Papa John’s (PZZA) needs to bake up some growth at the more than 40-year-old chain.
As pizza demand surged during COVID, shares of the company skyrocketed to a record high of $138.53 at the end of 2021.
Investors have since lost their appetite, as management missteps led to poor value messaging and lackluster marketing, tech innovation, and loyalty programs. Its shares are down roughly 75% from that record high, according to Yahoo Finance data.
“We got way out of position on the value proposition,” Todd Penegor, who was appointed Papa John’s CEO last August, told Yahoo Finance at the ICR conference in Orlando.
The consumer “completely gravitated away” from the $13.99 and $14.99 price points featured in the Better Get You Some campaign, which were far higher than offerings from competitors like Domino’s (DPZ).
In its preliminary fourth quarter results, Papa John’s same-store sales in North America fell 4% from a year ago. Foot traffic and ticket size fell 2% each.
For the full fiscal year, North American same-store sales dropped 4%, led by a 3% decline in foot traffic and 1% drop in ticket size.
There is a “lot of work to do … to get their sales and economics for their franchisees back in order,” BTIG analyst Peter Saleh told Yahoo Finance.
Upping menu price instead of working to increase order size was a recipe for disaster, per Saleh.
“Operators that are winning in this market, like Darden (DRI), Texas Roadhouse (TXRH), Wingstop (WING), they’re taking less pricing, and they’re driving transactions,” he said.
Penegor said the chain needs to drive awareness on its value offerings, like Papa pairings, which allow diners to pair a medium one-topping pizza with a side (like wings or dessert) for $6.99.
Getting more customers through the door will give them an opportunity to trade up to more expensive items.
Read more: how Shake Shack’s founder Danny Meyer is cooking up new growth
“It’s not just value for the money,” said Penegor, who was formerly the CEO of Wendy’s (WEN). “It’s got to be worth what you paid, the whole experience.”
Penegor, who noted Papa John’s app had to be “a lot more seamless,” has brought in former Wendy’s executive Kevin Vasconi to lead the charge as chief digital and technology officer.
International same-store sales growth was down less than 1% for the full fiscal year but up 2% in the fourth quarter, an encouraging sign for 2025, per Wedbush analyst Nick Setyan.
Competitor Domino’s stock is up just 1% in the last year, but Citi analyst Jon Tower calls it the “leader in the category.”