Business model of Papa John’s International

Customer Segments

Papa John’s serves the general consumer population. The company’s customer base appear to span a wide range of customer demographics.

The company’s Digital Director recently stated that Papa John’s has an ordering group in the 35 to 44 year old age group that is the same as the size of its 18 to 24 and 25 to 34 age groups.

The average order of Pap John’s customers is around USD 20, suggesting that its customers value budget-friendly food options.

Papa John’s reportedly makes around 20% or more of its sales through online or SMS channels, suggesting that a large portion of the company’s customers value convenience and accessibility. These customers likely include busy families and younger consumers.

Papa John’s is based in the US, which remains its largest market.

The company also serves a large international customer base, including consumers across Asia Pacific, the Americas, Europe, the Middle East, and Africa.

Value Propositions

Papa John’s provides value to its customers in the following ways:

• Brand Recognition and Reputation – Papa John’s is one of the largest and most well-known pizza chain operators in the US and internationally, it has an established reputation for providing good quality products and efficient services and a recognisable brand image;
• International Reach – Papa John’s has an extensive retail presence across the US, spanning all 50 states, as well as an operational presence in 44 countries and territories across the Americas, Asia Pacific, Europe, the Middle East, and Africa;
• Accessibility and Convenience – In addition to operating a network of physical retail outlets, Papa John’s also allows customers to place orders and scheduled deliveries online through its website, via its mobile app, and by SMS, ensuring that the company’s services are accessible and convenient for as broad a customer base as possible; and
• Quality and Variety of Products – Papa John’s provides good quality products to its customers, and implements quality control processes to ensure that it maintains a standard of service and product across its network of outlets.

Channels

Papa John’s primarily serves customers directly through its network of retail outlets. At December 31 2017, he company owned 5,199 restaurants, comprising 743 company-owned and 4,456 franchised restaurants operating domestically in all 50 states and in 44 countries and territories worldwide.

The company’s owned restaurants also include 246 restaurants operated under five joint venture arrangements and 35 units in Beijing and North China. The company’s outlets are staffed by dedicated sales personnel who serve customers directly and in person.

In addition to its physical sales locations, Papa John’s also operates an online ordering platform, through which customers are able to browse products, place orders, and schedule deliveries without leaving their homes.

The company also offers similar functionality through its mobile app, which is available on iOS and Android devices, as well as through its SMS ordering system.

Customer Relationships

Papa John’s seeks to establish lasting relationships with its customers, encouraging recurring business through the quality and efficiency of its services.

The company also provides high quality customer service to customers via its in-store sales personnel, who are available to respond directly to queries and questions from customers.

Through its website and mobile app, Papa John’s additionally operates a rewards and benefits membership scheme, through which regular customers can earn discounts and deals.

Papa John’s operates a dedicated customer support unit, which customers can contact online or over the phone. The company’s support personnel are available to handle customer complaints and to receive feedback regarding the quality of the company’s products and services.

Papa John’s additionally provides information on its services, operating locations, and structure through its website, which can be accessed on a self-service basis.

Papa John’s is additionally able to communicate directly with customers through its various social media accounts, including with Facebook, Twitter, Instagram, and YouTube.

Key Activities

Papa John's is a US pizza chain. It operates and franchises a wide network of pizza delivery and carryout restaurants and, in certain international markets, dine-in and delivery restaurants under the Papa John’s brand.

The Company organises its operations into five reportable business segments: domestic Company-owned restaurants, North America commissaries, North America franchising, international operations and all other business units.

The company defines North America as the US and Canada, and defines Domestic as the contiguous United States.

The company defines international franchisees as all franchise operations outside of the US and Canada.

Through its extensive network of outlets, numbering more than 5,000 across more than 40 countries worldwide, Papa John’s offers pizza along with side items, including breadsticks, cheese sticks, chicken poppers and wings, dessert items and canned or bottled beverages.

Key Partners

Papa John’s works closely with a broad network of partner companies and organisations that help the company to serve high quality products quickly and efficiently.

The company’s partners can be organised broadly into the following categories:

• Supplier and Vendor Partners, comprising suppliers of ingredients and equipment used across the company’s retail outlets, as well as third-party companies that provide other external services in support of the company’s corporate activities; 
• Franchise Partners, comprising a range of commercial enterprises and business figures that operate Papa John’s outlets as franchisees on behalf of the company;
• Sponsorship and Marketing Partners comprising various sports teams to which the company provides sponsorship in return for visibility, as well as marketing and branding companies that assist the company in marketing its products;
• Joint Venture Partners, comprising various restaurant operators with which the company jointly operates Papa John’s locations, primarily in China;
• Investor Partners, comprising various investment companies and private equity vehicles that provide financial resources to the company in return for equity stakes; and
• Strategic and Alliance Partners, comprising various other companies and organisations with which the company collaborates on other projects, including development and branding projects.

Papa John’s has a number of sponsorship partnerships in place, including with a number of US baseball teams, such as the New York Yankees, the Washington Nationals, the Pittsburgh Pirates, the Minnesota Twins, and the Texas Rangers.

Key Resources

Papa John’s reputation relies on its ability to provide good quality pizzas and other products to customers quickly and efficiently.

As such, the company’s key resources are its network of outlets – including joint venture and franchise locations, its equipment and ingredient inventory, its suppliers and supply chain, its website and mobile app, its IT and communications infrastructure, and its personnel.

As noted above, the company operates an extensive network of outlets across the US and internationally that are key to its ongoing operations, including franchise and joint venture locations. The company’s brand can also be considered among the company’s key assets.

Cost Structure

Papa John’s incurs costs in relation to the operation of its outlets – including occupancy and utility fees, the procurement of ingredients and equipment, the procurement of external services, the management of its partnerships, the maintenance and development of its IT and communications infrastructure – including its website and mobile app, and the payment of salaries and benefits to its personnel.

In its 2017 annual report, Papa John’s recorded total costs and expenses for the year in the amount of USD 1.63 billion. The bulk of these expenses were accrued by the company’s Domestic Company-owned restaurant and North America commissary segments.

Revenue Streams

Papa John’s generates revenue through the operation of an international pizza chain, comprising locations across the US, Canada and other locations in Europe, Asia Pacific, the Middle East, and Africa.

The company primarily derives its revenue in the form of sales at its various retail locations, including in-store orders and orders completed online via the company’s website and mobile app.

In 2017, Papa John’s recorded total annual revenue in the amount of USD 1.78 billion, an increase on the USD 1.71 billion recorded by the company the previous year.

The largest contributor to the company’s revenue was its Domestic Company-owned restaurant segment, which generated USD 816.72 million in annual revenue.

The company’s North America commissary and other sales segment generated USD 733.63 million.