Papa John Pizza Strategic Management

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Papa John Pizza Strategic Management

  1. 1. FIVE FORCESDIFFERENTIATION
  2. 2. HISTORY
  3. 3. 1984 John Schnatter and partner Bob Ehringer begin selling pizza out of a converted broom closet of Micks Lounge in Jeffersonville, Indiana1985 Schnatter opens the first Papa Johns restaurant in a retail space next to the bar.1986 Franchising of Papa Johns begins.1989 Company headquarters are shifted to Louisville, Kentucky.1993 Papa Johns goes public, raising about $12 million through an initial public offering (IPO).1996 The thousandth Papa Johns is opened.1998 International expansion begins with opening of units in Mexico and Puerto Rico. Company opens the 2,000th Papa Johns restaurant; the U.K. pizza1999 chain Perfect Pizza Holdings, Ltd. is acquired; Papa Johns moves into third place among U.S. pizza chains.2005 Nigel Travis is hired as president and CEO, with Schnatter remaining chairman.
  4. 4. FIVE FORCES ANALYSIS
  5. 5. THREAT OF NEWENTRANTS LOW Though the restaurant industry requires relatively low capital requirements, there were relatively high fixed costs. Barriers to entry: 1. Though product differentiation is difficult, Papa John possess brand identification; its ongoing passion to offer the perfect pizza. 2. There is cost advantages possessed by Papa John; favorable access to raw materials. Papa John partnered with BIBP Commodities, Inc. to reduce cheese price volatility.
  6. 6. THREAT OFRIVALRY HIGH • There is large number of competing firms that are roughly the same size (Pizza Hut, Domino’s Pizza, Little Caesars) • The restaurant, pizza industry has already mature and saturated, leads to slow industry growth.
  7. 7. THREAT OFSUPPLIERS MEDIUM • To reduce the cheese price volatility, Papa John’s partnered with a third-party entity formed by franchisees thus it allowed Papa John’s to purchase cheese from BIBP at a fixed quarterly price. • Profits and losses from BIBP were then passed on to Papa John’s. • Forward pricing to stabilize food cost.
  8. 8. THREAT OFBUYERS LOW • Number of buyers is high • Products sold to buyer is differentiated (high quality and focused product)
  9. 9. HIGH THREAT OFSUBSTITUTES In restaurant industry, there are so many variants of product that can be substitutes for pizza
  10. 10. SWOT ANALYSIS
  11. 11. STRENGTH WEAKNESS• Good brand name • Limited menu items. and high brand • Franchise loyalty. management.• High quality • Limited number of ingredients. stores.• Strong employee training program.• Efficient restaurant layout. OPPORTUNITY THREAT• International and • Intense competition emerging market in fast food pizza expansion. industry.• Diversification of • National economic business. instability.• The boom of social • Mature industry. sites. • Health-conscious people.
  12. 12. VRIO
  13. 13. VALUE• Papa John’s resources are its commissary and high quality ingredients (raw materials).• Why these resources are considered highly valuable?• Because both resources are in line with Papa John’s mission, core values, and slogan.
  14. 14. RARITY•The high quality resources are not rare and can be found easily since flour, dough, cheese, and other spices and ingredients are common even in the supermarket.•Commissary system is common among restaurant industry because it is part of food service system.
  15. 15. IMITABILITY•Though it’s not hard to imitate, these resources are definitely costly to imitate.•Why? Because competitors need to add extra costs to build commissary, to sustain the quality of the ingredients, etc.•Besides, it’s hard to maintain a fixed price for the high quality resources because of the price volatility.
  16. 16. ORGANIZATION•Papa John’s is ready, organized, and able to exploit these resources since it already established some commissaries and maintain its quality of the ingredients by cooperating with BIBP and forward pricing.
  17. 17. DIFFERENTIATION
  18. 18. 1 DIFFERENTIATION OF PRODUCTS Focuses on creating: superior quality pizzas customized pizzas
  19. 19. DIFFERENTIATION OF2 MARKETING CAMPAIGN CSR Partnerships Direct Mailings andDirect Store-to-Door Couponing
  20. 20. DIFFERENTIATION OF3 SUPPLY CHAIN COMMISSARY SYSTEM Reduces labor cost and waste. Maintains quality and consistency.
  21. 21. PROPOSED STRATEGY
  22. 22. MATURE INDUSTRY Boosts the number of franchisees. Focuses on The numbers in the restaurant. Develops Online Ordering system. Creates interactive marketing campaign. INCREASED DOMESTIC MARKET1 PENETRATION
  23. 23. QUALITY-CENTERED PREFERENCE GROWING INCOME BASE Keeps the premium price. Integrates with local culture. Secures local government approval. Creates interactive marketing campaign. INTERNATIONAL2 MARKET EXPANSION
  24. 24. Mexican-themed Restaurants CHINESE FOOD Restaurants BAKERY PASTA RESTAURANTS Diversifies through acquisition. Chooses F&B business using almost the same ingredients.3 DIVERSIFYING FROM PIZZA

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