Conversations with franchisees indicated sales have continued to soften sequentially in recent months, Saleh noted. Yet the “fatigue” of the category isn’t something Papa Johns will sit back on. As it has since Rob Lynch took over as CEO in late 2019, Saleh expects Papa Johns to introduce menu innovation to spruce up activity.
Going back to 2020, Papa Johns launched six new products in the pandemic’s first year, a path that began with garlic parmesan crust about 90 days after Lynch joined. It marked the first time Papa Johns added to its six-ingredient, never-frozen original pizza dough in company history.
And given what’s followed since, from Epic Stuffed Crust (last January) to Epic Pepperoni Stuffed Crust, Papa Johns will likely court transactions this route versus dangling value as a carrot for guests. Lynch told QSR in May these introductions weren’t value plays. “These are premium products that we’re promoting and that’s a very different model than some of our competitors, who promote the absolute lowest price point that they can and tie their advertising to those low price points.” It’s a strategy, Lynch believes, helped Papa Johns combat inflationary realities. Simply, consumers didn’t have to take much of a price leap from, say, $13 to $14.
Earlier in the year, Domino’s decided to raise the price of its $5.99 Mix and Match deal by $1 for delivery customers as food cost inflation was expected to be 10–12 percent higher in 2022, up from a previously projected 8–10 percent. And CEO Russell Weiner didn’t rule out a future price lift.
For perspective on the driver challenge in particular, because of staffing challenges in Q1, Domino’s store hours were reduced, phones weren’t answered, and online orders were restricted, the company said. It added up to lost operating hours equal to the entire U.S. system being closed for six days.
Still, one out of every three pizzas in the U.S. is delivered by Domino’s, the company said. So much of its aims are about meeting demand rather than creating it. The chain opened a net of 213 restaurants in Q1, including 37 in the U.S. and 176 internationally. It’s going to continue fortressing markets and pushing volume through value.
In perhaps a sign of what’s to come, Domino’s, from June 6–12, offered customers a 50 percent-off deal when they ordered online. It was the first time in more than two years the brand did so.
Across Q1, carryout comps rose 11.3 percent last quarter due to increases in average ticket, order growth, and Domino’s decision on January 31 to move its national $7.99 carryout deal to online only. Top and bottom-performing stores saw little difference in carryout sales, which fits considering the relatively low labor intensity associated with carryout.
Restaurants in the top percentile are positioned in those highly fortressed markets, which bring better delivery service times and incremental carryout customers.
Domino’s said 2,500–3,000 stores would leverage call centers in some capacity by mid-May—a number that could grow depending on need. Alongside franchisees, corporate stores would also test phone center options. Boost weeks returned over the summer as well, and will likely continue in the same cadence as they did prior to COVID.
Papa Johns, too, is investing in the call center route with a “PapaCall” initiative it unveiled last August. The company brought artificial intelligence into its call center with an engine designed to feed call center agents information when customers place an order by phone. Papa Johns worked with Cognizant to implement AI and machine learning so employees could answer phones less and aid customers more. It also offers a more personalized experience with a cloud-based telephony system that recognizes repeat customers' phone numbers and greets them by name. It stores preferences as well.
“The number of dropped calls and lost orders that we used to experience during our peak times have gone down dramatically,” Lynch told QSR. “And that’s a sales driver, not just a productivity driver.”
Yum! Brands CEO David Gibbs echoed Pizza Hut was working to prioritize operations, improve staffing levels, restore operating hours, increase online ordering availability, and more effectively leverage the use of the company’s overflow call centers.