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Papa John’s Has a Plan to Beat Domino’s and Pizza Hut

by WOOWinvest
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Papa John's Has a Plan to Beat Domino's and Pizza Hut



If there’s one word that serves as a way for buyers to attract and claim your product is superior, it’s “premium.” Brands will use it to refer to anything from flight upgrades and car rental grades to pizza — sometimes, it’s a way to post a higher price on a product with little differentiation from a non-premium product.

“Defining what a premium brand is can be difficult because it depends on who you ask,” writes brand strategist Chris Fulner. “Everyone has their own definition of ‘premium’.”

Papa John’s (PZZA) – Get Papa John’s International, Inc. Report is a fast food chain with a “premium” label. On its most recent earnings call, CEO Rob Lynch said the introduction of some specialty products helped the chain lure shoppers with pizzas that offer more than the cheapest options.

When talking to pizza lovers, it almost always comes down to more cheese.

What is the “premium” of these pizzas?

Back in 2021, the Louisville-based pizza chain is launching a number of so-called premium pizzas: Epic Stuffed Crust and Epic Pepperoni Stuffed Crust. (Epic is another word that can be used to mean anything a brand wants).

Since a regular pizza crust won’t be stuffed, this allows Papa John’s to position itself as offering specialty items and charging more than it would cost to get an average pie: $13 for cheese and $14 for cheese and pepperoni.

“These are premium products that we’re promoting, which is very different from the model of some of our competitors who promote the absolute lowest price points and tie their ads to those low price points,” Lynch said in an interview with QSR. stand up.” .

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Papa John’s revenue rose 6% to $542.7 million in the quarter ended March 27. It also announced plans to expand to about 300 new restaurants by 2022 and eventually to Asia by 2040, opening 1,350 locations in China.

Papa John’s was also the only one of the country’s largest pizza chains to have a solid sales quarter. Ok!brand (Yum) – Get Yum! Brands, Inc. report– Owns Pizza Hut and Domino’s (DPZ) – Get Domino’s Pizza, Inc. Report Their sales fell 6% and 3.6%, respectively.

Business Strategies for Premium Pizza

Lynch is quick to attribute success to these types of premium products, as they bring more money per pizza and attract customers who love the pie crust and will keep coming back.

Lynch told investors on a May 5 conference call: “We don’t need as many deals and are therefore less affected by the staffing challenges we’ve all seen.”

Amid rising food costs and inflation, the chain is one of many fast-food chains to raise prices by around 5% recently.

But as the U.S. emerges from the pandemic and as the way we eat and order pizza changes, Papa John’s shares are down more than 14% year over year, while Domino’s is down nearly 24% over the same period.

In turn, these companies are trying different things to keep people coming back. Premium product is one strategy, but it could also mean partnering with celebrities and investing in restaurants for those who are tired of ordering during the pandemic.

“We will continue our successful strategy of giving our customers, especially those less price-sensitive, the choice of our high-priced innovative products,” he told analysts on a May 5 conference call.

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