Papa Johns tapped a third-party to mystery shop 1,000 of its locations and 4,000 for competitors. As much as CEO Todd Penegor personally observed since joining in August, including a 100-day plan complete with a franchise listening tour, he wanted a holistic view of Papa Johns’ competitive standing across a range of order experiences.
What it found was the brand’s carryout offering (up low single digits in Q1 from an order standpoint and mid-single digits quarter-to-date so far in Q2) and improved digital platforms topped industry standards. Its delivery experience, however, did not.
Yet help is en route from a familiar place. Papa Johns in April announced a partnership with Google Cloud that included creating an internal innovation team called “PJX.” The goal was to use Google Cloud’s AI, data analytics, and machine learning to address a cadre of opportunities, delivery included.
This remains very early innings, but Penegor has a sense of where the effort might take the brand. He worked with Google Cloud when he was CEO at Wendy’s, alongside Kevin Vasconi, who came over in September as Chief Digital and Technology Officer (he was CIO at Wendy’s, leading a digital transformation that tripled the burger chain’s ecommerce business in three years).
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Penegor and Vasconi saw the generative AI in action at Wendy’s as the company deployed mainly drive-thru tests, although it also touted capabilities in mobile and analytics designed to improve customer accessibility.
Penegor said Papa Johns looks at Google Cloud as a “true innovation partner” and one the brand needed to engage with. It had fallen behind on tech after once being a pacesetter (Papa Johns, in 2001, became the first national pizza brand to offer online order; four years later it was the front-runner on online payment processing via credit/debit cards; and in 2010, a trailblazer for nationwide digital rewards). Vasconi calls the target “hyper personalization.” Can Papa Johns leverage AI to connect with guests, anticipate cravings, and chase other connective pieces it doesn’t today?
Also, regarding delivery, Penegor said the partnership will improve driver dispatch and routing, increase the accuracy of time estimates, and provide better driver tracking. “It was great for us to look in the mirror on where we’re doing really well,” Penegor said. “And carryout and the enhanced digital experience are performing well relative to our peers. We do know we have some opportunities on the delivery experience, both first party and third party. And those are all addressable, and we’ve got actions in place, and we know we can make a meaningful difference to create better consumer experiences, which will drive business moving forward.”
CFO Ravi Thanawala added there was variation in terms of total time to deliver from, say, Friday night at 7 in one market to another. The partnership with Google Cloud started by looking at Papa Johns’ tech stack holistically, which will benefit the entire system. Next, in particular trade zones and markets where Papa Johns has meaningful market share, it examined ways it could strategically spit areas, lean into carryout, drive incrementality, and improve service levels.
“What we know is that temperature plays an important role in terms of consumer satisfaction and taste of food,” Thanawala said. “… this is meant to work on multiple layers. It helps to unlock new innovation. It’s also going to help us to continue to deliver the best quality product for the consumers from a delivery experience standpoint.”
Penegor phrased it as a “more elevated experience, all the way from click to crust.” Leveraging insights to better talk and connect with consumers is going to be powerful, he added. More than 70 percent of Papa Johns’ sales flow through its own digital channels.
Using Google Cloud’s tech, Papa Johns can proactively suggest orders through push notifications or email based on learned preferences and anticipated needs for occasions like birthdays or sporting events. It’s also going to help Papa Johns’ loyalty program with real-time personalization that dynamically adjusts the website and app experience. For instance, unique discount codes or advertisements based on previous orders, habits, location, and other factors. Papa Johns will also be able to predict guest ordering patterns to provide relevant promotions and ordering shortcuts, including AI-powered marketing campaigns. You’ll see an AI-powered chatbot to handle common questions (escalating to a live agent if urgent) and the incorporation of voice ordering via the app.
Additionally, Papa Johns, speaking to Thanawala’s point around the tech stack, plans to move to a cloud-based point-of-sale to implement AI-driven dispatching, route optimization, and intelligent automation of certain restaurant processes.
The battle to grab pizza share and drive transactions today is one that’s going to require every tool at hand. Papa Johns’ North America same-store sales declined 3 percent in Q1, year-over-year (down 5 percent on a two-year stack) as company units fell 5 percent (8 percent two-year) and franchises 2 percent (4 percent two-year).
There were some underlying positives for Papa Johns, which remains on a five-point turnaround blueprint—focus on core product and innovation; amplify marketing message; invest behind tech; differentiate customer experience; and partner with and evolve the franchisee base.
In Q1, Papa Johns made the call to leverage its barbell and position premium offerings next to value deals to bolster a sliding proposition. So it placed strong messaging behind the Epic Stuffed Crust priced at $13.99 and supported its $6.99 Papa Pairings. Penegor said the former, which offers a size advantage at 14 inches, delivered “solid” performance and increased pizza orders in March during a national promotion. The number of overall pizzas ordered in the quarter increased 4 percent versus last year and the brand has since witnessed sequential improvement in orders with multiple pizzas.
The 3 percent comp decline marked the second consecutive period of sequential improvement, up 290 basis points since Papa Johns implemented a value strategy following Q2 2024.
Papa Johns’ same-store sales performance
- Q1 2025: –3 percent
- Q4 2024: –4 percent
- Q3 2024: –6 percent
- Q2 2024: –4 percent
- Q1 2024: –2 percent
Returning to tech, one of Penegor’s early aims was to buzz Papa Johns’ loyalty setup. The brand added a million users in Q1 to get to 37 million. He said Papa Johns’ refined its CRM and one-to-one communication and personalization capabilities. Notably, though, the company in November lowered the threshold for earning “Papa Dough.” This decreased Papa Johns’ overall order ticket by about 130 basis points. Q1 ticket comps were down 2 percent versus the prior year, with more than 50 percent owing to the threshold decision.
But growth pulsed among medium- and high-frequency loyalty consumers and faster repeat orders. It’s driving retention at a higher rate as the distance between second and third transactions narrows.
There’s been a sizable increase in the number of loyalty users earning, too—about 75 percent now collect rewards every time they purchase through Papa Johns’ first-party channel. “And what we’re seeing is about 50 percent of our loyalty consumers actually redeeming,” Thanawala said. “What’s really exciting about this experience is that if you purchase on a Sunday evening, Monday morning or Monday afternoon, you’re getting a push notification to reengage with the brand and it’s really helping us to stay relevant with the consumer.”
“For just contacts,” he added, “we more than doubled the number of consumers who are redeeming Papa Dough.”
The bigger point, Thanawala explained, is the company’s data science and understanding of the consumer became a core part of its competitive moat. That’s now pairing with a focus on quality and ingredient simplicity the company has always led with.
Penegor added loyalty is working as intended. The differentiator provides “cold, hard cash” for a bounce back instead of something a guest might not want. It’s value on the next purchase, and that’s why customers are repeating. “We think that’s an opportunity for the lifecycle of that customer to really have a good investment and a great return,” he said.
“We feel like it’s dialed in and we’ll continue to dial in, but we know we still have opportunities in our loyalty program to make it more engaging, more from how do you get into it and get into the app, how do you gamify the whole experience along the way, and what else can you learn and how does loyalty have its privileges,” Penegor continued. “For your super loyal customers, is there something else we can do for them? Those are opportunities still ahead of us and the team is working at pace against those.”
Beyond loyalty and data leverage, Penegor noted AI would ultimately “make our lives a heck of a lot easier in the restaurants.” Imagine a fully generative AI ops model where if you ask a question on what’s needed, it gives you a quick and simple answer. So no more flipping through a book.
Inventory. The ability to scan and digest and respond to reviews. Are there ways to scrape data and go figure out where the opportunities are, and then coach employees in real time to find brand detractors and fix them? All of that sits on the horizon, Penegor said.
The partnership with Google Cloud remains a “blue sky” conversation. Penegor said Papa Johns had the team in the office last week for a “massive ideation session” around how it can bend trends through different spots. To sum it up, there simply wasn’t a linear path.
Something else Penegor dialed into since his arrival is Papa Johns’ “promise to be the best pizza makers in the business.”
Task No. 1: get back into the “value” set. After, continue to review and remove underperforming SKUs so employees can focus on core products and improve consistency.
Alongside simplification, this included oven calibration, which may sound like an elementary thing but is, naturally, anything but at a global pizza brand. Papa Johns began work in Q1 and expects to see benefits by mid-summer. The foundation, Penegor said, will enable product innovation across menu layers, including new crust development opportunities.
While the brand has been “fast pitch down the middle” on releases of late as it works on backend fixes, new offerings are coming in Q2, including fresh uses of dipping sauces and “even a new pizza format,” Penegor hinted.
Essentially, Papa Johns sped ovens up a few years back. It’s slowing them back down, which means lower bake temperatures, too. In that, he explained, there’s an opportunity to bake better pizzas, introduce new crust types, and rethink innovation around handhelds, pastas, bowls, and so forth. With an optimized temperature and ensuring employees don’t pull pizzas out too quickly, it’s going to allow Papa Johns to deliver a better product.
“It opens up the world to not just be the best pizza makers in the business, but how do we evolve to become the best bakers in the business,” Penegor said. “This is a methodical approach to ensure that we’ve really leveraged our core tool in our restaurants and the oven can unlock a lot of opportunities for years to come around what we bring to life for our consumer.”
Logistical updates like the ovens have joined training-centric changes such as increasing coaching visits to stores and doing what Papa Johns terms “slice and rise,” where the pizza is flipped over and cut to make sure it gets a great dough bake along the way. Papa Johns put tools in around pizza grading as well.
These efforts drove positive overall satisfaction and taste metrics at the restaurant level, Penegor said.
The rally point for Papa Johns, however, has been to “restore the soul of the brand around quality and better ingredients and better pizza,” Penegor said. This is where the messaging element locks in. Penegor said Papa Johns is a “challenger brand with a fighter mentality.”
“We’ve embraced this position as we amplify our marketing message to win the customers’ consideration and deliver exceptional quality and strong value perception across consumer segments,” he said.
It began with a “Meet the Makers” campaign showing employees in restaurants “answering the question why Papa Johns,” with a focus on craftsmanship.
Penegor said Papa Johns’ brand tracker showed recent, meaningful improvement in value perception. The brand also saw gains in customer awareness and consideration among quick-service peers.
“[The campaign] got the attention of the next-generation consumer,” Penegor said.
Meet the Makers’ evolution will soon turn to why Papa Johns is unique—its six-ingredient, never-frozen dough, and storytelling around ingredients and differentiation.
Papa Johns invested about $7 million in incremental marketing in Q1 to test media mix, customer communications and messaging tactics, while reinforcing a core message. The brand continues to balance local and national approaches as well to remedy an earlier decision that went too far in the direction of the latter. A BOGO offering in Q1 created margin gains and protected transaction share. Papa Johns now plans to invest an additional $25 million in marketing this year, above its 2024 spend, to build on the success.
Papa Johns ended Q1 with 6,019 global units. In North America, it opened 18 new restaurants and closed 16, bringing the count to 3,516. It projects to open between 85 and 115 gross new stores in North America this year, and roughly 70 percent of remaining openings are currently in the construction, design, or later stages.
Currently, the brand has 539 company-run North America restaurants. As has been touted on past calls, Penegor said Papa Johns is looking at refranchising select units to “future-focused” operators as they aim to scale across various markets. The company is “aggressively” evaluating opportunities to optimize the value proposition of its integrated supply chain as well to better serve franchisees.
“We’re really focused on our core markets where we have a strong one or two position,” Penegor said of refranchising. “And we’ve got some other great markets that could allow growth-minded franchisees to take on to scale up or bring some fresh blood into our system to really set ourselves up for long-term success. But when you think about that corridor from Indianapolis, down to Louisville, Nashville, Atlanta—that’s really core, and we’ll have to take a hard look at everything else.”
