Papa Johns made a remarkable comeback in the years following founder John Schnatter’s exit under a cloud of controversy. Can the brand do it again in 2025?
For the third quarter of 2024, Papa Johns’ same-store sales were down 6% from the same quarter in the previous year, with domestic company-owned restaurants seeing a decline of 7% and franchised stores down 5%. International comparable sales were down 3% from the previous year. The company also experienced a 3% drop in global systemwide restaurant sales in that quarter.
The drop-off has been a problem all year long, with North America comparable sales down every quarter thus far in 2024, including 2% in the first quarter and 4% in the second quarter. The problems persist despite Papa Johns’ much-ballyhooed “Back to Better 2.0” strategy, introduced in January 2024 by former president and CEO Rob Lynch, who then left the company in March and was replaced in August by Todd Penegor.
It’s a worrisome trend considering that, for 2023, Papa Johns reported its fourth straight year of positive same-store sales.
To engineer another comeback, the brand needs to refocus on the fundamentals, Penegor said in a meeting with investors on December 12. Papa Johns was founded on the promise of “Better Ingredients. Better Pizza.” But Penegor believes the brand’s recent menu innovation efforts have proven a distraction from its core product.
As QSR recently reported, Penegor told investors, “We’ve added a lot of complexity over the last many years. We’ve brought a lot of product on. It’s driven short-term sales and brought in new users, but it’s not driving the frequency we need, which a core pizza can do day in and day out.”
Whereas medium and large original-crust pizzas accounted for 75% of Papa Johns’ pizza sales in 2019, that figure fell to a little over 50% in 2024—due to a flurry of new crusts and toppings aimed at demonstrating Papa Johns’ commitment to menu innovation. All of those new products turned out to be “rhythm breakers,” according to Penegor.
“As I’m working in the restaurants, we’re cranking out a lot of great pizzas, and then, all of a sudden, some unique product or topping was put out there, and it takes us away from making a great [core] pizza,” Penegor told investors.
Now it’s time to simplify and focus on consistency and efficiency, he said. He pointed to variability in the chain’s baking processes from store to store, which has affected product consistency, and the need for better training and support for general managers. Ovens need to be recalibrated to ensure every pizza coming out of the kitchen meets the brand’s standard for quality.
“New offerings actually bring in customers, but great pizza drives frequency, and we’ve got to get back to driving great pizza with every visit to drive that frequency and the connection to our brand,” Penegor said.
Like other major pizza chains, Penegor also wants to finetune Papa Johns’ loyalty program, Papa Dough, to make sure customers can earn rewards faster and to better personalize offers to keep loyal customers coming back.Â
