America's 4th Largest Pizza Chain Is On a Downward Spiral, Data Shows
The past few months have proven to be a remarkably tough time for the restaurant industry as major chains like Starbucks, Pizza Hut, KFC, and many more faced declining sales. Newly released data shows that another fast-food behemoth is among the brands facing a downturn in popularity.
Papa Johns, one of the country's largest pizza chains, released its latest quarterly earnings data on Nov. 7, reporting a 3% drop in revenue and a 6% decline in its North American same-store sales. This is Papa Johns' third consecutive quarter of same-store sales declines and its worst result since the second quarter of 2019, Restaurant Business Magazine reported.
In an earnings call with investors, CFO Ravi Thanawala said that Papa Johns has been seeing "challenging sales trends" all year, and "we expect they will likely continue as we close out 2024 and enter 2025." This is an issue that many restaurant brands have encountered in 2024 as budget-conscious consumers cut back on spending and protested rising prices at chain eateries. CEO Todd Penegor believes that Papa Johns' "value perception" among consumers has contributed to its negative sales trends.
"I think value perception is a big part of kind of the momentum challenges that we've seen in this business," he said during the call. "We need to make sure that we're back in the consideration set, first and foremost, to be competitive on price. But we also have to amplify our message around quality and why we're uniquely different."
Though Papa Johns doesn't expect this year's challenging sales trends to reverse soon, Penegor laid out a multi-faceted plan for improving the company's performance in the long term. For one, he wants Papa Johns to focus on living up to its "Better Ingredients, Better Pizza" promise by delivering consistently good food. Penegor also hopes to entice customers with value offers and new menu items, which "resonate with our customers" and provide good profit margins.
Additionally, the company will ramp up its marketing efforts, invest in technology to improve the customer and franchisee experience, help loyalty program participants earn rewards faster, and place a heavy emphasis on new restaurant openings, according to Penegor. Papa Johns opened 25 net new restaurants last quarter and expects to achieve more than 100 gross restaurant openings for the full fiscal year. Meanwhile, the chain anticipates between 170 and 190 gross openings in its international markets.
"We are acting with urgency," Penegor said. "We are laser-focused on strengthening our foundation in the near-term, while positioning the company to capitalize on opportunities to drive success and value creation over the long-term."
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