BTIG: Papa Johns’ value menu attracting new base of customers

Dive Brief:

Papa Johns’ $6.99 value platform, Papa Pairings, appears to be attracting customer attention, according to a BTIG report emailed to Restaurant Dive.
About 20% of surveyed Papa Johns’ customers claim they have ordered from the menu since its September launch, according to a BTIG survey of over 1,000 customers.
BTIG believes that this menu is attracting new customers with earnings less than $60,000 per year.

Dive Insight:

Papa Johns franchisees are finding the platform is mixing about 15% to 20%, according to BTIG. Papa Pairings, which has been offered for a limited time at select restaurants, allows customers to pick from items like Papadias, Chicken Poppers, medium one-topping pizzas and desserts for $6.99 each so long as the customer picks two or more items.

“We believe this platform will become a permanent menu fixture for Papa John’s that could help drive consistent traffic and check growth for the brand, mirroring the results at Domino’s for over a decade,” BTIG said.

Domino’s Mix and Match value platform typically results in a higher-than-average check since consumers typically order more than the required two items. This trend is starting to happen with Papa Pairings, according to BTIG.

A typical Papa Johns’ customer earns over $75,000, but more customers are selecting value offerings instead of using them as add-ons, according to BTIG. Premium items, such as Stuffed Crust and Shaq-A-Roni continue to be important to consumers, however, according to BTIG’s report.

New menu items have helped drive long-term growth for Papa Johns, with average unit volumes up 30% since 2019. For example, when Stuffed Crust was launched in 2020, it had a 25% sales mix. The addition of new flavors like Pepperoni Stuffed Crust have only helped. Forty percent of the customers surveyed by BTIG said they typically order this product. The newest additions, Papa Bites, launched this week at $4.99 each and will offer more menu diversity.

“We believe the diversity of the menu with new innovation should support these elevated volumes relative to pre-pandemic as Stuffed Crust, Papa Pairings, Papa Bowls, NY Style Pizza and a handful of other Papadias were not on the menu in 2019,” BTIG said.

Customers aren’t really phased by the 8% to 9% price increase Papa Johns implemented over the past year, according to BTIG. Of the 1,073 customers BTIG surveyed, about 4% said Papa Johns had a low value rating and 20% were neutral. The cohort of consumers that said pricing went up too much were lower-income and mostly lived in the South and Midwest. Households that didn’t mind the pricing change tended to be higher-income families of three or more people, according to BTIG.