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Papa john's final presentation
- 1. Jordan Burrell, Cole Ferguson, Nate Morse, Fangzhou Wang, and Eric Williams
- 2. Presentation Outline I. Company History and Overview II. Assessment of Operations III. Assessment of Marketing Mix IV. Balanced Scorecard and Managerial Accounting V. Analysis of Financial Status VI. Strengths, Weakness, Opportunities, Threats VII.Recommendation
- 3. History and Overview - Humble beginnings in 1984 with Founder John Schnatter - Louisville, Kentucky - Competitors - Business franchise model - 2015 Revenues: $1.6 Billion - IPO 2001
- 4. The Products
- 5. Store Locations and Distribution Facilities
- 7. 16% 73% 11% Breakdown of Papa John's Locations Corporate: 735 Franchise: 3450 Non-Traditional: 505
- 8. 50% 6% 40% 4% Domestic Revenue Distribution (in thousands) Domestic Company-Owned, $756,307 Domestic Franchise Royalties, $95,046 Domestic Commissary Sales, $615,610 Other Domestic Sales, $64,711
- 9. Order Qualifiers Order Winners • Relatively Low Prices • Offering items besides pizza (Wings, breadsticks, Desserts) • Delivery Speed, Reliability, and Availability • Perceived Quality • Customer Service
- 10. Ingredient/Product Suppliers PJ Food Service Inc.
- 11. Technology & Service Providers
- 12. Online Ordering & FOCUS Point of Sale System January 2002: First national pizza chain to make online ordering available to customers.
- 13. Sustainability and Corporate Social Responsibility -Boxes are made in the USA from 100% natural fiber and have received “Certified Sourcing” from the Sustainable Initiative - Animal welfare: Significant movement to alternative housing from gestation crates by 2022
- 14. 30.19% 22.05%16.90% 14.22% 4.42% 12.22% Market Share Pizza Hut Domino's Little Caesars Papa John's Papa Murphy's Other
- 15. BCG Matrix Market Share Market Growth Rate High Low High Stars None ?’s Pan pizza Dessert Low Cash Cows Regular pizza Bread Sticks Chicken Dogs Drinks
- 16. Product/Market Growth Matrix Product Emphasis Market Emphasis Existing New Existing Penetration Sales promotion Product Development Pan pizza Chicken Dessert New Market Development Sports fans Diversification “Papa Rewards” program
- 18. Perceptual Map
- 19. Balanced Scorecard Papa John’s Balanced Scorecard Perspective Strategic Objective Measure Goal Financial • Superior Long-term Value For Shareholders • Sales per Papa John's owned restaurant • Sales per Papa John's franchise restaurant • # of restuarants that maintain or surpass past revenue • # of restuarants that maintain or surpass past revenue Customer • Marketing Strategy • Franchise Training • Number of franchises joining each year • Number of franchises trained • Franchises' satisfaction with the training programs • Constant increase of franchise every year • 100% • >95% satisfied Internal Business Process • Efficient Operating System • Ease of Entry for New Franchises • Lower operating costs • Lower franchises' operating cost • Constant decrease of operating cost every year • Promises reduced royalties for the first 4 years • Promises no franchise fee Learning and Growth • Employee Benefits • Employee Training • Employees' satisfaction • Number of employees trained • Employees' satisfaction with the training program • >80% satisfied • 100% • >95% satisfied
- 20. 0.9856 1.2047 0.5155 1.7005 1.4322 1.2760 0.0000 0.2000 0.4000 0.6000 0.8000 1.0000 1.2000 1.4000 1.6000 1.8000 2015 2014 2013 Acid-Test Ratios Papa John's Average
- 21. 1.7932 0.7427 0.5032 0.6132 0.2945 0.2195 0.0000 0.2000 0.4000 0.6000 0.8000 1.0000 1.2000 1.4000 1.6000 1.8000 2.0000 2015 2014 2013 Return On Equity Papa John's Average
- 22. 0.0462 0.0461 0.0483 0.0963 0.0749 0.0367 0.0000 0.0200 0.0400 0.0600 0.0800 0.1000 0.1200 2015 2014 2013 Net Profit Margin Papa John's Average
- 23. 1.9180 1.7899 1.6027 5.1406 4.7709 3.6409 0.0000 1.0000 2.0000 3.0000 4.0000 5.0000 6.0000 EPS 2015 EPS 2014 EPS 2013 Earnings Per Share (In USD) Papa John's Average
- 24. 0.8978 0.7908 0.6872 1.0921 0.9832 1.1258 0.0000 0.2000 0.4000 0.6000 0.8000 1.0000 1.2000 2015 2014 2013 Debt Ratio Papa John's Average
- 25. 69.6287 53.7180 57.8482 63.0536 56.8789 54.5796 0.0000 10.0000 20.0000 30.0000 40.0000 50.0000 60.0000 70.0000 80.0000 2015 2014 2013 Inventory Turnover Papa John's Average
- 27. Intrinsic Value $30.96 : with the Dividend Discount Model $87.57 : Most Recent Closing Stock Price Over Priced by $56.61 DPS1= $0.89 Re = 5.21% G = 2.25% DPS1 Re - G =
- 28. SWOT Analysis Positive Negative Internal Strengths: • Perceived high quality • High emphasis on labor training programs • Technological advantages • Strategic Marketing • ROE is relatively high comparing to its competitors Weaknesses: • Relative high price compared to other pizza restaurants in the industry • Significantly low net profit margin • EPS is far below the industry average • Liquidity ratios lower than the industry average • Intrinsic value shows the stock is overvalued External Opportunities: • Expand Internationally Threats: • Increase in competitors • Negative media portrayal of John Schnatter • Increase in trends of healthier eating
- 29. Recommendation - Intrinsic value shows the stock is highly overvalued - Significantly low NPM and EPS compared to competitors - Share price is hovering at its highest peak of all time
- 30. Q&A