LOUISVILLE, KY. — Domestically, recent premium pizza product launches such as Shaq-a-Roni, Epic Stuffed Crust and NY Style have made it easier for Papa Johns to achieve higher ticket prices amid rising input costs. Internationally, the Louisville-based chain expects to continue expanding its store count despite the Russian military action in the Ukraine.
“So if you think our average price per pie, let’s just say, is around a little over $10,” said Robert M. Lynch, president and chief executive officer, in a Feb. 24 earnings call to discuss fiscal year 2021 results. “And then we launched Shaq-a-Roni. We launched Stuffed Crust. We launched New York Style, all of those at $12 or $13 national promoted price points. Those are 20% and 30% increases in price per pizza. So that has been a significant driver of our check growth.”
The higher-priced product launches give Papa Johns more room to manage and offset external cost pressures through pricing actions, he said.
“Also, since our value proposition is focused on delivering premium value, not around specific low-price points, we have more flexibility around our pricing,” Lynch said.
Comparable store sales in the fiscal year ended Dec. 26, 2021, rose 12% in North America and 13% internationally. Over a two-year basis, comparable sales increased nearly 30% in North America and over 25% internationally, Lynch said.
The number of international stores in the fiscal year increased by 200, to 2,311 stores. Papa Johns in August 2021 signed a deal with Chilean-based Drake Food Service International to open 220 restaurants by 2025 across Latin America, Spain, Portugal and the United Kingdom. Then in January of this year an agreement was announced with FountainVest Partners, a private equity firm in Asia, to open more than 1,350 new stores across south China by 2040.
Papa Johns operates in 50 countries, Lynch said.
“We have restaurants in Russia,” he said. “We don’t have any restaurants in the Ukraine. We source our ingredients really pretty close to where we end up using the ingredient. So if there’s disruption in the Ukraine, we don’t have any restaurants there.
“Our restaurants in Russia, it will depend on how much disruption there is there and the impact of that business. We have about 185 restaurants in Russia, but our domestic business and our business globally in the UK, Latin America, China, Korea, we don’t see any operational disruption on the horizon.”
Comparable sales in the fourth quarter were up 11% in North America and 2.4% internationally.
Omicron exacerbated the labor shortage early in 2022, Lynch said.
“Throughout Q1, our restaurants have been at their lowest staffing levels since the beginning of the pandemic,” he said. “This has impacted customer service and, in limited cases, our ability to deliver or take orders. “
He added the omicron infection appears to have peaked in early January and the number of positive tests is declining rapidly.