Get ready to see a lot more Papa Johns on TV.
The quick-service pizza chain is hoping a shift in its marketing strategy, set to take effect in the coming weeks, along with a new ad campaign and new products set to debut in April, will lift sales through the rest of 2024.
That follows a tough first quarter in which the chain’s same-store sales declined 1% in the first eight weeks, largely due to weakness in its own delivery channel.
“We always knew that Q1 was going to be our toughest quarter coming into the year,” CEO Rob Lynch told investors this week. “All the things, all the plans that we have built to deliver strong comp sales growth this year, really take effect in Q2.”
Those plans include a major shift in its media spending, from local marketing to national marketing.
Papa Johns worked with franchisees on what the company calls “Back to Better 2.0,” a second version of the strategy it worked to rebuild sales five years ago. Its centerpiece is an increase in franchisees’ national marketing fund contribution from 5% to 6%. In exchange, they will no longer have to spend 3% of their revenues on local marketing.
The company also plans a new ad campaign. And it is also promising “major food innovation” come April.
“We’re about four weeks away from a 20% increase in media, a new advertising campaign hitting, and we’ve got some great new innovation coming in April,” Lynch said. “Those impacts are going to sustain through the balance of the year.”
The strategy is coming five years after the company kicked off a revitalization effort by bringing in Lynch from Inspire Brands and overhauling management and marketing while rebuilding its development strategy. The effort has brought the company back from a point in which it couldn’t find a buyer to one in which it is gaining market share in a tough pizza category.
The Back to Better 2.0 version includes aggressive development incentives, launched in November, that waive the marketing fund requirement on new stores for five years. It’s designed to convince operators to build more units by making those stores more profitable.
The strategy also features investments in data to drive its marketing strategy and its new marketing agency is at “the forefront of analytics.” The company believes that effort will make the increased spending more effective at driving sales.
“We believe we’re at the forefront of data analytics in this industry,” Lynch said in an interview. “So, we’re harmonizing our data with their data. It’s going to allow us to be a lot more effective and productive in our targeting and media delivery.”
He also said that shifting spending from local to national will also make the marketing more effective because more of it will be spent on marketing. About 20% to 25% of local marketing is spent on local agencies, making them “non-working dollars.” Sponsorship dollars will also shift into direct marketing.
The company began working with franchisees, who operate most of the chain’s 3,200 U.S. locations, about a year ago on the new marketing strategy. More than 90% of Papa Johns operators voted in favor of the new strategy.
“This management team and our franchisee leadership work really collaboratively together,” Lynch said. “We don’t always agree on everything, but we definitely work through those disagreements and get to an outcome that we all feel is mutually beneficial.”
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