itstargetnews
Papa John’s (PIZZA) has to grow a bit of the 40-plus-year-old chain.
As demand for pizza increased during COVID, the company’s stock soared to an all-time high of $138.53 by the end of 2021.
Since then, investors have lost appetite as mismanagement led to poor value messaging and lackluster marketing, technology innovation and loyalty programs. Its shares are down roughly 75% from that all-time high.
“We’ve disengaged from the value proposition,” Todd Penegor, who was named CEO last August, told Yahoo Finance at the ICR conference in Orlando.
The consumer “completely walked away” from the $13.99 and $14.99 prices featured in the Better Get You Some campaign, which were far higher than the offerings of competitors such as Domino’s.
In its preliminary fourth-quarter results, Papa John’s same-store sales in North America fell 4% from a year ago. Foot traffic and ticket size each fell 2%.
For the full fiscal year, US same-store sales fell 4%, led by a 3% drop in foot traffic and a 1% drop in ticket size.
There is “a lot of work to do … to get sales and the economy back to its franchisees,” BTIG analyst Peter Saleh told Yahoo Finance.
Raising the menu price instead of working to increase order size was a recipe for disaster, according to Saleh.
“The carriers that are winning in this market, like Darden, Texas Roadhouse, Wingstop, are taking lower prices and driving transactions,” he said.
Penegor said the chain needs to build awareness of its value offerings, such as Papa Pairings, which allow diners to pair a medium single-topping pizza with a side (such as wings or dessert) for $6.99 .
Getting more customers through the door will give them the opportunity to exchange for more expensive items.
“It’s not just value for money,” said Penegor, who was formerly the CEO of Wendy’s. “It has to be worth what you paid for, the whole experience.”
Penegor, who noted that the Papa John’s app needed to be “much more seamless,” has introduced Wendy’s executive Kevin Vasconi to lead the charge as digital and technology director.
International same-store sales growth fell less than 1% for the full fiscal year but rose 2% in the fourth quarter, an encouraging sign for 2025, according to Wedbush analyst Nick Setyan .
Shares in competitor Domino’s are up just 1% in the past year, but Citi analyst Jon Tower calls it a “category leader.”
“As long as value remains front and center for guests … (Domino’s) will continue to gain share,” he told Yahoo Finance by phone. “I would be surprised if 2025 was the year they were massively disrupted or lost share relative to the industry.”
