee margins are "definitely starting to improve."

However, cutting costs and maximizing efficiencies isn't unique to Papa John's, and these latest moves won't be a silver bullet to regain the market share it has lost. Domino's is also maximizing labor efficiencies through technology, including GPS, its Pie Pass program, autonomous delivery and AI-based labor scheduling. 

During Domino's Q4 call, CEO Ritch Allison said, "We're breaking down every aspect of the operation to try to find opportunities for efficiency, because we know that labor costs are only going up over time." In other words, changes like Papa Call, an automated dough spinner and autonomous delivery may just be the tip of the iceberg for coming operational changes across the segment.