Dive Brief:
- Papa Johns’ North America comparable sales were down 3.6% during the second quarter, primarily driven by lower transactions, despite continued growth in its aggregator channel, CFO Ravi Thanawala said Thursday on the chain’s Q2 earnings call. The chain saw declines in its first-party pizza delivery and to a lesser extent in its carryout business.
- Consumers have been managing their overall spend and prefer brands that are offering value. Previously, Papa Johns’ marketing and innovation efforts have focused more on higher priced, premium products, he said.
- During the quarter, Papa Johns began shifting its focus to initiatives that can help boost its value perception, but still maintain its brand positioning, Thanawala said.
Dive Insight:
Papa Johns has already made significant investments in improving its marketing strategy and in boosting North American development. Earlier this year, it rolled out its Back to Better 2.0 plan, which includes a $20 million investment in marketing. During the second quarter, it unveiled its brand platform Better Get You, providing a refreshed brand visuals, tone and message, Thanawala said. That platform has already seen an improvement in brand awareness and higher intent to purchase quarter over quarter, he said.
“Our work now is to couple this new brand platform with value messaging so that we are best positioned to convert attention to sales in the third quarter,” Thanawala said.
Papa Johns’ strategy highlights its ingredients and pizza while also emphasizing products at competitive prices, Thanawala said.
“We are being thoughtful and intentional in our approach, by focusing on opportunities for modest transactions without placing unmediated pressure on store level profitability,” Thanawala said. “We believe this is critical in our alliance with our franchise needs.”
In June, the brand launched a Cheesy Burger Pizza limited-time offer for $9.99. Papa Johns shifted its media towards its Papa Pairings, the chain’s mix and match platform that costs $6.99. Earlier this year, Papa Johns launched its extra large New York Style pizza for $10.99, which Thanawala said is at a more competitive price point than when it offered the same pie last year.
Papa Johns North America comparable sales
“The products are priced attractively and at parity with competitors’ offers within the QSR segment,” Thanawala said. “Over the past eight weeks, we have seen our value perception improve. This gives us confidence that if we maintain an appropriate balance of value offerings and premium products, it will lead to improved sales trends over time.”
The pizza chain is also testing various value offerings in its company-owned restaurants in some markets, by offering starters or add-ons to increase basket size.
The chain is working to improve its loyalty program to boost conversion rates and reduce friction, especially with one-third of its digital sales occurring with its app where customers tend to purchase more frequency, Thanawala said.
In July, the company added an update to its app that includes calls to action, improved navigation and elevated imagery of its most commonly featured loyalty rewards. It is also evolving the digital platform to boost conversions, drive weekly transactions and improve customer insights, Thanawala said.
“We are actively identifying opportunities to more quickly assess information, streamline the ordering journey and improve the overall user experience,” he said.
