Friday, December 13, 2019

Papa John’s Free Essays

Papa John’s Pizza Analysis Executive Summary These recommendations will enable Papa John’s to increase their market share and grow their customer base. These recommendations are based upon in-depth analysis of the company’s dominant economic forces, macro-environment, The detailed findings, resulting from this analysis, are contained in the appendix that follows the recommendations. The appendix is comprised of seven exhibits, and these exhibits are referenced in the recommendations. We will write a custom essay sample on Papa John’s or any similar topic only for you Order Now This recommendation includes introducing global topping preferences across different nations, entering the frozen pizza market and allowing premade Papa John’s pizza to be sold in stores, and opening dine-in restaurants. Papa John’s can capitalize on these new growth and improvement opportunities, to increase their revenues, efficiencies, and customer base. Recommendation Papa John’s is the world’s third largest pizza chain, trailing Pizza Hut and Dominos. (Exhibit 4, pg. 1) Although Papa John’s has established a notable amount of success in the industry, to have only existed for a shorter period of time than its rivals, there are existing opportunities that would help Papa John’s to gain competitive advantage and build on its core competencies. Currently Papa John’s is known for its commitment of quality ingredient and quality pizza. (Exhibit 6, pg. 13) Because Papa John’s has a base of customers that already trust the company to deliver great value, this gives Papa an advantage in capitalizing on the segment of health conscious consumers. (Exhibit 1, pg. ) Papa John’s should introduce whole wheat pizza and other organic ingredient and toppings that are low in calories to attract consumers that feel that pizza isn’t a healthy choice. Papa John’s should also make changes to its distribution strategy. In order to compete with Pizza Hut and other restaurants that offer their customers an option to dine in, Papa John’s allow their customers to come to their facility/location be seated and enjoy a meal. This would also attract a larger demographic of consumers. ‘Pizza joints’, over the course of time, have been generally been more popular among college students and the younger generation. Exhibit 1, pg. 6) If Papa John’s where to restructure their establishments to a more sophisticated environment, it could draw the attention of an older and/or more professional consumer group. Another distribution strategy Papa John’s should explore is the Take ‘n’ Bake strategy. (Exhibit 1, pg. 6) The Take ‘n’ Bake strategy is a fairly new concept, which involves providing premade, uncooked pizzas for consumers to take home to bake at their own convenience. Papa John’s could have premade pizzas of their own sold in stores. This would allow Papa John’s to compete with brands like DiGorno, etc. nd to reach consumers who prefer homemade/frozen pizza. There is opportunity for Papa John’s to offer it’s consumers a broader selection of menu items. While rivals such as Pizza Hut and Dominos have grown to offer everything from oven-baked sandwiches and pasta, Papa John’s has been very slow pursuit in spicing up its offerings. Being that the company does have an international presence, and different countries have different preferences for topping combinations, Papa John’s should study its customer data and the trends in popularity for various toppings and introduce topping across nations. (Exhibit 7, pg. 15) If there is an area in the U. S. that has a high population of Russians, Papa John’s should offer popular Russian toppings, such as sardines, tuna, salmon, and red onions, etc. , in the that area. (Exhibit 10, pg. 16) Appendix Exhibit 1:   Dominant Economic Features6 Exhibit 2:   The Five Forces Model7 Exhibit 3: Driving Forces10 Exhibit 4: Market Position of Rivals11 Exhibit 5: Macroenvironment12 Exhibit 6: SWOT Analysis13 Exhibit 7:   Global Toppings15 Exhibit 1: Dominant Economic Features Market Size and Growth Rate * Studies reveal that, in 2012, the pizza industry is worth $42. 8 billion in revenue and includes a more than 65+ thousand pizzerias. Pizza sales make up 17%, of the entire restaurant industry, and are expected to grow by 31% by 2015. Number of Rivals * The industry is fragmented into pizza chains and independent pizzerias. * The pizza chain segment is dominated by the â€Å"Big 4†, which includes Pizza Hut, Domino’s, Papa Johns, and Little Caesars, that make up 32% of the industry sales and 28% stores. * Independent pizzerias account for 57% of stores and 48% of industry sales Number of Buyers—Retailers and End? Consumers * Consumers between 25 and 44 years old make up 46. 3% of all consumers. * Consumers between the ages of 45 and 64 make up 22. % of all consumers * Consumers under 25 make up 16. 2% and those over 65 make up 14. 7% Degree of Product Differentiation * Products are becoming more differentiated, in order to accommodate the growing consumer demand for specialty/gourmet pizza. * 4 channels of distribution: sit-down, carry-out, delivery, and take ‘n’ bake Pace of Techn ological Change * Technology does not play a huge role in this industry, but it does serve opportunity for the players in this industry to better interface with their consumers. Exhibit 2: Five Forces ModelRivals/Competition The â€Å"Big Four† (Papa John’s, Pizza Hut, Domino’s Pizza, and Little Caesar’s) Rivals/Competition The â€Å"Big Four† (Papa John’s, Pizza Hut, Domino’s Pizza, and Little Caesar’s) Suppliers Farmers Small Business Owners IT Providers (internet, applications, software, web presence, etc. ) Suppliers Farmers Small Business Owners IT Providers (internet, applications, software, web presence, etc. ) Substitutes Homemade Pizza Frozen Pizza Other restaurants Substitutes Homemade Pizza Frozen Pizza Other restaurants New Entrants Independent/Small Pizzerias New Entrants Independent/Small Pizzerias Buyers Customers between the ages of 25 and 44 (largest segment), with well-established careers and families. Buyers Customers between the ages of 25 and 44 (largest segment), with well-established careers and families. The five predominant forces that influence Papa John’s are as follows: Competitive Rivalry, New Entrants, Substitute Goods, Buyer Bargaining Power, and Supplier Bargaining Power. Rivalry among Competing Sellers * Buyer demand is growing rapidly * Consumer spending is expected to increase by an average annual rate of 2. 9%, up to 2017 * The products of rival sellers are differentiated and customer loyalty is high * Buyer costs to switch brands are high Threat of New Entrants Threat of new entrants from independently owned pizza restaurants is high because they have the capital to open multiple units. Threat of Substitute Products * There are many choices for consumers to purchase pizza from locally owned to national chains therefore the threat of substitutes is high. Bargaining Power of Buyers * With the multiple outlets available for consumers the bargaining power of b uyers is high because if prices are too high they will shop elsewhere. * Additionally, many consumers switch between pizza restaurants because they choose the outlet with the best prices at that time. Bargaining Power of Suppliers * The bargaining power of suppliers is high for the nationally owned pizza restaurants so they can demand lower prices. * The bargaining power of suppliers for locally owned pizza restaurants is low because they do not buy in large quantities. Exhibit 3:   Driving Forces Four main forces are driving the pizza industry. In order to compete in this industry, a company must capitalize on (1) Emerging new internet capabilities and applications, (2) growing buyer preference for differentiated products, (3) changes in cost efficiency, and (4) changes in societal concerns, attitudes, and lifestyles. Emerging new internet capabilities and applications * Due to new technological advancements, the pizza industry has enabled their consumers to view menus, receive coupons/promotions, and make and track orders online and via mobile device. * Most industry players have also taken advantage of the new wave of social media and have established presence on sites such as Facebook, Twitter, etc. These social media sites allow a more personal connection with their customers, and allow customers to freely voice their satisfaction or lack thereof with the product or service. Changes in cost efficiency As the fuel prices continue to increase, it becomes less convenient and less likely for consumers to purchase from establishments similar to Little Caesar’s, which only offer carry out/pick up and no delivery. Growing buyer preferences for differentiated products instead of standardized commodity product Changing societal concerns, attitudes, and lifestyles * A 2010 survey, conducted by th e National Restaurant Association (NRA), showed that 7 out of 10 consumers are now trying to eat healthier when eating out and that 2 out of 3 restaurant guests pay more attention to the nutritional content in their food and ordered healthier items. Exhibit 4: Market Position of Rivals The graph that is shown below details the market position of Papa John’s main rivals. Pizza Hut (11. 6%) Pizza Hut (11. 6%) Convenient Convenient Product Differentiation Product Differentiation Local Local Local Local Local Local Papa John’s (6. 3%) Papa John’s (6. 3%) Distribution Distribution Domino’s (9. 8%) Domino’s (9. 8%) Little Caesar’s (4. 7%) Little Caesar’s (4. 7%) Inconvenient Inconvenient Low Low High High In the strategic group map above, the x-axis represents the diversity of product offerings (from least to greatest diversity). The y-axis represents the convenience of distribution, in other words how accessible the product is to the consumer. The circles on the map are drawn roughly proportional to market share in 2012. Exhibit 5: Macro-environment ECONOMIC FACTORS ECONOMIC FACTORS Rivals Rivals Substitutes Substitutes HEALTH CONCERNS HEALTH CONCERNS TECHNOLOGY TRENDS TECHNOLOGY TRENDS Buyers Buyers Suppliers Suppliers PAPA JOHN’S PAPA JOHN’S New Entrants New Entrants Exhibit 6:   SWOT Analysis Strengths High Quality Ingredients * Papa John’s uses only fresh ingredients in the pizza production process. Customers perceive value of high quality fresh ingredients. * Many of Papa John’s competitors use frozen pizza dough and sauce made from concentrate therefore using fresh ingredients enables them to meet customer expectations better than the competition. Weaknesses Limited Menu * Although Papa John’s allows its customers the flexibility of creating their own pizza or choose from over 9 specialty pizzas. In comparison to its competitors, the Papa John’s menu remains fairly simplistic. Locations * Papa John’s is still considered new to the pizza market, they are not as large as the competition. Most of Papa John’s competition has doubled the amount of stores. As a result, Papa John’s is not able to serve as large a market as the competition. Opportunities Expansion * The upside to the location issue is that Papa John’s has not saturated all of the markets that are available to them; whereas the competition may not be able to obtain additional store growth. * Target Health Conscious Customers * Diversify Menu Threats Independent establishments Fast-casual restaurants Exhibit 7: Pizza Toppings From Around the World How to cite Papa John’s, Essay examples Papa John’s Free Essays Papa John’s Analysis Alex Quiquia 3/19/13 MGMT 4800 Strategic Analysis of Papa John’s Introduction–We already know that Papa John’s is a major player in the Pizza industry but what does the future hold for them. One of the business-level strategies that Papa John’s implemented was product differentiation through the use of fresh dough and superior-quality ingredients. John Schnatter believed that other pizza restaurants used inferior ingredients and that he could do it better. We will write a custom essay sample on Papa John’s or any similar topic only for you Order Now This strategy was implemented from the very beginning in the United States. Another successful business-level strategy that focused on product diversification employed by Papa John’s was the use of technology to order pizza. In 2001 they became the first pizza company to offer online ordering. The most significant corporate-level strategy used early on by Papa John’s was mergers and acquisitions. In the late 90s, the company acquired 205 â€Å"Perfect Pizza† restaurants in the UK. They continued aggressively acquiring international restaurants until the early 2000s when they began to focus their acquisition efforts domestically. In just under 30 years since opening its first store, Papa John’s has added over 4,000 stores (papajohns. com). That’s an average of over 140 new stores every year since inception, an incredible pace. They also decided to use the franchisee model. Although this model has its critics, it can be a very useful way to generate revenue without adding to store overhead, etc. The franchisee model has been successful for Papa John’s. Papa John’s was enjoying a 5+ percent average revenue growth rate for the previous five years. The company also boasted one of the highest returns on invested capital in the restaurant category of the markets. Total assets grew steadily from 2003 to 2007 as well. This growth was financed mostly by debt, but debt/equity ratios remained healthy. Apparently Papa John’s holds a competitive advantage in its fresher, higher-quality ingredients. When a customer is looking for a restaurant-quality pizza with ease of delivery, they turn to Papa John’s. External Analysis– During this study, the pizza industry was extremely competitive. Barriers to entry were few and competitors could drive prices for pizza ingredients extremely low, enabling them to easily undercut other competitors’ prices. Food commodity prices also took a 20 percent jump in 2007, which didn’t make the industry any more attractive. One of the attractive features of the industry is that because pizza ingredients are commodities, supplier power is very low. Suppliers cannot dictate prices to buyers, because they can go somewhere else. Buyer power, however, is very high. If someone doesn’t wish to buy a $12. 00 pizza at Papa John’s, they can go across the street to Little Caesar’s for a $5. 00 pizza that tastes almost the same. The two major competitors of Papa John’s are Dominos and Pizza Hut. Both of these companies enjoy a larger market share than Papa John’s. These companies are focused more on price savings than Papa John’s, who is focused on quality pizza. Just like any other sub-section of the food industry, thousands of pizza restaurants are opened each year, which continues to make profits more difficult to obtain. Internal Analysis–The commissary system is an important part of what gives Papa John’s an edge over its competitors. Every Papa John’s restaurant belongs to a subdivided region, and each region has what is known as a commissary. These commissaries send fresh ingredients and cleaning supplies twice per week to all the Papa John’s restaurants within their region. This ensures fresh ingredients and all the supplies needed to clean the restaurants. This also maintains consistency from restaurant to restaurant as all of the commissaries are controlled at the corporate level. By servicing several units from one commissary, labor costs are also driven down. Papa John’s international growth is also an advantage it has over many of its competitors. By taking advantage of all different markets around the world, Papa John’s ensures that business is most likely thriving somewhere at all times. All of these factors create a competitive advantage for Papa John’s. Recommendations Based on this analysis of Papa John’s, the following recommendations are made to help the company continue its profitability. 1. Expand internationally as much as possible. With several stores in diverse locations throughout the world, Papa John’s will be well diversified and able to absorb losses in one area better. 2. Continue to move more toward the franchisee model even more so than they are currently doing. By furthering this model, overhead and administrative costs at the corporate level are drastically reduced. How to cite Papa John’s, Papers

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.