Some of the most well-known restaurant brands, like Starbucks, Pizza Hut, KFC, and many more, have seen a decline in sales over the last few months, making it a particularly challenging moment for the restaurant business. The most recent data that has been made public reveals that yet another fast-food giant is one of the businesses that is seeing a decline in popularity.
According to the most recent quarterly results data that Papa Johns, one of the top pizza franchises in the United States, reported on November 7th, the company saw a reduction of 3% in revenue and a fall of 6% in its same-store sales in North America. According to Restaurant Business Magazine, this is the third consecutive quarter that Papa John’s has seen a fall in same-store sales. This is also the company’s worst performance recorded since the second quarter of 2019.
Ravi Thanawala, the Chief Financial Officer of Papa John’s, said on an earnings call with investors that the company has been experiencing “challenging sales trends” during the whole year, and that “we expect they will probably continue as we close out 2024 and enter 2025.” At the same time as customers who are concerned about their finances have reduced their spending and complained rising costs at chain restaurants, this is a problem that many restaurant businesses have confronted in the year 2024.
Todd Penegor, the CEO of Papa John’s, is of the opinion that the “value perception” of customers has been a contributing factor in the company’s declining sales trends.
“I think value perception is an important component of kind of the momentum challenges what we’ve seen in this business,” he pointed out during the conference call. Before anything else, we need to make certain that we are once again included in the consideration set in order to be competitive with regard to pricing. In addition to this, we need to emphasize the importance of quality and the reasons that set us apart from other businesses.
Penegor presented a multi-pronged strategy for improving the company’s performance over the long run, despite the fact that Papa John’s does not anticipate that the unfavorable sales patterns that have been occurring this year would turn in the near future. To begin, he desires that Papa John’s prioritizes producing consistently high-quality meals in order to fulfill its “Better Ingredients, Better Pizza” claim. In addition, Penegor intends to attract consumers by providing value deals and new menu items that “resonate with our customers” and generate high profit margins.
According to Penegor, the firm will also increase its marketing efforts, make investments in technology to enhance the experience of both customers and franchisees, assist members in the loyalty program in accumulating points more quickly, and put a significant focus on the creation of additional restaurants.
In the most recent quarter, Papa John’s built 25 new locations, and the company anticipates increasing the number of gross restaurant additions to more than 100 for the whole fiscal year. While this is going on, the company is planning between 170 and 190 gross openings in its foreign markets.
Penegor said, “We are acting with urgency,” and he was right. “We are laser-focused on strengthening our basis in the near-term, while preparing the company to capitalize on possibilities to drive success and value generation over the long-term.”