Papa John’s is looking for a new recipe after last year.
Papa John’s ( PZZA ) should be cooking up some growth for the more than 40-year-old chain.
The company’s shares have soared to a high of $138.53 by the end of 2021 as pizza demand surges during the Covid-19 pandemic.
Investors lost appetite as management mistakes led to poor value messaging and a lack of marketing, technological innovation and loyalty programs. The stock is down 75 percent from that peak, according to Yahoo Financials.
“We’re out of place on the value proposition,” Todd Penegor, who was named CEO of Papa John’s last August, told Yahoo Finance at the ICR conference in Orlando.
The consumer was “completely turned off” by the $13.99 and $14.99 price points offered in the Better Get You Some campaign, which far exceeded the offerings. Competitors Like Domino (DPZ).
In its preliminary fourth-quarter results, Papa John’s same-store sales in North America fell 4 percent from a year ago. Foot traffic and ticket volume each fell 2%.
For the full fiscal year, North American same-store sales fell 4 percent, driven by a 3 percent decline in foot traffic and a 1 percent decline in ticket volume.
BTIG analyst Peter Saleh told Yahoo Finance that “there’s a lot of work to be done… for their franchisees to get their sales and economics back in order.”
Increasing menu prices instead of working to increase order volume was a recipe for disaster, according to Saleh.
“Operators that are winning in this market like Darden (DRI), Texas Roadhouse (TXRH), Wingstop (WING) are taking lower prices, and driving transactions,” he said.
Penegor said the chain needs to build awareness of its value offerings like Papa’s Pairs, which allow diners to pair a medium topping pizza with a side (like wings or dessert) for $6.99.
Getting more customers through the door gives them the opportunity to trade for more expensive items.
Read more: How Shake Shack founder Danny Meyer is preparing for new growth.
“It’s not just value for money,” said Penegor, a former WEN CEO. “It has to do with the price you pay, the whole experience.”
Penegor, who says the Papa John’s app should be “pretty seamless,” already brings it up. Wendy’s CEO Kevin Vasconi To lead the responsibilities as digital and technology officer.
Global 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 Setian.
Shares of rival Domino’s rose just 1% last year, but Citi analyst John Tower calls it “a leader in the category.”