LOUISVILLE, KY. — The success of one innovation, Epic Stuffed Crust pizza, is delaying further menu innovation at Papa John’s International, Inc.
“Epic Stuffed Crust has done way better than we have had forecasted,” said Robert M. Lynch, president and chief executive officer, in a May 6 conference call to discuss first-quarter results. “We had already planned to have launched new innovation already this year, but when you're doing the kind of sales that we're doing, and it's being driven by an initiative that you're promoting, it's really hard to take that thing off of promotion.”
Comparable store sales for Louisville-based Papa John’s in the quarter ended March 28 shot up 26% in North America and 23% internationally when compared to the previous year’s first quarter. Papa John’s International reported net income of $33.9 million, or 83¢ per share on the common stock, which compared to $8.4 million, or 15¢ per share, in the previous year’s first quarter. Total revenues, at $511.7 million, marked the first time Papa John’s surpassed $500 million in a quarter and was a 25% increase from $409.9 million in the previous year’s first quarter.
Papa John’s stock price on the Nasdaq closed at $100.84 per share on May 6, which was up 7% from a close of $94 per share on May 5.
Papa John’s will begin to go up against impressive quarters from a year ago when more consumers ordered delivery during COVID-19. Comparable store sales grew 28% in the second quarter of 2020.
“Based on our strength in Q1 and continued strong April sales, even as markets begin to reopen and we left double-digit comps from a year ago, we are increasingly confident in delivering year-on-year flat to slightly positive comp sales growth in North America in Q2,” Mr. Lynch said.
Epic Stuffed Crust pizza launched in North America in December.
“Epic Stuffed Crust has continued to bring in new customers,” Mr. Lynch said. “We have been promoting it now for over four months, and we continue to see growth in that business, and we're going to continue to double down on it and continue to invest behind it.”
Papa John’s introduced Papadias in North America early in 2020 and since then has added it to menus in 25 international markets.
“Like Epic Stuffed Crust, Papadias are built on Papa John's premium dough and better ingredients, better pizza positioning,” Mr. Lynch said. “This premium positioning means we rely less on discounting to engage our customers. We have been able to drive a large increase in new customers without having to give our food away. This has significantly contributed to higher margins and better unit economics.”
While the foodservice market this year has dealt with a labor shortage, Mr. Lynch said Papa John’s retains its drivers by paying “significantly” more than minimum wage in all its markets and by offering incremental benefits around health care. The pizza chain also is partnering with DoorDash and leveraging its labor force.
“Most folks are familiar with the capability of DoorDash Drive,” Mr. Lynch said. “We have full integration with that capability, and I think we're a top five customer for DoorDash now and leverage them to a huge extent. That is part of our plan. It couldn't come at a better time. When we are running short on labor, particularly on a Friday or Saturday night at our peak periods, we are leveraging DoorDash Drive in a big way, and we will continue.”