2. FIVE
FORCES
DIFFERENTIATION

3. HISTORY

4. 1984 John Schnatter and partner Bob Ehringer begin selling pizza out of a
converted broom closet of Mick's Lounge in Jeffersonville, Indiana
1985 Schnatter opens the first Papa John's restaurant in a retail space next to
the bar.
1986 Franchising of Papa John's begins.
1989 Company headquarters are shifted to Louisville, Kentucky.
1993 Papa John's goes public, raising about $12 million through an initial
public offering (IPO).
1996 The thousandth Papa John's is opened.
1998 International expansion begins with opening of units in Mexico and
Puerto Rico.
Company opens the 2,000th Papa John's restaurant; the U.K. pizza
1999 chain Perfect Pizza Holdings, Ltd. is acquired; Papa John's moves into
third place among U.S. pizza chains.
2005 Nigel Travis is hired as president and CEO, with Schnatter remaining
chairman.

5. FIVE FORCES ANALYSIS

6. THREAT OF
NEW
ENTRANTS
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.

7. THREAT
OF
RIVALRY 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.

8. THREAT OF
SUPPLIERS
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.

9. THREAT
OF
BUYERS LOW
• Number of buyers is high
• Products sold to buyer is differentiated (high quality and
focused product)

10. HIGH
THREAT OF
SUBSTITUTES
In restaurant industry, there are so many variants of
product that can be substitutes for pizza

11. SWOT ANALYSIS

12. 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.

13. VRIO

14. 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.

15. 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.

16. 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.

17. 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.

18. DIFFERENTIATION

19. 1 DIFFERENTIATION OF PRODUCTS
Focuses on creating:
superior quality pizzas
customized pizzas

20. DIFFERENTIATION OF
2 MARKETING CAMPAIGN
CSR
Partnerships
Direct Mailings and
Direct Store-to-Door
Couponing

21. DIFFERENTIATION OF
3 SUPPLY CHAIN
COMMISSARY SYSTEM
Reduces labor cost and
waste.
Maintains quality and
consistency.

22. PROPOSED STRATEGY

23. MATURE INDUSTRY
Boosts the number of franchisees.
Focuses on The numbers in the restaurant.
Develops Online Ordering system.
Creates interactive marketing campaign.
INCREASED DOMESTIC MARKET
1 PENETRATION

24. QUALITY-CENTERED PREFERENCE
GROWING INCOME BASE
Keeps the premium price.
Integrates with local culture.
Secures local government approval.
Creates interactive marketing campaign.
INTERNATIONAL
2 MARKET EXPANSION

25. 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