SWOT-Papa John's

COMPANY PROFILEPapa John's International, Inc. REFERENCE CODE: 0CF6FA79-7DAD-48ED-BFE4-C6C38AFDA5C9 PUBLICATION DATE: 12 Jun 2015 www.marketline.com COPYRIGHT MARKETLINE. THIS CONTENT IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED OR DISTRIBUTED. ............ TABLE OF CONTENTS TABLE OF CONTENTS Company Overview.............. Inc...........................................................................Papa John's International..................................................4 Papa John's International........3 Key Facts................................................................................................. © MarketLine Page 2 .. Inc..........................3 SWOT Analysis........................... 1% over FY2013.700 NASDAQ Ticker PZZA Papa John's International. an increase of 5. The net profit of the company was $73. an increase of 11. Inc.700 people as of December 28. © MarketLine Page 3 .1 (USD Mn) Financial Year End December Employees 21. The operating profit of the company was $117. 2014. Kentucky and employed about 21.Papa John's International. Company Overview COMPANY OVERVIEW Papa John's International (Papa John's or 'the company') is an operator of restaurants and pizza delivery services in the US and 36 other countries. Inc.3 million in FY2014.1 million during the financial year ended December 2014 (FY2014).4% over FY2013. an increase of 10.6 million in FY2014.com Revenue / turnover 1.598. The company recorded revenues of $1. It is headquartered in Louisville.papajohns. Inc. KEY FACTS Head Office Papa John's International. 2002 Papa Johns Boulevard Louisville Kentucky 40299 2367 USA Phone 1 502 261 7272 Fax Web Address http://www.4% over FY2013.598. Inc. 2014. food products. However. Other international full-service QC Centers are licensed to franchisees or non-franchisee third parties.663 Papa John's restaurants. consisting of 735 company-owned and 3. China. Mexico and Beijing. the company operated 4. Strengths Weaknesses Wide network of food chains enabling to reach broad customer base Marketing and advertising capabilities providing greater visibility Leveraging information technology capabilities for increasing operating efficiency Lack of scale compared to peers Opportunities Threats Acquisition of Pizza Corner’s stores in South India Expansion of restaurants could improve market position Growth trends in the US restaurants industry Intense competition from many well-established food service companies Increasing labor costs in the US Stringent laws and regulations Strengths Wide network of food chains enabling to reach broad customer base Papa John's has a strong and wide spread chain of restaurants. paper products.Papa John's International. smallwares and cleaning supplies. SWOT Analysis SWOT ANALYSIS Papa John's International (Papa John's or 'the company') is a leading operator of restaurants and pizza delivery services. intense competition could affect the company's profit margins. In addition. As of December 28. In order to ensure Papa John's International. The company's domestic quality control (QC) centers comprised of 10 full-service regional production and distribution centers. Inc. supply pizza dough. Mexico City. The company sets quality standards for all products used in its restaurants and designate approved outside suppliers of food and paper products that meet its quality standards. Papa John's owns full-service international QC Centers in the UK.928 franchised restaurants operating domestically in all 50 states and in 36 countries. © MarketLine Page 4 . The company's wide network of food chains enhances its market penetration opportunities. In international markets. digital. Inc. all domestic Papa John's restaurants purchases tomato sauce and dough from its QC Centers. a digital solution that lets customers immediately split their pizza bill. Strong and innovative marketing efforts provides better visibility to the company that leads to enhanced sales volumes and provides a competitive advantage to the company. text messages and local social media. and print materials such as flyers. Its domestic national strategy includes national advertising through television. national purchasing agreements with most of the company's suppliers result in volume discounts to the company. digital display advertising. A wide network of food chains of Papa John's in the US enhances its market penetration opportunities by reaching a broader customer base. advertising and sponsorships to drive sales and generate restaurant traffic. allowing it to sell products to its restaurants at lower prices. which is an e-commerce customer loyalty program designed to increase loyalty and frequency of consumer use of the company's e-commerce ordering platform. print. Papa John's has also increased its online and digital marketing activities over the past few years in response to increasing consumer use of online and mobile web technology. The company's local restaurant-level marketing programs target consumers within the delivery area of each restaurant through the use of local TV. Papa John's marketing strategy consists of both national and local components. the company introduced PayShare. it utilizes its proprietary FOCUS System.The company is also involved in a variety of community oriented activities within schools. targeted direct mail. Further.Papa John's International. including television. SWOT Analysis product quality and consistency. digital. mobile marketing and social media channels. a robust supply chain management by the company in its own restaurants and franchise-operated restaurants allows the company to derive economies of scale in operation. radio. products are distributed to restaurants by refrigerated trucks leased and operated by it or transported by a dedicated logistics company. Its e-commerce platforms include enhanced mobile web ordering for its customers. store-to-door flyers. which in turn enables the company to increase its bargaining power with suppliers and improve its operating efficiency and margins. a next-generation point-of-sale system (POS). newspaper inserts and in-store marketing materials. © MarketLine Page 5 . direct mail. Further. Additionally. in all of its domestic Papa John's International. Marketing and advertising capabilities providing greater visibility The company utilizes marketing. and the marketing efforts use a combination of advertising strategies. email marketing. sports venues and other organizations supported with its advertising vehicles. print materials. the company targets customers living or working within a small radius of a Papa John's restaurant. It also has the Papa Rewards program. For instance. Leveraging information technology capabilities for increasing operating efficiency Papa John's uses information technology (IT) to run its daily operations. radio. the company's proprietary digital ordering platform allows customers to order online. Inc. in April 2015. Most recently. Within the company's domestic QC centers system. As of December 28.700 stores in over 75 international markets. the quick service restaurant segment in India is a $2. Lack of scale also reduces the bargaining power of the company. Many of its competitors. Opportunities Acquisition of Pizza Corner’s stores in South India According to the company. including all company-owned restaurants and almost 1.Papa John's International. in contrast. Weaknesses Lack of scale compared to peers Papa John's lacks favorable scale of operations in comparison to its competitors. Restaurant Brands International currently operates over 19.600 franchised restaurants. in November 2014. Papa John's. Papa John's would significantly expand its presence by a minimum of 40 stores by 2015. According to the company. Papa John's International. Om Pizza and Eats. enabling Papa John’s to offer nationwide digital ordering to its customers. Inc. Papa John's operates 15 restaurants across India through its Master Franchisee for the region. the company had installed FOCUS in almost 75% of its domestic restaurants. The system allows the company to obtain restaurant operating information. this consolidation provides Papa John’s with an opportunity to increase its market share in the Indian pizza segment. The company's comparatively small scale of operations may turn out to be a disadvantage in the fiercely competitive market. Through this merger. and Yum! Brands operates more than 41. the usage of IT tools helps the company in enhancing its operating efficiencies. © MarketLine Page 6 . such as Restaurant Brands International. operates around 4. the company would convert the existing Pizza Corner stores to Papa John's branded restaurants. is the third largest pizza chain in Southern India. Thus. Pizza Corner. including facilitation of managing food inventory and placing orders from the domestic QC centers. Hence. To increase its share in this segment. a part of the Global Franchise Architects (GFA) brands. Domino's Pizza and Yum! Brands are larger in size in terms of revenues and operations. Papa John's acquired Pizza Corner stores in South India.700 company-owned and franchised restaurants in the US and other 36 countries. SWOT Analysis Papa John's restaurants. accounting for 43% of the overall food services business in the country and growing at a rate of approximately 25%.5 billion industry. It also allows the restaurant manager to better monitor and control food and labor costs.000 restaurants in nearly 100 countries and US territories. Domino's Pizza operates through a network of more than 11. Inc.000 restaurants in over 125 countries and territories. The FOCUS system is also integrated with the company’s digital ordering solutions in all domestic traditional Papa John’s restaurants. this technology facilitates fast and accurate order-taking and pricing. By 2015. 2014. providing it with timely access to sales and customer information. food quality and variety. Further. service. Inc. Inc. Expansion of Papa John's restaurants in the new markets would provide an opportunity for the company to capture the niche market demand and thereby increase its revenues through its product offerings. Some of the company's competitors have been in existence for substantially longer periods than Papa John's and can have higher levels of restaurant penetration and stronger. representing a compounded annual growth rate (CAGR) of 4. an increase of 23. approximately 75% of which will open in international markets.200 restaurants (200 units in North America and 1. the company competes with many franchisors of restaurants and other business concepts.Papa John's International. According to a report by MarketLine in April 2015. more developed brand awareness in markets where the company competes.1% between 2010 and 2014. the US restaurants industry is forecast to have a value of $842.4 billion in 2014. During 2015. which could strain its profit margins. © MarketLine Page 7 . Growth trends in the US restaurants industry The restaurants industry in the US is forecast to have a strong growth. As Papa John's operates and franchises pizza delivery and carryout restaurants in the US. International franchised unit expansion includes an emphasis on markets in the Americas. Papa John's expects net unit growth of approximately 220 to 250 units. location. There are well-established competitors with substantially greater financial and other resources than Papa John's. Papa John's International. SWOT Analysis Expansion of restaurants could improve market position Papa John's has expanded its restaurants by opening new restaurants in different locations in the recent years The company opened 388 restaurants in FY2014. and 374 franchised restaurants (132 in North America and 242 international). the US restaurants industry had total revenues of $683. With respect to the sale of franchises. as of March 2015. The category is largely fragmented and competitors include international.000 units internationally). as well as a large number of local independent pizza operators.2% since 2014. Threats Intense competition from many well-established food service companies The quick service restaurant pizza industry in the US (QSR Pizza) is mature and highly competitive with respect to price. the UK and Asia. the company’s development pipeline included approximately 1. it is likely to benefit from the growing US restaurants industry. consisting of 14 company-owned (12 in North America and 2 in Beijing and North China). the majority of which are scheduled to open over the next six years. In 2019. Such an intense competition faced by Papa John's could force it to reduce prices. national and regional chains.1 billion. Inc. As Papa John's primarily operates in the US.78 in 2013 to $8 in 2014). could adversely affect Papa John's as well as the restaurant industry.15 per hour since 1998. such as mandatory health insurance coverage. Colorado (from $7.85 in 2013 to $7. It further increased to $6.95 in 2013 to $9.79 in 2013 to $7. which remained at $5. SWOT Analysis Increasing labor costs in the US The tight labor markets. state and local laws. Papa John's International. living wage or other proposed increases in minimum wage rates and nutritional guidelines or disclosure requirements. increased labor costs in the country may affect the company's operating margin.1 in 2014).25 per hour in 2010. Inc. Moreover. Oregon (from $8. Stringent laws and regulations Operations of Papa John's are subject to various federal.9 in 2014). government mandated increases in minimum wages and a higher proportion of full-time employees are resulting in an increase in labor costs. increased to $5. © MarketLine Page 8 .Papa John's International.8 in 2013 to $7. The federal minimum wage rate in the US. Further national.93 in 2014). Florida (from $7. building and fire agencies in the state or municipality in which the restaurant is located.25 per hour due to higher cost of living. increased overtime.55 per hour in 2009 and to $7. Operations of the company are also subject to Federal Trade Commission regulation and various state laws regulating the offer and sale of franchises. The minimum wage rate has increased in the states of Arizona (from $7. state and local government initiatives.95 in 2014).85 per hour in 2008. safety. many states and municipalities in the country have a minimum wage rate even higher than $7. Each of its restaurants is subject to licensing and regulation by state and local departments relating to health. and Ohio (from $7. sanitation. download. Inc. However. . or email articles for individual use. users may print. SWOTS Analysis is the property of MarketLine.Copyright of Papa John's International. a Datamonitor business and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission.