Papa John’s International Inc.

This American-based corporation operates a takeout and delivery pizza restaurant network across the country. The business operates restaurants in 38 different nations. With an emphasis on intensive marketing efforts, user-friendly ordering processes, and high-quality products prepared with the finest ingredients, this business has expanded to become the third largest pizza company in the world. 183 of the company’s 265 new restaurants opened in foreign markets while 82 opened in northern America by 2013. There were 723 company-owned restaurants by that point (Strickland, A et al.).

History

The organization was instituted in 1984 by John Schnatter at the back of his father’s tavern. The business picked since his Pizza became popular among the local community; this prompted him to move into an adjoining space. As of 2017, the organization is the biggest pizza delivery and take-out restaurant chain in the USA. The companies headquarter based in Jeffersontown. The company mainly takes delivery orders and carryout’s, although some of the restaurants have chairs and tables for dining in.

PESTEL Analysis

Political Factors

This company operates in an environment that is regulated by various nations since it is a multinational corporation. This has a direct impact on the commodity it offers to the consumers. The company has to operate within the laws that exist in the 38 nations it has established this can be a difficult task putting in mind some of the state’s laws might be complicated in nature driving the country into unnecessary lawsuits. Various countries have different laws that govern multinational organizations, some of the laws might be unfavorable, but the company must struggle to comply with them; this ends up draining the organization a lot of profits. The global economic swings have an impact on the operation of this company because of the linkages that do exist in the business cycle. Some of the bottlenecks that prevent this institution’s growth include accessibility to low-cost raw material and strict taxation.

Economic Conditions

Economic factors have an impact on Papa john’s international Inc. operations because it is a multinational corporation. For example, if the global economy is in a slump clients might not be willing to spend their income on Pizza products. Many consumers will go for other substitute commodities when the economy is weakened. The pizza industry is strongly linked to the economy as a whole and disposable income of patrons. During economic slumps, consumers tend to face financial uncertainties they are less likely to purchase these commodities. When the economy recovers, many people are ready to dine out for pizzas. A different scenario also presents itself in this situation, that customers who are strapped for cash tend to go for the cheaper delivery and take out services with discount and coupons, while those who have the high income like dining out in Pizza restaurants.

Sociological Factors

Consumers changes in tastes and preferences have a significant impact on Papa john’s International Inc. the food industry has so many substitutes that are available on the menu. Consumers are always willing to try out other commodities that exist in different restaurants. This makes it hard to predict the exact income the company expects on an annual basis. So as to maintain customer loyalty, the Papa john’s International Inc. keeps focusing on superior quality commodities. As at present the company has achieved the highest consumer rating when compared to other Pizza chains. The company provides different packages for instance delivery and take out services so that they pick one that they feel is affordable and convenient.

Technology Factors

The technological advancement of the Internet, computers, and smartphones has transformed the industry. Papa john’s International Inc. pioneered the first online food services that became operational in 2001, it also added text order in 2007, and it launched an app for Androids and iPhone in 2011 and 2010 respectively. Papa john’s International Inc. also launched an online app for Kindle Fire in 2012. By 2014 more than 50 percent of the company’s orders were made online. Technological advancements have contributed to the company’s growth to become the third biggest Pizza business in the world. Because of technology the company has managed to reach many customers faster than before.

Environmental Forces

The company operates in an environmentally regulated sector; this means that it has to comply with the various environmental regulations. Some countries have control on how commodities should be packaged (environmental friendly bags) this means that the company must strive to adhere to these regulations to avoid any lawsuits that can at times be costly. The company’s operations can also be affected by environmental conditions that surround the individual customer in this sector.

Legal and Regulations

The Food Safety and Inspection Service is the regulatory body that monitors restaurants in the United States. The agency sets policies and standards for the quality of food that has to be produced. The body uses fines and other regulations to make sure that restaurants are complying. Papa john’s International Inc. also operates in other 38 countries which also have other regulatory bodies that also set standards that have to be followed. The company must structure its operations to comply with all legal requirements to prevent any lawsuits that might ruin the reputation of the business.

Five Forces Analysis

Competitive Rivalry

The company operates in an environment that is highly competitive. Some of the firms that offer same commodities include Pizza Hut that is located in Louisville; Dominos a company that has franchised more than 10800 delivery and carryout’s pizza units in more than 70 countries in 2014 and Little Caesars which is the fourth largest pizza chain on the globe, it has over 2500 units and operates in more than 20 countries.

Threats for new Entrants

The company faces high threats for new entrants because of limited barriers. The entry of more firms in this industry will have an impact on the number of customers Papa Johns has. The company must, therefore, diversify its operations to other regions, for instance, Africa to acquire an even bigger market share.

Threats for substitutes

There are so many substitutes that exist in this industry; this means that consumers can switch to other commodities if a quality of pizza commodities is compromised. The industry also has another player such as Dominos that offer the same products; this means that consumer can shift from one restaurant to the other whenever they feel like.

Bargaining power of Customers

Customers in this market have high bargaining power because of a vast number of substitutes. Consumers are more likely to switch from one restaurant to the other when one company decides to raise prices; this means that the company must be cautious about the different price moves it makes.

Bargaining Power of Suppliers

This industry has so many suppliers that offer the ingredients that are used by the company to produce its products. These ingredients include cheese, milk, wheat, etc. An attempt by one supplier to raise the price will prompt the company to look for another supplier. The customers bargaining power is weak.

Forces Driving Change

Changing customer taste

The changing consumer tastes can be used by the company to understand customers even better. So that the company remains competitive, then it is prudent that the company has to change its selection based on current trends in consumer style and tastes.

Technological Advancement

Papa john’s International Inc. can utilize the current technological advancement to improve its delivery process. With all devices and options at the hands of consumers then the company can easily market its commodities and reach out to potential customers.

Current Strategy

At the present Papa john’s International Inc. focuses on expanding its market share by opening other outlets in other parts of the world. The company has aggressively focused on improving the business’s financial status, cutting operational costs, attracting new customers and recruitment of employees who can support its vision. The strategies have helped attract new customers and lower operational costs.

Papa John’s Main Rivals

The main company rival is Dominos; this company has 10800 delivery and carryout that are distributed in more than 70 nations all over the world. Most of Dominos sales are mainly generated through the sale of Pizza. Because of the marketing strategies, it employs Dominos gives Papa John’s stiff competition. Dominos commercial mostly relies on television commercials.

Industry’s key success factor

Price

The company must take consideration of the prices that it imposes on its commodities. The prices charges on the product have an impact on whether the consumers will buy it or not. If the company decides to charge customers a higher fee more than its competitors, it means that they will shift to other firms. Prices ought to be cautiously moderated.

Financial Analysis

The company has had a stable financial performance as illustrated in the statement of financial position. From the income statement, the revenues have been rising consistently from 2011 all the way to 2013. In the total revenue was $1,078,550, $ 1,126,397, $1,217,882, $ 1,342,653, and $1,439,022 in 2009, 2010, 2011, 2012 and 2013 respectively. The rise in revenue is credited to the strategy the company adopted in 2001 to start using the online; it also diversified its operation in other area meaning it acquired more customers. From the balance sheet, it is clear that the company financing business by the use of financial debt has also been increasing total debt in 2009 was $99,050 but rose $157,900 in 2013. According to the financial statement, the company remains competitive because of its profits and the future seems promising.

SWOT Analysis

Strength

Stronger brand

Customer loyalty

Efficient management

Size Advantage

Weaknesses

Stiff competition

Economic challenges

Cost structure

Opportunities

Online marketing

Ability to diversify in emerging market

Advancing technology

International expansion

Threats

Political risk

Government regulations

Change in tastes

Stiff competition

Bad economy

Recommendation

Papa john’s International Inc. is well placed for the future success. The company strategy to expand, offer high-quality products at a lower price have worked positively for the enterprise. The company has numerous options that consumers can benefit from. So as to serve customers even better, the company has resorted to online business. The company must, however, diversify its operations to other regions to be able to shield against the increasing competition, it must also keep an eye on the green movement, technology, buyer’s interest and on the economy. Watching these could help build or break the company in future.

Work Cited

Strickland, A et al. Papa John’s International, Inc.: It’s Strategy in the Pizza Restaurant Industry. 2013,