Dive Brief:
- Papa John's has been struggling to hire and retain delivery drivers, which make up 60% of its employee base, due to low unemployment and competition for drivers, according to a recent BTIG report.
- Delivery driver turnover at Papa John's has reached 220% following negative publicity and a subsequent decline in orders.
- BTIG expects the pizza chain to turn to more third-party delivery services following its nationwide partnership with DoorDash to supplement its existing drivers.
Dive Insight:
Given its recent bout of bad press surrounding the downfall of founder John Schnatter, Papa John's has had a particularly difficult time retaining talent at all levels. It has gone through several CMOs and may soon hire someone to help stabilize the brand, BTIG said in its report. The company recently hired a chief people officer to help implement the brand's talent management strategy.
Outside of its publicity problems, Papa John's isn't the only restaurant chain looking for ways to retain and even supplement its existing labor force. McDonald's has been struggling with retention as well and has been looking into ways to create more efficiencies with its labor intensive operations. Shake Shack is testing out a four-day work week to try and improve retention.
The pizza chain has a particularly difficult task, especially since delivering pizza has a reputation of being dangerous, adding wear and tear to vehicles that are often owned by the drivers. Drivers also face low pay and inconsistent tips, with yearly salaries averaging about $21,000. Papa John's drivers average about $15,000.
BTIG said it expects Papa John's to use third-party delivery not only to remove some of the stress over finding delivery drivers, but also to help reduce labor costs during times when business is slower, giving operators more flexibility with staffing.
DoorDash will also allow Papa John's to deliver to further locations that were traditionally outside of its coverage area unless the customer paid a higher delivery fee, according to BTIG. This could also help boost sales, especially since management told BTIG that 50% of DoorDash sales are incremental with 20% of these transactions coming from outside of a typical delivery zone. Pizzas ordered via DoorDash are priced higher as well, averaging about $17 compared to $12 for pizzas ordered directly through Papa John's, according to BTIG.
Given Papa John's has been on a downward sales slide for multiple quarters, this extra boost from third-party delivery could be what the brand needs to start turning profits around.
