Like many operators in the restaurant industry right now, Papa Johns is facing low consumer spend and economic headwinds driven by shifting tariff rates. The Atlanta-based pizza chain reported a 3% decline in North America same-store sales, offset by a 3% same-store sales increase in international markets, for the first quarter ended March 30.
Despite these numbers, Papa Johns executives said the company’s performance was in line with expectations at this point in its turnaround journey, and that there were even some bright spots like higher transaction rates and more loyalty activity.
Papa Johns’ main strategies for fighting macroeconomic factors include boosted marketing spend and innovation investment, particularly on the technology side.
CEO Todd Penegor emphasized the success of the company’s new Meet the Makers ad campaign and aggressive promotional strategy, which helped to drive transaction growth.
“As we continue to innovate across the menu, we’re also improving our perception relative to our restaurant peers — our brand health tracker showed meaningful improvement in value perception after we shifted to consistently showcasing our Papa Pairings menu and launched our Meet the Makers marketing campaign,” Penegor said during Thursday’s Q1 earnings call. “We were also very pleased to see significant gains in customer awareness and consideration among QSRs during the quarter, indicating that our marketing strategy and investments are delivering early, positive results.”
Building off of brand and consumer awareness, Papa Johns also aimed to improve experience customization through its previously announced Google Cloud AI partnership.
“More than 70% of our sales are made on our own digital channels, so we have a tremendous opportunity to improve customer engagement and win market share,” Penegor said. “As a part of this, we announced a long-term partnership with Google Cloud, which will enhance our ordering and delivery experience and take personalization to the next level. Leveraging the power of AI, through this partnership, we will make the customer journey more consistent, seamless, and customized across our own channels.”
Besides customization, Papa Johns said it intended to use Google’s AI tool to improve delivery operations by optimizing driver dispatch and route efficiency and providing more accurate tracking and time estimates — addressing key areas identified in its recent mystery shopper study.
For the first quarter ended March 30, Papa Johns reported total revenues of $518 million, up 1% from $514 million the same quarter the year prior. Net income was $9 million or 36 cents per share, down from $14.9 million, or 67 cents per share, in the same quarter last year.
Papa Johns reported 47 net unit openings in the first quarter, for a total of 6,019 stores systemwide.
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