Papa John’s Pizza
John Schnatter began selling pizzas out of the back of his father’s tavern in 1983, and opened the first Papa John’s one year later. He began to grow Papa John’s on the ideas of superior customer service, a quality product, and keeping a limited menu. As of 2012, Schnatter has grown Papa John’s to the third largest pizza chain in the world.
Over time Schnatter has realized that he must expand his menu to keep up with the other pizza chains. He has also had to keep up with the advancing of technology such as applications for smart phones and online ordering. He has also had to deal with the unstable economy and the recent health craze in the United States.
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Domino’s pizza takes these dining dollars as a form payment. I can pay for a meal at Domino’s by simply giving them my campus wide identification number. Personally, Domino’s is my least favorite delivery pizza chain, but I order it all of the time because Domino’s is the only one that takes dining dollars. Because dining dollars are prepaid in our tuition by our parents, I feel like I am getting the meal for free. Since most college students are low on money, I am sure that I am not the only person to order Domino’s simply because they take dining dollars. If Papa John’s created partnerships with universities similar to the one Domino’s has with Alabama, more people would order their product.
Exhibit 1: Dominant Economic Features
Market Size and Growth Rate of Pizza Industry
* $42.8 billion industry with 65,238 pizzerias
* Sales make up 17% of entire restaurant industry
* Industry expected to grow by 31% by 2015
Number of Rivals
* Comprised of two segments: independent pizzerias and pizza chains
* Independent pizzerias:
- Account for 57% of stores
- Account for 48% of industry sales
* Pizza chains:
* Dominated by “Big 4”—Pizza Hut, Domino’s, Papa John’s and Little Caesars
* “Big 4” sales comprised 32 % of the industry and their number of stores accounted for 28% of the industry
Scope of Competitive Rivalry
* Location is very important to the success of a pizza restaurant
* Vital to be located where customers have easy pick up options, shorter driving distances for delivery and suppliers, and restaurant visibility
* Independent pizzerias are mostly local, however the major pizza chains, such as Papa John’s, Domino’s, and Pizza Hut compete globally
Number of Buyers
* 93% of Americans eat pizza at least once a month
* Americans on average consume 100 acres of pizza every day at a pace of 350 slices per second
* The market demand for pizza among buyers is segmented by age:
* Under 25 years: 16.2%
* 25-44 years: 46.3%
* 45-64 years: 22.8%
* 65 and older: 16.2%
Degree of Product Differentiation:
* As consumers are trying to eat healthier, some restaurants such as Cici’s and Pizza Hut have started to offer salad bars
* All major pizza chains have posted their nutritional content online, and some have included a calorie counter to see how many calories their customizable pizzas have
* Chicken tenders/bites and different flavored wings were added to all of the major pizza chains menus
* Some chains have added pasta and sandwiches as well as a variety of desserts
* As well as food items, most pizza chains have added bottled soft drinks and water
* Pizza chains have also allowed customers to customize their pizzas with different crusts, toppings, and sauces as well as adding recommended specialty pizzas.
* Most innovations in the pizza industry focus on the healthiness of their products
* Some pizza chains...