Papa Johns CEO wants to emulate local pizzeria operations
Papa Johns CEO Todd Penegor envisions a shift toward localized mom-and-pop-style operations
“Last year, we sold 4% more pies but they were trade-downs from large to medium … We’re trying to figure out if there are other cool things we can introduce to really drive add-ons.”
The quick-service pizza chain’s leader also declined to address the latest company takeover rumors at the UBS Global Conference.
Last month, the Atlanta-based pizza chain announced 300 store closures and a 7% reduction in corporate staff, following a pattern of sales declines. Penegor addressed store closures Thursday as part of the “foundational work” that has been done to strengthen the core business, alongside refranchising measures and ramping up local co-ops.
Following news of these closures and cutbacks, rumors have resurfaced about potential takeover bids for Papa Johns. Last November, following reports that Apollo Global had offered and then withdrew a $2.1 billion takeover bid of the company, Penegor said that they are “open-minded to strategic alternatives, including a possible acquisition, but that leadership is laser-focused on the company’s turnaround efforts.
This week, media reports surfaced about a potential takeover bid from Qatari-based investment firm Irth Capital Management, which Penegor was asked about at the UBS Conference but declined to address.
“I really can't comment on any market speculation or rumors,” Penegor said. “I've been in the role 18 months, and I think almost the whole time, there’s been some kind of rumor out there around the brand. But we’re really focused on being the best Papa John's that we can be, and are working hard to execute the strategy that we've laid out.”
“Over time, there will be opportunities to continually expand our total addressable market and be more akin to your local mom-and-pop pizzeria with the offerings that we have,” Penegor said. “We’ll do it in an operationally efficient manner, but at much more affordable price points. That’s how we're starting to evolve to make sure we can compete.”
Moving forward, the company said there is still progress to be made on the right type of menu innovation. As Papa Johns phases out some operationally complex items like Papa Bites and Papadias, the executive team still wants to focus on menu innovation beyond pizza. Menu innovation that entices customers to come back and drives value perception but doesn’t slow down the kitchen is key, Penegor said.
“We still have to address where we've really been challenged this this last year, and it's on our non-pizza items,” Penegor said. “Last year, we sold 4% more pies but they were trade-downs from large to medium … We’re trying to figure out if there are other cool things we can introduce to really drive add-ons.”
