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Papa John’s hopes more products yield better sales

Company executives promise more innovation as the chain pushes into more dayparts and different products.
papa johns storefront
Photograph: Shutterstock

In November, Papa John’s introduced Garlic Parmesan crust for its pizzas, the first time the company had changed the dough in its history. It quickly followed that up with the introduction of Papadias sandwiches and more recently added Jalapeno Popper Rolls.

Expect more of that this year and next as the Louisville, Ky.-based chain looks to rebuild sales following a lengthy slump.

“We’re going to continue innovating against our core business,” Rob Lynch, named CEO last year, said in an interview with Restaurant Business on Wednesday. “Innovation is a big, foundational pillar of our growth strategy. We’ve got to bring new ideas.”

The 5,400-unit chain is coming off its best sales quarter in three years, when it generated 3.5% same-store sales growth in the U.S. in the quarter ended Dec. 29. The company is projecting that to continue this year, with same-store sales expected to range between 2.5% and 5%.

Those numbers seemed to have disappointed investors, who sent the company’s stock plunging more than 10% Wednesday.

Still, a performance in the middle of that range would be the company's best performance in five years. Papa John’s sales have plunged in recent years after its founder, John Schnatter, acknowledged using a racial slur during a conference call in 2018.

That challenge led to a complete overhaul of the company’s executive team, ultimately leading to the hiring of Lynch from Inspire Brands to take over as CEO.

“It’s no secret the challenges this brand, this company, has faced the last couple of years,” Lynch said. “This organization is committed to being a better company, of being the kind of company all of our current employees can be proud of.”

Rebuilding sales has become the primary goal. The company brought in Shaquille O’Neal last year to be a company director, franchisee and spokesman, and he has since become a popular figure in the chain’s ads.

Yet Papa John’s also hopes that taking more aggressive steps with its product lineup will help, too. The Papadia sandwiches, the chain’s take on the Italian piadina sandwich, are a key example, giving the chain a potential foothold in the lunch business.

“We’re incredibly bullish on this platform,” Lynch said. He said it helps the company “tap into the lunch daypart” and use its resources more efficiently.

“More volume in lunch helps us optimize our labor,” he said. “Lunch for us is more of a carryout occasion. It helps us mitigate the challenges we have in staffing and hiring drivers.”

The Garlic Parmesan crust, meanwhile, was more of a risk. But Lynch made it clear that the company is focused on what its customers want and is willing to take such steps in the name of generating sales.

“Moving forward, we’re going to do what the customer wants, not necessarily what some individual or organization says we should have,” Lynch said.

The company also launched Jalapeno Popper Rolls this week that are baked with pizza crust and cream cheese. “Don’t make any plans for the evening,” Lynch said, “because you’re going to be eating these, one after the other.”

Papa John’s also plans to focus more on marketing. The chain is the fourth-largest player in the pizza category behind Domino’s, Pizza Hut and privately held Little Caesars. So the company has to spend its marketing dollars wisely to get more attention for everything it does.

Lynch said the company is focused on leveraging all marketing channels. He also said the company needs to make better use of its loyalty program.

“We’re the underdog, right?” Lynch said. “We’re competing against a much larger, better-resourced competitor. We have to be smarter, harder-working, more efficient and more productive.”

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