Papa John's: Super Bowl tie-in, messaging drove 1Q growth

Staff Writer
The advertisement drove up game traffic as well as added enrollment to Papa Rewards online

Papa John’s domestic marketing has helped drive positive results in the first quarter, as a Super Bowl tie-in not only drove traffic during the big game but also advertised its Papa Rewards online loyalty program and increased enrollment, executives said during an earnings call with investors and analysts.

Chief marketing officer Andrew Varga said online sales now account for more than 35 percent of Papa John’s orders.

Additionally, as they have done in previous calls, Papa John’s executives credited the long-term effort to own its “better ingredients, better pizza” positioning for allowing the chain to stay at the $11 price point without hurting traffic while its largest competitors compete largely against one another for deals between the $5 and $10 price points.

“Everybody wants to own our position or a Chick-fil-A position of high quality,” Papa John’s founder and chief executive John Schnatter said. “But the problem with owning quality is it takes time and costs money, and most companies aren’t willing to do that. At Papa John’s we have taken the time, we have spent the money, and our brand perception is very good.”

Schnatter added that the company’s recent acquisition of 50 restaurants in Minneapolis and Denver from a bankrupt franchisee holds vast potential for Papa John’s, due to the strength of the brand’s corporate operators.

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Steve Ritchie, senior vice president of North American operations, said the two new corporate markets, as well as the domestic franchise and international systems, would benefit from best practices in operations and local-store marketing that have been driving higher same-store sales at corporate restaurants for several of the past few quarters.

“Our corporate operation is leading the charge for our brand, and our team excels at almost every key metric,” said Tony Thompson, the chain’s executive vice president of global operations. “We see that as a really big opportunity for us still domestically for us within our franchise organization.”

For the March 25-ended first quarter, Papa John’s net income rose 1.9 percent to $16.7 million, or 69 cents per share, compared with $16.4 million, or 64 cents per share, a year earlier. Revenue rose 6 percent to $331.3 million, from $312.5 million in the first quarter of 2011.

Same-store sales rose 1.1 percent in North America, reflecting gains of 3 percent at company-owned restaurants and 0.5 percent at franchised locations. International same-store sales rose 8.4 percent.

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