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EXECUTIVE SUMMARY

The purpose of this report is to assess the pizza industry, as well as Papa John’s industry outlook. To begin
with, an industry analysis will be included, analyzing the following:

 Industry’s strategically relevant macro-environmental components

 Five forces evaluation of competitive forces in the pizza segment of the quick serve restaurant industry
 The forces driving change in the industry

 Identification of Papa John’s main rivals and a high level overview of their strategy and market position

The industry’s key success factors The examination will continue with a company and financial analysis of
Papa John’s; this will include:

 An evaluation of Papa John’s strategic and financial performance

 An identification and critique of the company’s strategy and business model

 The basis of Papa John’s competitive advantage

 An assessment of Papa John’s strength, weaknesses, opportunities, and threats; most commonly known
as a SWOT analysis

The process of examination will end with final recommendations made to help Papa John’s maintain their
position as a market competitor in the industry, and continue to maintain a strong competitive advantage
in the pizza industry. This recommendations include:

 Identification of strategic issues and problems that need to be addressed by Papa John’s

 Set of recommendations to deal with these issues and problems, including any changes in the company’s
generic competitive strategy

This report concludes that Papa John’s is a great competitor in this industry by focusing their
efforts in offering high quality products made from the best ingredients; responsive customer service and
convenient ordering systems; extensive marketing campaigns; employee training and development; and
franchising.

However, with peoples’ lifestyles changing toward the healthy trends, Papa John’s should focus
on expanding their product offering line, including something more than pizza and chicken wings. Second,
they should increase their international and domestic market share; increase their marketing efforts,
besides just sponsoring NFL games; and finally; one of Papa John’s strategic intents is to build the strongest
brand loyalty, but in their intents, the customers are not their main focus. Therefore, a final
recommendation for Papa John’s is to recognize the customers and their needs.
CASE STUDY Q & A
1. How Well is the Company’s Present Strategy Working?

Papa John’s long-term growth plan is to grow global retail sales by expanding its franchise
program. During 2013, franchisees openened 386 Papa John’s restaurant, of which 171 were
located in North America and 215 internationally. The international makets will provide better
growth opportunities given that the pizza delivery business in international markets is relatively
underdeveloped compared to the U.S . As the end of 2013, Papa John’s had development
agreements with its franchisees to open about 200 additional North America restaurants and
about 1.000 additional restaurants internationally, the majority which are scheduled to open over
the next six years. Papa John’s ultimate goal is to provide its customers the freshest ingredients
possible. The company’s strategy is comprised around five major components: high-quality menu
offerings, efficient operating systems, employee training and development, effective marketing
programs, and a strong franchise system. Papa John’s has been successful so far because of its
fresh ingredients, convenient ordering systems, extensive marketing campaigns, and franchising.
The company’s franchising segment is strong; they plan to open more than 1,000 new stores in
the next five years, with 95 percent being franchised and 70 percent being in international
markets. Furthermore, Papa John’s superior customer service has given them the highest
satisfaction ratings in customer service. With the industry changing towards more health
conscious consumers and trends, Papa John’s responds to this by informing their customers about
their products’ nutritional value on their website. Papa John’s is currently only present in 34
countries; by venturing into other countries they will gain constrict the gap between its
competitors that have more international presence Since Papa John’s was first started its main
value has been a strong work ethic and excellent customer service, this was instilled to John by
its father and grandfather. If Papa John’s continue to fulfill this core values, they will continue to
be successful, gain a higher market share, and outcompete its rivals.

2. Identifying Company Resource Strengths and Competitive Capabilities :

a. What are company’s strength and weaknesses in relation to the market opportunities and
external thread

Papa John’s SWOT Analysis.

STRENGTHS :
• The use of only fresh ingredients – Papa John’s requires its franchisees to purchase their
ingredient from their quality control centers to maintain their high quality standards
• Convenient ordering systems – Papa John’s allows their customers to order online;
through their app; or through their kindle
• National and global exposure – 723 owned restaurants, 3,705 franchised, and exposure
in 34 foreign countries
• World’s third largest pizza chain, trailing only Pizza Hut and Dominos
WEAKNESSES :
Papa John’s weaknesses include a limited menu; the company only offers pizza, chicken
wings, sides and desserts. This limits them because aside from being a pizza restaurant,
they are also considered a fast food chain restaurant and are going up against competitors
like Burger Flores 12 King and Mc Donald’s that offer a variety of foods in their menus.
Another weakness considered for Papa John’s is their poor international exposure.
Currently they are only present in 34 other countries. If they want to continue to grow
they should consider introducing Papa John’s to more countries.

OPPORTUNITIES :
• The addition of more items to their menu, this will position them higher in the
competition with their rivals that have already made this move
• Papa John’s should increase their franchisee opportunities, but as well as company
owned restaurants and venture into new countries around the world introducing the
Papa John’s brand
• Papa John’s should create more brand awareness by focusing more on their customers,
sponsoring other sports events, and targeting other age groups

THREATS :
Papa John’s faces several threats in the industry, for instance; they continue to be third
in the race with their top rivals Pizza Hut, and Dominos. Additionally, the health conscious
trend could harm them because pizza is stereotyped as an unhealthy dish. Finally,
economy instability not only in the US, but as well as in the other countries they are
present, varies with time. This instability causes changes in peoples’ buying power.

The Weighted Competitive Strength Assessment in which Pizza Hut beat the rest of the
remaining player. Even though Papa John’s has superior customer service, this still does
not beat the fact that Pizza Hut can accommodate all of its customers despite the
economic conditions. If they want to dine in, they can, since they have dine-in
establishments.

 Assessing a Company’s Competencies and Capabilities—What Activities Does it Perform


Well?

3. Identifying Company Resource Weaknesses and Competitive Deficiencies.

4. Identifying a Company’s Market Opportunities.

5. Identify Company’s Value Chains.

4 primary value chain components stand out :


 Quality Control Centers
 Raw materials, packaging, and fixture sourcing
 Supply Chain Management
 Handling the commissary operation and logistics for franchisees
 Arranging for timely/frequent deliveries of inventory as well as trained personnel
to Papa John’s company-owned and franchise outlets
 Restaurant, take-out, and delivery operations
 Marketing and brand-building (include promotions, website management, mobile app
development, monitoring social media, and charitable event sponsorships)

6. Is the Company Competitively Stronger or Weaker Than Key Rivals?

Papa John’s is a competitively stronger competitor in this industry by focusing their efforts in
offering high quality products made from the best ingredients; responsive customer service and
convenient ordering systems; extensive marketing campaigns; employee training and development; and
franchising.

Papa John’s main rivals are Pizza Hut, Dominos and independent pizzerias. In addition to holding
the number one place in the industry, Pizza Hut was known for not only its takeout and delivery options,
but for its dine in locations. On the other hand, Domino’s sales were mainly generated through its pizza
delivery business. Hence, they always acquire convenient locations.

With the health trends invading the industry, all main players expanded their menu, except Papa
John’s, including all sorts of items like salad bars, sandwiches, chicken, and pasta. In addition to expanding
their menu, every chain allowed its customers to customize their pizzas, offering a variety of crusts and
pizza toppings. For instance, according to the Case, many pizzerias featured specialty pizzas ranging from
Hawaiian Barbeque Chicken to Bacon Cheeseburger.

Furthermore, with the nonstop advancements of technology, most of the major pizza chains
included order placements via their websites, created smartphone apps, and even some included a
feature where the customer could track their order.

In order for Papa John’s to continue being successful and eventually overtake the other two big
players, they should be aware of key success factors. One of the most important key success factors for
this industry is location. Having a good location permits customers easy access to pick up their products
and shorter driving distances not only for the delivery staff, but for the customers too. In addition,
constant monitoring rival’s strengths and weaknesses is key for Papa John’s to find loopholes and
overcome their competitors.

Some other key success factors in this industry are flexibility during economic downturns; high
engagement in social media platforms to create greater brand awareness, as well as advertisement and
the offering of promotions/coupons; with the health trends taking over the industry, it is imperative to let
your customers know the nutritional content of the product; and finally, training and development of your
staff is key to offer great customer service.
7. What Strategic Issues and Problems Merit Front-Burner Managerial Attention?

FINAL ANALYSIS AND RECOMMENDATIONS


In order for Papa John’s to continue in the race for the best pizza chain restaurant in the world, it
must create some change to their growth and intent strategy. To begin with, Papa John’s should expand
its product line and include healthier menu options. Thus, adapting every type of consumer, from
vegetarians to meat cravers, to their brand. This move has been made by all of its main rivals, resulting in
great success. For instance, Pizza Hut attributes its incredible victory to its dine-in menu. They offer lunch
buffets, salad bars, calzones, pastas, and many more. Even though pizza is the number one meal of choice
for Americans, in recent years a trend that overtook the whole restaurant industry emerged. According
to the Case, a survey in 2010 by the NRA concluded that 7 out of 10 consumers wanted to eat healthy
when eating out. Expanding its product line and including healthier options is an imperative course of
action for Papa John’s.

Second, Papa John’s should increase their domestic and international market share, creating a
healthy ratio among the two. Currently, Papa John’s is only present in 34 other countries. They operate
723 company-owned restaurants and 3,705 franchised establishments. According to the Case, the
company plans to open more than 1,000 new units over the next 5 years, with 95 percent of these units
being franchised. This is going to create an unbalanced ratio between company-owned and franchised. If
somehow Papa John’s could venture into other countries by purchasing/partnering with smaller pizza
restaurants, this will not only introduce the brand to new countries, but also it will increase their revenues
since company owned restaurants produce more revenue. In 2013, domestic company-owned restaurants
had a revenue of $635,317 in comparison to $82,873 from North American franchising.

Third, Papa John’s is known to be one of the official sponsors of the NFL, and their advertisements
and promotions are big through them. Papa John’s should consider expanding their marketing efforts.
Currently, Papa John’s marketing strategy varies by geography, in the U.S it consists of television, print,
and social media marketing and advertising, as well as locally targeted promotions. Internationally, Papa
John’s only focuses on a small radius surrounding an establishment; and they use television, radio, and
print advertising. Internationally, Papa John’s should get rid of their advertisements through radio, since
nowadays no one really listens to the radio, they just play music from their phone. Instead they should
partner with big grocery stores where they can target everybody and offer in store promotions. This form
of direct marketing will help Papa John’s increase their brand awareness among other people from
different backgrounds. In the U.S new social media trends have arisen, like the promotion app “Hooked.”
Papa John’s should partner with apps like this, where people can find their promotions. People nowadays
like the thrill of finding good promotions and coupons. Also, instead of marketing by location, Papa John’s
should focus its resources by doing it nationally. This will not only save them money in the logistics
department, but it will reach a greater market. Finally, Papa John’s should market their pizza as a healthy
pizza.

A final and most important recommendation for Papa John’s is to include their customers’ needs
and wants into their intent strategy. According to the Case, and it was mentioned before in this case
analysis; John Schnatter build Papa John’s on three basic key success factors: superior customer service,
limited menu, and quality products. Today, that superior customer service factor is not part of their
strategic intent. In order for Papa John’s to strive and overtake its competitors, they need to focus their
business around consumers. They could do this by employing a link in their website that would take
costumers to a place where Flores 16 they could voice out their opinions online. Dominos established this
and it has been extremely successful for them. Additionally, one of Papa John’s key success factors is
employee training and development. This is a very good way for management to instill this into their
employees.