Papa John's CEO: We Embrace the 'Stuffed Crust Pizza Rivalry'

Papa John’s has been on quite a run. The “Big 4” pizza chain’s third-quarter same-store sales of 6.9 percent gave it a 30.7 percent two-year stack. And it’s a well-worn story by now just how far the brand had to climb. CEO Rob Lynch set a plan in motion when he took the role in 2019 that centered on a few pillars: product innovation; growth; franchisee profitability; technology chief among them.

So what happened when COVID hit? Not much, Lynch says. Those fundamental plans didn’t take a detour. Instead, Papa John’s accelerated everything. From third-party delivery to the “stuffed pizza crust rivalry,” these past 19 months have been one wild ride.

Lynch caught up with QSR following the brand’s Q3 report, which saw company revenues increase 8.4 percent to $512.8 million, and global systemwide sales lift 11.2 percent to $1.2 billion.

As noted, though, it’s just the beginning.

You mentioned much of Papa John’s aim today concerns bringing in new customers as much as it is inspiring repeat business. How much of this past 19, COVID months has opened that up? What role is third-party delivery playing?

I think the objective of every company and every brand is to continue to bring in new customers. Otherwise, the only way you’re going to grow is by charging your current customers more, right? Or getting them to come back more. We started on this path back in 2019 and started seeing a little momentum in Q1 of 2020. But it wasn’t a lot of new customers. It was really around us launching some new innovation and getting our current customers to trade up to those new products.

Then the pandemic came on. And we started seeing a lot of new customer acquisition. People who had never come into the brand before were starting to order delivery pizza. Obviously, every brand saw that, but we were really able to leverage that situation. We launched no-contact delivery and I think that really resonated with both our current customers as well as a lot of customers who were trying to figure out how to get food to their house while they were quarantining. That was the start of it.

Throughout the balance of 2020, we grew our new customer base significantly. Probably more than any other pizza brand. Then, we were lapping all of that in 2021. We launched Epic Stuffed Crust in January of 2021 and it set a new, ongoing customer sales level. I mean, it really took our business up significantly. It brought in new customers and traded current customers up.

We’ve been able to sustain that for the balance of the year. It’s become a new part of our business versus just an LTO or some temporary blip on an incremental volume. So it’s been extremely positive for us and it’s helped us go out and get a lot of stuffed crust customers, whereas before we didn’t offer that. We know stuffed crust customers are the most valuable pizza customers in the industry. It’s been a really important building block. We’ve continued to leverage that and bring in new customers.

And how have you built on that once they’re through the funnel?

Our loyalty program has gone from 12 million in 2019 to 22 million today. Almost doubled in two years. And 22 million loyalty members who are ordering from our brand and we’re able to market to them and send them offers and promotions. It’s just a powerful tool. That growth is coming from new customer acquisition. We couldn’t be more excited about bringing new customers into the brand.

"I’ve always talked about, we’re not going to try to beat Domino’s by trying to be Domino’s. Our goal isn’t to tell people we have the cheapest, fastest pizza. Our goal is to tell people we have the best pizza and you can feel great about buying it from Papa John’s."

Talk about the aggregator part of this. As people know, it’s not every day a major pizza chain hooks up with third-party vendors to deliver its product.

We see that as very incremental business. Customers come through those channels—they’re folks we may otherwise not have gotten. And now they’re starting to enjoy Papa John’s. Once they determine we’re a brand they want to do business with, they can come into our organic channels and get a better deal with us than the aggregator platform. We think there’s a virtuous cycle there.

In return, we give a lot of trips to DoorDash and they’re happy—we’re one of their largest customers. It’s been a really positive partnership. Strategically, it’s helped us both from new customer acquisition as well as mitigating some of the labor challenges the entire industry is facing.

As an executive with a marketing background, are you embracing this idea there’s a “stuffed crust pizza rivalry” (as this story suggests) brewing between Papa John’s and Pizza Hut?

Absolutely. I loved when I read that (story) because that means that not only are our customers paying attention to what we’re doing, but our competitors are. They are watching the progress that we’ve made, and for them to acknowledge that there’s a stuffed crust rivalry here, it means we accomplished our adjective. Of course, we believe our products are the best. That’s why we talk about Better Ingredients. Better Pizza. When we positioned our stuffed crust, it wasn’t just stuffed crust, it was Papa John’s crust, stuffed. We think our crust, always fresh, never frozen, six simple ingredients, is the best in the business, and why wouldn’t you want to take advantage of that and offer it in a lot of craveable ways to customers that may not have come to your brand before.

So love the stuffed crust rivalry. We think we have a winning product to win that race.

You’re selling a lot of Shaq-a-Roni Pizzas, too. Over 3 million in September and October.

Shaq isn’t just another spokesperson for us. He’s a franchisee. He has ownership in the brand. He’s a board member. And so, when we came up with this idea for Shaq-a-Roni it was about more than just launching a product. It was about how do we put Shaq into a situation where all of the great things he brings to the table can be married with all of the great things we’re trying and aspiring to be. The Shaq-a-Roni and the fundraising piece of that program is really the most important part of it. (The product raises $1 from every pizza sold for the Papa John's foundation. That’s amounted to $3 million this year).

It’s not about the product and the sales—it’s much more about the good it creates. Every pizza that we sell generates $1 that is then able to be reinvested back into the communities in which we work, live, and operate. Shaq loves that. When we’re out there talking about “pizza with purpose,” and our competitors are out there talking about giving away free stuff and discounted stuff, that is indicative of the difference in perspective and strategy. Our goal is to elevate our brand. Our goal is to help people see why Papa John’s is different than a lot of the other national players. And I think the Shaq-a-Roni being a great product, but an even better contributor to communities that can use the help is something that has really helped our brand move in the direction we’re trying to go.

I’ve always talked about, we’re not going to try to beat Domino’s by trying to be Domino’s. Our goal isn’t to tell people we have the cheapest, fastest pizza. Our goal is to tell people we have the best pizza and you can feel great about buying it from Papa John’s.

So going forward, how does Papa John’s take a 31 percent two-year stack of same-store sales and keep that momentum going?

It’s crazy. It’s been such a wild ride for the past two years. But we really haven’t changed our fundamental strategies. We put our plan in place back in 2019 and we haven’t changed anything. We’ve just accelerated everything. It’s all about delivering the best products that we can deliver being innovative in everything that we do. Leveraging technology to help us connect with our customers and help make us more productive throughout our system, and build more restaurants. Find great partners, domestically and internationally that are going to help us do that. That’s what we’re focused on—those same things.

We’ve got a great lineup of innovation on the product front set up for 2022. We have recently announced some great partners that are coming in to help us build restaurants, both internationally and domestically. We’re investing more capital than we ever have in our technology footprint, our consumer facing as well as our store infrastructure. So it’s not going to be a big departure from what we’ve been doing the last two years. It seems to be working for us. We’re just going to double down on everything.