In a mix of good news and bad news for the first quarter of 2025, Papa Johns reported a 1% increase in global system-wide sales and a significant uptick in loyalty program members while its North American same-store sales were down 3% year-over-year.
Papa Johns has been struggling with its comp sales for the past year, registering declines in every quarter. Its Q4 2024 same-store sales fell by 4%, while Q3 saw a decline of 6%.
But in an earnings call with investors last week, CFO Ravi Thanawala said the company is on the right track, despite the mixed results. “We are confident that we have the strategy in place to accelerate sales throughout the year,” Thanawala said. And CEO Todd Penegor noted, “Our loyalty program is working as we intended it to.”
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In November 2024, Papa Johns made it easier for its Papa Rewards loyalty members to unlock benefits and added about 1 million members in Q1 2025, raising the total to 37 million. “Importantly, we saw growth among our medium- and high-frequency loyalty consumers and faster repeat orders,” Penegor said.
The brand also recruited a third-party mystery shopping company to evaluate its performance at 1,000 of its own stores as well as the performance of 4,000 competitors. Penegor said the study found that Papa Johns’ carryout and digital platforms “exceeded industry standards” but also “highlighted an opportunity to improve our delivery experience. “We know we can do delivery better,” he said.
That’s where Papa Johns’ partnership with Google Cloud will come in. The pizza brand hopes to use Google’s AI and data analytics capabilities to improve driver dispatch and routing, increase the accuracy of its delivery time estimates, and provide better driver tracking.
Related: With Hopes of Improving Customer Experience, Papa Johns to Expand Google Cloud Partnership
Carryout was a bright spot in this quarter’s report, Thanawala pointed out. “We’re probably more [convinced] now than we were even a quarter ago on the carryout opportunity. Carryout was up low single digits in Q1 from an order standpoint. It’s up mid-single digits quarter-to-date [in] Q2. We see meaningful opportunity for us to continue to take share in that space. And what we’re also seeing is that, as we reset the value proposition, leaning a little bit more into medium pizzas at certain points in the year [and] connecting that to a carryout consumer…this could be a sales driver [and] an incremental sales layer for us to continue to build on that’s gonna benefit the four-wall economics, benefit frequency, and benefit the business for the long term.”
Penegor said there is “still work to be done” but added that the company is “moving forward with a sense of urgency and confidence in our ability to deliver on our promise to be the best pizza makers in the business.” He said Papa Johns’ new Epic Stuffed Crust Pizza “delivered solid performance and increased pizza orders in March.”
The brand will also focus on boosting product consistency by looking closely at oven calibration, bake temperatures and bake times. “Oven calibration may seem like a small thing,” Penegor said, “but ovens are the most important equipment in our kitchen” and key to “delivering a great customer experience.”
“Our oven calibration efforts kicked off in Q1, and we expect to see the first benefits from this work by mid-summer,” he said. “This foundation enables product innovation across multiple layers of our menu, including new crust development opportunities.”
Penegor added that a “new pizza format” is in the offing for the second quarter of 2025, along with new uses for Papa Johns’ dipping sauces.
Meanwhile, the mystery shopper study was an eye-opener for the brand. “It was great for us to look in the mirror on where we’re doing really well and [to see that] carryout and the enhanced digital experience are performing well relative to our peers,” Penegor said. “We do know we have some opportunities on the delivery experience, both first 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 the business moving forward.”
