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Papa John's layers on the digital topping

Stuart Lauchlan Profile picture for user slauchlan May 4, 2017
Summary:
Papa John's pizza firm is another example of a digital fast food champion, with a strong mobile user demographic coming to the fore.

papajohn
Digital is the future of this business. One of the negatives on the execution part of running a Papa John’s restaurant is happening to answer the phones.

That’s the view of John Schnatter, Chairman and CEO of pizza outfit Papa John’s. As noted earlier this week, it’s a very similar stance to the one taken by rival Domino’s, currently one of the benchmarks of digitally-enabled fast food delivery.

Over at Papa John’s, the rise of digital investment has been a matter of timing, with the current climate being particularly appetising, according to Chief Operating Officer Steve Ritchie:

Our corporate restaurants were early adopters in the marketing initiatives to drive the digital traffic…we now have multiple markets that are average on a weekly basis over 70% of digital. We believe that the opportunity to get the 80% plus over the next several years here.

It’s a digital transformaton journey that began early, says Ritchie:

As we have [seen] since the inception in 2001 of being the first national pizza chain to launch online ordering capability, the ticket average has been every year higher for a online customer than it is for an offline customer. That trend is continued into 2017. But not only higher, ticket average will also see higher levels of frequency and better overall customer experience.

[There was] the introduction of our loyalty program which was also the first in the pizza category back in 2011. I think about the ticket average and frequency level there versus a traditional online customer is even higher within the loyalty program. So, those initiatives and the functions of the future of the business are really the benefits of moving offline customers into the digital side.

That's delivering good results, he adds:

We averaged over 60% domestic sales across our digital channels in Q1, of which roughly 70% is from our mobile oriented channels. In addition to being the leader in digital payment options to check out, in March we announced the introduction of Papa Track, a digital pizza tracker that allows customers to follow the pizza process from the oven to delivery.

Just as we do with our ingredients we prioritize and invest in additional digital payment options in the development of Papa Track to provide customers with a seamless experience from ordering and paying for their pizza to tracking that order to delivery.

That customer experience aspect is one of the main drivers behind the digital investment strategy, Ritchie emphasises:

On the technology front, we continue to reinforce our commitment to providing better customer experience with enhancements to our digital ordering process…Papa John's has taken its place as the 2017 pizza brand of the year in the 2017 Harris Poll EquiTrend rate rankings. The Poll measures planned perceptions of more than 100,000 U.S. consumers across more than 4000 brands from automobiles to TVs and technology. We are proud to be recognized as the pizza category leader by consumers in confident that we have the brand strength to continue producing great results for years to come.

The digital side of the business is clearly an area where we are going to continue to apply and make sure that we are being very targeted with our segments.

Mobile

The person charged with making a success of this is Mike Nettles, recently appointed Chief Information and Digital Officer, who has own ‘to do’ list front of mind:

I think a big part of what we have in opportunity [going] forward is tying our digital marketing into the rest of our digital properties. So we have got a tremendous opportunity to leverage unique meal experiences if you are watching an NFL game. We have a deep integrated sponsorship with NFL. We can tie that into half-time promotions, to make sure that the customers are well aware that they are hungry, they are thinking of snacks for their parties [and that] they are able to get those quickly.

We present [this] to them as opportunities ahead of the game so they are not actually waiting on it. [We can] use Papa Track to actually tell them that, hey it's going to be there on time for half time and kind of run with those types of programs wherever possible. I think we have many other opportunities you are going to see this year where we are going to be continuing to tie that digital outreach particularly through our social media channels where we get the opportunity to really connect with customers, more to targeted demographics segment as oppose to kind of broad brush the entire industry.

On the subject of demographics, there is one particular segmentation that is apparent at Papa John’s - the savvy mobile user. Nettles says:

What we’re seeing the biggest change is probably the number of our customers who have quickly gravitated and stick to use of the mobile devices. I think [in] mobile device use in general we’ll continue to be at a very aggressive trend. We’re actually looking for ways to try to leverage some partnerships in that area. We had a very successful promotion this year with T-Mobile not too recently.

There’s some opportunity for us to really just recognize that mobile devices are such a unique part of the everyday experience of all consumers that people feel more comfortable using them. They feel more in control of the experience and they gives us an opportunity to really leverage that better ingredients better pizza.

But [it’s] also a better ordering experience overall. So, not so much a difference in terms of different types of people, different segments, but certainly we’re seeing a big push on the mobile and a lot of our development investment and effort is on that platform accordingly.

My take

Another fast food digital champion. The legacy delivery business model of the pizza industry seems better suited to digital enablement and transformation than, for example, the burger or chicken chains.

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