Papa Johns is Food On Demand’s next Outstanding Operator.
The world’s third-largest pizza chain is recognized for embracing new ways of learning, adapting to changing customer habits and exploring modern models for each part of its business.
Since its inception, Papa Johns has upheld the commitment to meet consumers where they are. This was reflected in 2019 when the company became the first national pizza chain to enter the third-party delivery marketplace and partner with aggregators such as DoorDash, Uber Eats and Grubhub.
“Because of our first-mover advantage, we’ve established strong integrated partnerships and invested in optimizing the customer experience, and that’s led to some tremendous growth for our brand on the aggregator platforms,” said Nancy Combs, VP of digital strategy and product at Papa Johns International.
Solving for labor during peak dayparts
The strategic move not only provided increased visibility but also solved for driver shortages during the busiest dayparts.
“Historically, it’s been challenging to execute our delivery during the lunch and late-night dayparts, and that’s been due to the lack of consistent ordering patterns and the inability to accurately forecast the labor that’s necessary to meet the available consumer demand,” said Nancy.
“Those relationships enable us to deliver incremental occasions and help us service those existing customers during peak periods where we might not have drivers and be fully staffed,” she added.
Despite other national pizza chains jumping on board with third-party aggregators (Domino’s joined the marketplace in 2023) and as QSR competition heats up in the space, Combs relayed that the pizza category as whole has continued to expand its share of the overall market.
“It indicates that competitive entries do not necessarily lead to significant volume loss for brands that have been thriving in the space for years,” said Combs.
Today, third-party aggregators bring in about 15 percent of overall sales for Papa Johns—with more than 85 percent of transactions flowing through organic channels such as carry-out and in-house delivery.
The majority of sales coming through direct channels are fueled by a robust loyalty program. Dubbed Papa Rewards Members, the program has grown from 12 million to over 30 million members in the last five years.
“Those customers are the best, most frequent, and the highest ticket and highest customer lifetime value,” said Combs. “Our program today is structured to deliver incentives to those really valuable customers and ensure they feel special when they order from organic channels.”
Nancy Combs, VP of Digital Strategy Papa Johns International
Tactics include branding early access for new product launches and access to exclusive deals.
Advancing AI technology fuels customer retention
With most transactions occurring digitally, Papa Johns is laser-focused on advancing technology.
The company is fine-tuning a dispatching system to predict arrival times for customers and drivers. The technology can determine the best available delivery driver, whether that is someone in the store, a third-party driver or a courier returning from a delivery.
The pizza giant is also leveraging AI to better understand price elasticity and quote time algorithms, “an especially hard metric to get right,” according to Combs.
Machine learning algorithms support customer retention by predicting orders and target marketing campaigns. The company also uses AI for anomaly detection on various e-commerce channels.
Additionally, Papa Johns is experimenting with AI for labor forecasting and scheduling, as well as testing conversational AI to attract talent.
When asked what other brands, not just within the pizza category, could learn from Papa Johns, Combs said to embrace disruption, alluding to the leap of faith the company took when partnering with aggregators five years ago.
“I think what that means for others, is to not be afraid to lean into innovation across all facets of your business.”
Moreover, Combs adds, “not just food innovation, which so many of us do, but technology and data as well.”
Papa Johns has 3,433 locations in North America and 2,473 locations internationally, 53 of which opened in the fourth quarter.
Looking ahead, Papa Johns plans to continue to scale. Last year it launched a new development initiative to drive momentum, with over 100 new units currently in various stages of development.
The Outstanding Operators Program is highlighting 20 innovative brands taking creative paths to success with all things off-premises. Winners receive a $1000 charitable donation to the organization of choice and will be recognized on-stage at the 2024 Food On Demand Conference. Register today!
The Outstanding Operator program is sponsored by these industry-leading partners.
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