Papa John's International, Inc. reported a strong fiscal year for 2023, wrapping up in a solid fourth quarter that ended Dec. 31, boosted by product innovation and aggressive delivery aggregator promotion. The Atlanta-based pizza chain reported same-store sales up 2%, driven by transaction and ticket growth boosted by menu mix and modest pricing increases.
Papa Johns is focusing its 2024 strategy on “Back to Better 2.0” — the plan announced in January meant to drive franchisee profitability by lowering marketing expenditure requirements from 8% to 6%. The strategy is supposed to kickstart development through the new incentive and involves investing more in national marketing spend.
CEO Rob Lynch noted during the company earnings call on Thursday that the company will start to see results of “Back to Better 2.0” next quarter as the first quarter of 2024 will be the “toughest quarter of the year.” In April, the company will announce a new cross-platform product innovation that will add new menu items to the pizza, Papadias, and Papa Bites platforms. Lynch added that customers will see innovation across all three menu categories throughout this year, aided by national advertising campaigns.
“We’re driving the business with the changes that we've just implemented on the marketing side,” Lynch told Nation’s Restaurant News. “We decided to go with a new media partner that has the ability to ingest all of our first party purchase data and help that leverage our targeting decisions …. It’s really all driven now by the analytical and targeting capabilities of this partnership.”
Another crucial part of the Papa Johns strategy is the company’s third-party aggregator partnerships, which grew 50% in volume sales over the past year and did not see any loss even with the addition of major competitor Domino’s, which partnered with Uber Eats for the first time last year.
“We're benefiting from almost five years of partnership with these aggregators,” Lynch said. “We sell more per unit with aggregators than anybody else of the major national delivery chains. Aggregators are not growing as quickly as they were four years ago, but… we’re still going to take share and benefit from that growth. We have big plans to continue to thrive in that marketplace.”
For the fourth quarter ended Dec. 31, Papa Johns reported total revenues of $571 million, up 9%, or $45 million from the same quarter the year prior. The revenues jump was bolstered by an extra 53rd week in the quarter. Without the extra week, total revenues were up 1%. Net income was $26.1 million or $0.79 per share, up from $23.5 million or $0.66 per share the same quarter last year.
Papa Johns reported 89 net unit openings in the fourth quarter, largely driven by international growth for a grand total of 5,906 stores systemwide.
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