Papa John's - The Rise and Fall...And Rise Again

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[Music] Papa John's is among the most popular pizza chains in the world for years now they have been one of the big four and not quite as big as Domino's or Pizza Hut but depending on the year they have been right there in third or fourth place performing similar to Little Caesars but I do think it's worth pointing out that Papa John's is the newest of the big four chains starting decades after any of the others there was a time when this was such a fast-growing standout concept and sure there were a few setbacks but generally Papa John's existed for over 30 years growing to over 5 000 locations over that time before ever experiencing any major troubles but starting in 2017 they did in fact start experiencing some major troubles a simple way to show that would be their stock price if you invested one hundred dollars in Papa John's stock symbol pzza by the way at the end of 2013 you would have doubled your money over the next three years and then lost all of those gains over the next two that was a definite low point for them but they have since recovered and in some ways are looking better than ever their stock prices has risen significantly from that point and their current CEO said that 2021 was their biggest year in company history it is a crazy story so in this video I'm going to talk about all of it detailing the rise fall and Rise Again of Papa John's the name Papa John's comes from John Schnatter who has been professionally making pizza since he was a teenager all throughout high school and college he worked in various pizza places learning about all the parts of the business and thinking about different ways to improve it now his father owned a Tavern in Jeffersonville Indiana called mix Lounge that was not doing too well it was falling apart having trouble generating business it was 64 000 in debt so when John returned home from business school at age 23 his father believed that he had learned enough in college to potentially turn things around over at the tavern so he put him in charge of managing it right away he improved the appearance by cleaning everything really well and repainting it he bought more pool tables and raised the price to play at them while reducing the prices of the beer the changes were successful the place became more fun and inviting which attracted more customers and added to their sales within a few months the tavern was profitable again and Well on its way to paying off that debts but John had yet another idea to try to move things forward drawing on his previous experience he went out and sold his car for sixteen hundred dollars used the money to buy some used kitchen equipment and basic ingredients and cleared out a broom closet over at Mick's lounge and started a very modest Pizza Kitchen over the next year those pizzas became a big hit with the customers at the tavern and the demand for them had gotten so high that they needed more space to fill it he moved the operations to their own building next door and soon Incorporated the business as its own independent company officially marking the start of Papa John's and they knew where the real opportunity was soon after they sold mix Lounge to dedicate their full time and attention toward the pizza business opening more of them in the area that was accelerated when they started franchising with their ninth location the size of the business was more or less doubling every year well into the 1990s some of the other reasons behind the early success would be an emphasis us on Quality Pizza that's been their thing since the very beginning I'm sure you've heard the slogan better ingredients better Pizza Papa John's John Schnatter says that he always believed he could make a better Pizza than the big chains I guess that's up to the individual to judge but they have always made a lot of claims involving the freshness and the quality of the ingredients that they use early on they didn't even offer chicken wings or anything else on the menu that you would expect to see at a pizza place like that because this was their full Focus they even started putting garlic sauce in those peppers in the Box just to help improve the pizza experience they also started this commissary system where instead of making the dough in the restaurants they would make it in these centralized buildings and ship it over to the restaurants a couple times each week ensuring that it would be the same no matter which Papa John's you went to but it also made the restaurant simpler and cheaper because they didn't require as much equipment allowing new ones to be opened with much less of an investment even the external factors were in their favor Papa John's happened to start right when Pizza itself was becoming more popular throughout the 80s and 90s at the Pizza Market was growing faster than any other major restaurant segment so Papa John's along with many other pizza places were able to grow or around that time because there was such a growing demand for their products by the end of the 1990s Papa John's was considered to be a major threat in the pizza markets at almost 2500 locations and in the American customer satisfaction index they were ranked number one among all national fast food restaurants and held on to that number one spot for the next five years here's how ambitious they were John Schnatter had set the goal of surpassing Pizza Hut to become the biggest pizza chain within the next decade which did not happen obviously it's been more than two decades and it hasn't happened but it was looking very possible at the time in fact they had the attention of Pizza Hut they had this whole Feud going on Pizza Hut introduced a line of totally new pizzas meant to compete directly with Papa John's and then Papa John's made a line of commercials talking about how they make better pizzas than Pizza Huts and I think it's funny that one of those commercials actually featured one of the founders of Pizza Hut who had become a Papa John's franchisee all of that led to lawsuits against each other that ultimately never had much of an impact to either company but hey just the fact that they were considered to be a threat to the Undisputed number one pizza chain after having only existed for such a short time I think is impressive the 2000s didn't turn out to be quite as successful as they had hoped specifically toward the end of that decade the recession was hurting sales across the restaurant industry and then the fast casual restaurants were taking sales away from the pizza industry meanwhile the ingredient costs were Rising specifically the cheese and Papa John's was having trouble I don't want to focus too much on this fall because it's far less dramatic than the next one but their main solution was to bring back John Schnatter as CEO who had resigned back in 2004 one of his biggest moves was to make a deal that made Papa John's the official Pizza sponsor of the NFL with all of that additional advertising along with the economy improving among other factors Papa John's started growing much faster in the 2010s a fantastic period for them up until 2017. the following year they reported falling revenue for the first time in that decade despite continuing to open new stores and at the same time their net income dropped to its lowest point in decades directly after having reached its highest point ever and the source of almost all of these troubles would be statements made by John Schnatter himself now there has been some debate about all of this and it does involve politics so let me just try to give you the facts I'm sure that most of us have heard about NFL players kneeling during the national anthem to protest racism and police brutality in America well in an earnings call in late 2017 he basically criticized the way that the NFL had been handling the protest and said that the Papa John's company was being hurt by it they were the official Pizza sponsor of the NFL after all effective in early 2018 the backlash over those statements caused him to step down from his CEO position and then the NFL ended their contract you would hope that would be the end of it but then a few months later in July of 2018 it was made public that used a racial slur along with other potentially insensitive racial remarks ironically during a diversity training conference call while he was trying to explain why his first remarks weren't all that bad clearly another incident that caused major public backlash this time enough for him to resign from his role as chairman I should say it has been argued that the way his comments have been reported by certain media Outlets has exaggerated the backlash so I do encourage you to look up exactly what he said before you form your full judgments then about a year after that he slowly started selling his ownership in the company that I believe has been reduced from around 30 to about four percent effectively ending his involvement with the company that he had started and built up over the past three decades it's such an unfortunate ending he has since criticized the company's new leaders how they're running the company the pizzas themselves it's almost become a bit of a joke but I find it all pretty sad because just think about that for a second John Schnatter was like the modern day Colonel Sanders he was in the commercials he was on the box the company is named after him he was so publicly associated with this company which I think is a cool thing that quickly turned bad once his Public Image was harmed so was the restaurant I mean if the public thinks you're racist or insensitive or whatever they're not going to want to go to your pizza place so just to recap here Papa John's had a hurt Public Image they had lost their longtime CEO chairman and owner if they had lost their NFL contract and they even had the person most associated with Papa John's now criticizing Papa John's I would be surprised if things weren't falling at that point but amazingly they were able to regroup and grow to even bigger Heights than ever before in 2021 the revenue surpassed 2 billion dollars for the first time ever making it their best selling year and it was also their most profitable year in order to make that happen first and foremost they needed to separate themselves from John Schnatter he obviously stopped appearing in the commercials and even went so far as to make advertisements that were clearly trying to convey that he was no longer associated in late 2021 they announced a brand refresh complete with a new restaurant design an altered logo and they even got rid of the apostrophe in Papa John's they say that the reason for it was to continue their positive momentum but I strongly suspect that the real reason is so that they can stop reminding the public of all the craziness and negativity from before another big part of their comeback believe it or not has been the pandemic Papa John's has always been concerned with takeout and delivery something that became much more popular in the 1990s so unlike most of those other major pizza chains that already existed for a long time and had to adjust to it Papa John's started by doing it to compliment that they've been ahead of the curve when it comes to technology as well in 2001 they became the first pizza chain to offer online ordering at all traditional restaurants so in 2020 when everyone was looking to order something online and have it delivered that was their time to shine 75 of all orders were digital that year and that helped them build their Papa's reward members causing repeat visits from customers another part of the comeback has been new menu items who they say have formed the foundation of their growing sales specifically the Epic stuffed crust pizza was officially launched in 2021 as one of their most successful launches to date they have also indicated that the New York style pizza has been successful along with the papatios not to mention the shacarroni named after Shaquille O'Neal who joined the board of directors in 2019 and became somewhat of a spokesperson for the brand the final reason on my list would be the fact that they literally brought in what I would consider comeback experts here's what I mean by that in August of 2019 they hired a new CEO named Rob Lynch mainly because of his previous experience as president of Arby's where he played a big part in turning their business around also in that your starboard value LP made this deal where they invested 200 million dollars in Papa John's and their CEO took over as chairman of the board starboard also had experience with helping struggling restaurants because they did something kind of similar with Olive Garden back in 2014 and saw positive results from it what I'm trying to say is that they brought in people with experience at making comebacks and then they went on to make a comeback let me know in the comments what do you think of Papa John I really appreciate the peppers and the garlic sauce that goes a long way for me but what do you think how do they compare to Pizza Hut or Domino's or Little Caesars and what do you think of John Schnatter obviously a controversial figure at this point but you know Papa John's it wouldn't be there without him so any other thoughts you have about Papa John's over the years the overall Pizza Market or that garlic sauce let me know in the comments I'd like to hear what you have to say this video is sponsored by audible hey if you want to get your mind off things relieve some stress I recommend you go outside for a walk pop in some earbuds and get immersed in an audiobook that's what I do I recommend the Gambler it's all about Kurt cocorian kind of a Hidden Gem of a story I first learned about him a few months ago when making a video about the film studio MGM if you saw that video of mine you already know a bit of his unique story but I promise you it runs much deeper than that but that audiobook is just one of 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Channel: Company Man

Views: 339,640

Keywords: Pizza, Papa John's, Business, Company, Fast Food

Id: e1BNxy_i99A

Length: 13min 1sec (781 seconds)

Published: Wed Dec 14 2022