Competition | August 2016 | By Robin Hilmantel

Papa’s Playbook

The pizza category is as competitive as ever, but Papa John’s isn’t crumbling under the pressure.
Former NFL superstar Peyton Manning, left, is one of Papa John’s “franchise players,” and owns several Denver-area locations. Papa John’s

The first person to kiss Denver Broncos quarterback Peyton Manning after he won Super Bowl 50 in February wasn’t his wife. It wasn’t his kids or his mother.

It was Papa John’s CEO and founder John Schnatter.

“[Broncos general manager] John Elway let me tag along with his group, and I walked on the field, and [Manning] was just there,” Schnatter says. “It was just luck. I was the first guy he saw, and he was the first guy I saw. And I just came up and said, ‘Hey man, way to go!’ And it just kind of was a special moment.”

Papa John’s got 2 billion media impressions off that moment, including headlines such as “Peyton Manning got a kiss from Papa John seconds after winning the Super Bowl” from USA Today and “Peyton Manning Just Celebrated the Highlight of His Career By Kissing Pizza Mogul Papa John” from Esquire.

The exchange was just one of several feathers Papa John’s added to its cap in the past year: The brand announced in April that it would be the official pizza of Major League Baseball; it recently opened its 1,500th international store (with plans to open its 5,000th store overall by the end of this year); and, thanks to its clean label initiative, ingredients like artificial colors and flavors and high-fructose corn syrup have been eliminated from the menu.

How did Papa John’s manage to pull off such a successful year, especially at a time when so much buzz in the pizza category was directed at the upstart fast-casual chains hoping to eat its lunch?

“Basically we run our play,” Schnatter says. “We do what we’re supposed to do every day.”

Pizza and sports: A match made in heaven

Papa John’s worked its way up to Schnatter’s moment in the Super Bowl spotlight. It started years ago with local sports partnerships and smaller deals, like becoming the official pizza sponsor of football teams such as the Washington Redskins. Then, drawing off of the success of those alignments, it became the official pizza sponsor of the National Football League in 2010.

“There’s such a huge consumer engagement with our brand in general,” says Robert Thompson, senior vice president of marketing for the company. “But it just went to another level whenever we tied it in with sports.”

Papa John’s has looked for additional opportunities to leverage sports partnerships ever since. In 2012, the brand signed Manning as a “franchise player,” announcing he would own several Denver-area restaurants in partnership with Papa John’s. NBA superstar Paul George of the Indiana Pacers partnered with the

brand beginning in 2014, and Houston Texans defensive end J.J. Watt came on in 2015.

Then, this spring, the brand made its MLB announcement. The key, Schnatter says, is picking the right leagues and athletes to align with.

“The NFL and MLB are two of the most powerful leagues in the world,” he says. “As for athletes, I look for: Are they disciplined? Do they want to win? Are they winning? Are they good leaders? Do they love what they do? And then once an athlete passes that threshold, I go to the parents. The parents tell you everything.”

Moving forward, Papa John’s will look to maximize its opportunities within the MLB. When the company announced its baseball partnership, it also announced that whenever a grand slam happened—or a Papa Slam, as they now call it—consumers would get 40 percent off of a regular-priced pizza the following day. But Thompson says there are many more opportunities to get baseball fans excited about Papa John’s.

“We have a lot of legs with MLB,” he says. “This is just our first toe in the water with the Papa Slam, but we’ll be building and capitalizing that more throughout the year.”

Better ingredients, better pizza

Of course, sports partnerships aren’t the only reason that Papa John’s has been able to maintain 12 consecutive years of flat or positive sales. Its pizza quality has also been key, as stated by the brand’s infamous slogan: “Better ingredients. Better pizza.”

“We’ve always had fresh dough and fresh-packed sauce and fresh veggies,” Schnatter says. “It’s been a priority for going on 32 years.”

But last year, the pizza quality got a boost with Papa John’s clean-label initiative, an ingredient strategy that the brand plans to make the core of its food development of the future.

The clean-label strategy first took root at Papa John’s in 2009, when the company started looking to aggressively eliminate ingredients it could no longer stand behind. “It’s been very difficult, because there’s a reason why a lot of those chemicals were being put in the food supply,” Schnatter says. “You’ve got to be extremely arduous and careful that you’re doing it right.”

The announcement of Panera Bread’s “No-No List,” which was unveiled in May 2015, served as another opportunity for Papa John’s to review its own ingredients. While Panera’s No-No List included more than 150 ingredients that the bakery-café chain wanted to remove from its menu by the end of 2016, Papa John’s was using only 14 of the items on the list at the time, says Sean Muldoon, chief ingredient officer at Papa John’s—a title he was promoted to earlier this year. “Right after they made that announcement, we decided to remove those 14 by the summer of this year,” Muldoon says.

He adds that the brand is on track to deliver on that promise—thanks to Papa John’s unique organizational structure.

“We don’t see another company that’s got a C-level position with my responsibility set. It speaks to the commitment that Papa John’s has and the passion we’ve got around ingredient quality,” he says. In his role, Muldoon is responsible for research and development, quality assurance, and supply chain. “[Clean label initiatives] require all three of those functions to work together really efficiently—and the fact they’re working together in one department allows us to be quick and nimble, and first to market.”

Papa John’s was first among its competitive set to remove MSG, partially hydrogenated oil, and synthetic flavors and colors. All of the chain’s ingredients are listed on its website, offering transparency and education for consumers, Muldoon says.

Schnatter says the quality of the ingredients Papa John’s uses is a point of personal pride.

“The category is notorious for cutting corners,” he says of the pizza industry. “We’ve gone from like 70 chemicals in our products to now getting down to less than 10. That’s very difficult to do and very expensive. A year and a half or so ago, I asked [Muldoon about it], and he said, ‘We can get rid of the MSG, but it’s going to cost you $2 million. We can get rid of cellulose, but it’s going to cost you $4 million.’ And I said, ‘I don’t care, let’s do it.’”

Muldoon says the company has worked very closely with its 50–60 primary suppliers to make its clean label initiative a reality. The company has quarterly reviews with suppliers in which it shares its clean-label vision, and has worked hard with those partners to go through permeations and tests to prove each new ingredient can work on a national level. “There’s a discipline and process around how we do it,” he says.
While Papa John’s execs say the clean-label initiative should appeal particularly to Millennials and moms (many of whom are also sports fans, which creates a synergy with the brand’s sports partnerships efforts), Schnatter says he also knows “in his heart” that the initiative is the right thing to do.

“I knew it would be good for the category,” he says, “and so that’s begged the question: What’s the competition going to do? They could do what we did and clean their act up, but they’d have to spend a lot of money, which they’re not doing. Or they could let us have the clean label with a clean runway.”

It’s about the people, not just the pizza

While Papa John’s sports partnerships and clean-label initiative may help get consumers’ attention, at the end of the day, if they don’t have a good customer-service experience with the brand, they won’t come back—which is why the company has been investing heavily in its customer-facing technology.

“We know our customer touch points are what’s most critical to the overall experience, and over 50 percent of our business happens online for the customer,” says Steve Ritchie, the president and chief operating officer at Papa John’s International. “We’re working to continually improve the transaction path for the consumer, whether it be ordering on their mobile device, on a desktop, or on a tablet. We continually try to improve that customer experience of ordering on the web.”

Of course, the other point of contact for customers is the Papa John’s employee, which is why the company invests so heavily in its people. “If you invest in the people, they’re going to invest in the company and in turn invest in the experience of the customer,” says Ritchie, who started at Papa John’s in 1996 as a customer-service representative making $5 per hour.

He says Papa John’s is spending millions of dollars in culture-building and leadership-development programs for employees.

“I was a general manager, and we know the success of the brand—or the lack thereof—is in the hands of the general managers,” says Ritchie, who notes that the vast majority of those general managers were promoted internally from lower positions in stores. “We firmly believe that continuing to invest in the time and effort with your people and providing them with opportunities is really the driver of the overall business. Being a people-powered organization is what we want to be.”

Central to these ideals and Papa John’s culture is a term executives call “intrapreneurship.” Ritchie says it’s about making sure employees are motivated, creative, and courageous in their decision-making, and about encouraging employees to think like store owners. “The best ideas—I wish I could say they come from the four walls of the nice office building we have around here, but frankly, the best ideas come from the field and they always have,” he says. Ritchie points to Papa John’s Buffalo Chicken Pizza LTO as an example. The idea, which came from a store employee, ended up becoming one of the brand’s most popular LTOs ever.

Next up on Papa John’s radar is to start making this investment in its team members more visible to the public.

“I’d say our next big campaign is talking about the things that we’ve always done around our people and telling those stories of how uniquely special the Papa John’s team members are,” Ritchie says. “I think there’s really some relatable and relevant stories to tell the consumers about our team members and the passion and pride they show.”

Similar to the clean-label initiative, this is something the brand hopes will resonate with Millennials, who are projected to have an increasing amount of buying power in the coming years.

“I think Millennials are looking for authenticity—something true, something real, something that has purpose,” Ritchie says. “All my years at Papa John’s, nothing excites me more than the pride that our people have for this brand. How cool to be able to show the Papa John’s customer the passion the people have who are crafting their pizzas in the restaurants.”

Comments

As an ex employee you would think I would grind an ax. NO WAY! This is a great company and everything in this article shows the care, passion and integrity these leaders have in their product, customers and vision. If every company operated like PJI we could "make America GREAT again"!

Add new comment