Papa John’s International executives believe their brand gives customers more bang for their buck and are encouraged that consumers will feel the same way.
As the official pizza sponsor of the NFL, the Louisville-based pizza chain kicked off its “Quality Guarantee” offer during Super Bowl 50. The initiative allows any customer who is not satisfied with their Papa John’s pizza to receive another for free. (See the stipulations here.)
“(The pizza industry) has always been really competitive, and I think it will be competitive,” Papa John’s founder and CEO John Schnatter said during a call with analysts Wednesday. “I think our job is to really differentiate ourselves by owning that quality position.”
As part of the”Quality Guarantee” kick-off, the company also started a promotion offering customers a large five-topping pizza for $9.99. The promotion runs through March 13.
“The strategy behind the $9.99 promotion was directly aligned with our quality guarantee,” Papa John’s president and chief operating officer Steve Ritchie said during the call. “Our quality guarantee was implemented to really drive new customers from other brands to try the Papa John’s high-quality product.”
When many of its competitors are focusing on price, Papa John’s executives said they are not getting caught up in that rat race.
“Price is what you pay, value is what you receive,” Ritchie said, adding that Papa John’s is a high-value brand.
Year-end sales increases seem to back up claims that consumers value what Papa John’s has to offer. Net income in 2015 rose 14.1 percent to $83.7 million from $73.3 million.
Same-store sales also increased 4.2 percent in North American and 6.9 percent at international stores. And earnings per share went up 19.4 percent to $2.09 in 2015 compared to $1.75 in 2014.
Papa John’s continued to see growth after improving the company’s online and mobile ordering systems, Ritchie said. More than 60 percent of Papa John’s orders come through online channels.
“Our focus is not necessarily on bells and whistles,” he said. “It’s on the customer experience.”
In China, Papa John’s is not performing nearly as well. International revenues declined 3.4 percent in the fourth quarter of 2015, primarily because of poor performing company-owned China stores.
Similar to other restaurant brands breaking into the China market, Papa John’s is looking to sell off its stores to franchisees.
“We do still expect to have a transaction done this year, and we have several interested parties,” said Papa John’s CFO Lance Tucker. “Beyond that I can’t go any deeper.”
Schnatter said he is confident the company is making the right decisions to turn around business in China and Southeast Asia in general.
“We are making progress in that part of the world, not probably as fast as we’d like, but we are moving the needle,” he said. “We don’t have the right folks in place and the right franchisees, and we are going to fix that.”