The third-largest pizza delivery and takeout chain in the United States is Papa John’s Pizza. Better Ingredients, Better Pizza. Papa Johns.
is the company’s slogan, which highlights the brand’s differentiation through premium ingredients. Thanks to this positioning.
Papa John’s ranked first in both product quality and customer satisfaction among all national pizza chains in the American Customer Satisfaction Index.
In over 45 different nations and territories, there are over 5,000 Papa John’s restaurants. The stock of Papa John’s is traded on the NYSE (PZZA).
The History of Papa Johns’ Franchise Opportunities
In 1984, “Papa” John Schnatter founded Papa John’s Pizza in Jeffersonville, Indiana. In high school, Schnatter worked in pizzerias, which sparked his interest in food.
After graduating from college, he took over his father’s tavern and started making and selling his own pizzas.
Famously, Schnatter started his business by razing a broom closet, selling his Camaro, and purchasing used pizza-making equipment.
The business progressed well for Schnatter, and by 1993, Papa John’s had approximately 500 locations and was a publicly traded firm.
Before recently, Schnatter served as the CEO and Chairman of Papa John’s as well as its public face. However, a series of incidents,
including his criticism of the NFL and his profane comments made during conference calls, forced him to resign from both positions.
Papa John’s is still the third-largest pizza chain in the US despite the controversy.
Formats for Papa John’s Franchises
Papa John’s provides both conventional and unconventional locations to franchisees. Only delivery and takeout are available at the majority of classic Papa John’s locations;
However, a select few of these locations also allow dine-in service.
Traditional Papa John’s locations are typically found alongside or close to major roads and highways because of their substantial (or exclusive) emphasis on delivery and takeout service.
Papa John’s has opened non-traditional outlets in places like mall food courts, hospitals, schools, airports, theme parks, sports stadiums, concert venues, and rest areas for travelers.
Usually, these unconventional formats don’t offer delivery.
What is the Price to Start a Papa John’s?
You must have a minimum net worth of $750,000 and $250,000 in liquid assets or cash to be eligible to apply to become a franchise operator.
You will need between $115,120 and $794,420 to open and run this pizza shop, including a $25,000 franchise fee.
When you examine the financial specifics, however, these projections include more information. Continue reading to learn more about Papa John’s additional charges, their income and profit status,
Operating this chain’s problems and benefits, and other information. Is this franchise a good fit for you? Learn more below.
Financial Conditions and Costs
To franchise a Papa John’s, you need to have the following funds:
|Expenses / Fees||Amount of money|
|Gross Value||at least $750,000|
|Lean Capital||at least $250,000|
|Total Expenditure||$115,120 to $794,420|
These projections only apply to franchising in the US and Canada. In order to franchise globally, Papa John’s requires potential franchise operators to agree to a certain number of units in a specific location between 3 to 7 years.
Prospective franchise owners must have a $2,000,000 minimum net worth.
The 5% Papa John’s royalty fee and the 8% ad royalty fee are additional costs to be aware of. The agreement’s conditions are valid for ten years.
For all locations, Papa John’s prefers that franchise operators have experience in retail or restaurants and that candidates be business professionals with management experience.
For locations in the US and Canada, multi-unit management experience is also preferred.
Average Annual Sales or Revenue
Since 2006, Papa John’s annual income has been in the billions. From 2007 to 2010, its income fluctuated between $1 billion and $1.1 billion.
But it has since gradually increased to $1.8 billion at the moment. Despite a decline in sales from $1.6 billion in 2018 to $1.6 billion in 2019,
Revenue increased by 11.98% in 2020. Over the previous 18 months, pizza franchisees have performed extraordinarily well. Delivery orders provide most of the business’s income.
Facts About Papa John’s Franchise
|Overall Units||greater than 5,000|
|Organizational Name||Papa John’s International Inc.|
|Industry||Restaurant with Quick Service|
It is well known that Papa John’s business operations began in a broom closet. In Jeffersonville, Indiana, John Schnatter began selling pizza out of the back of a bar in 1984.
For $1,600, Schnatter purchased supplies and machinery to launch Papa John’s. According to estimates, during the first six months,
Schnatter and his business partner Bob Ehringer could only make $1,000 to $1,500 each week. However, in March 1985,
Ehringer and Schnatter began producing between 3,000 and 4,000 pizzas per week together with a small workforce, which led to an increase in sales. The pizza shop experienced an important turning point.
In 1986, Papa John’s became a corporation. By that time, the pizza joint had developed a reputation for including two pepperoncini and a unique garlic sauce with every order.
In order to ensure consistency in the quality of their pizza while reducing labor costs and waste.
Papa John’s was also well-known for operating its own commissary where it prepared its own pizza crusts before delivering them to all of its locations.
Papa John’s expanded to over 200 locations and $82 million in sales throughout the 1990s. An entrepreneur could purchase a Papa John’s franchise in the 1990s for less than $100,000.
Given that the startup costs for similar businesses can reach $1 million, many of the early franchise members considered this opportunity to be a deal.
Papa John’s quickly expanded to over 2,000 sites by the end of the 1990s.
Classic pizza toppings like pepperoni and Garden Fresh for those who prefer vegetables are already available on the Papa John’s menu.
The Fiery Buffalo Chicken and the Philly Cheesesteak are just two of the other stronger tastes they offer. Customers at Papa John’s can also design their own pizza.
Breadsticks, chicken wings, and cinnamon buns are also on the menu.
More Facts About Papa John’s Franchise
Because of allegations of racism, John Schnatter resigned from his roles as CEO and board member of Papa John’s in 2017 and 2018, respectively.
After this news broke, Papa John’s stock price fell by around 50%. Schnatter quickly sold most of his stock in the company, leaving him with just 3.96% of the corporation.
John Schnatter’s net worth is believed to be $1.1 billion because of all of his efforts in building up Papa John’s and managing the company.
At the time of writing, Papa John’s stock price has recovered and is currently trading close to all-time highs. I’m looking at the stock ticket right now, and the price per share is above $125.
The stock pays even a tiny dividend to shareholders. Investors who persisted in holding onto this pizza stock during the tough times have benefited.
Schnatter’s offensive statements were one reason the pizza chain’s sales declined in 2019. For months, many social justice organizations and customers boycotted the pizza restaurant.
During this time, the restaurant reported a 5.7% decline in North American same-store sales and a 3.8% decline in system-wide same-store sales.
Shaquille O’Neal joined the board of directors of Papa John’s to aid the restaurant chain. Shaq owns nine locations in the Atlanta region and is a well-known marketing ambassador for Papa John’s.
The Shaq-a-Roni pizza, an extra-large pizza with extra pepperoni and mozzarella cheese, is named after the basketball player.
The Shaq-a-Roni pizza’s pieces are larger than typical pie slices, and $1 from each sale goes to The Papa John’s Foundation for Building Community.
Rob Lynch, a former Arby’s president, is now the CEO and president of Papa John’s as of August 2019.
How Much Profit Does Papa Johns Make?
MarketWatch estimates that Papa John’s gross income will reach $294.5 million in 2020, up 21.06% from the $243.26 million reported for 2019.
Using this information, you may predict that in 2020, the gross income per site will be around $58,600 per unit.
By dividing the entire gross income by the number of Papa John’s locations, I arrived at that estimate.
A well-known brand is Papa John’s. If nobody knows what Papa John’s is, it will be more surprising given that the company has over 5,000 outlets.
You won’t have to bother about marketing your pizza restaurant after all. Because of how well-known Papa John’s is, marketing won’t be a huge issue.
Papa John’s is well-known to sports fans, particularly those who watch the NFL on television, thanks to national advertising campaigns that are run during matches.
Eating pizza crusts at Papa John’s is even more interesting because of their reputation for both their pizzas and their dipping sauces.
Thanks to their dipping sauce, people actually consume the entire pie as opposed to discarding the crusts. The dipping sauce is now offered in gallon containers because of its growing popularity.
I’ve personally ordered from Papa John’s since I love the garlic dipping sauce so much, so I can speak from experience.
On its pizza, Papa John’s is renowned for using only the finest, all-natural ingredients. Trans-fat, MSG, BHA, BHT, partly hydrogenated oils, and fillers are absent from their pizzas.
Customers are assured that every pizza is created from scratch because their dough is never frozen.
Over 2,111 of Papa John’s over 5,000 outlets are found outside of the US. They are well known not only in America but also around the entire world.
On the list of the Top 100 Global Franchises for 2021, Papa John’s is listed as number 8.
Papa John’s Franchise Challenges
Like many businesses, Papa John’s faces difficulties. The benefit of reading about these issues now is that you will know what to expect.
Better to expect them than to be surprised. Here are a few obstacles to be aware of.
Between that time in 2018 and 2019, Papa John’s franchisees suffered because of John Schnatter’s discriminatory statements.
Even though Shaquille O’Neal served as a brand ambassador and there has been an increase in income recently, some people still connect Papa John’s with the John Schnatter incident from a few years ago.
This is a disgusting illustration of how the performance of your business may be impacted by the remarks of a company CEO.
Schnatter ought to have known better, and his remarks have cost him.
Before the public forgets about this occurrence, some time will pass. But for the time being, it’s crucial to be aware of this background before putting your entire life money in the pizzeria.
Low Employment Levels
According to Statista, Papa John’s had a low employment workforce in the years between 2018 and 2019, but that was to be expected given the events of those years.
2020 saw a rise, and maybe things will get better for Papa John’s and its staff.
SBA Loan Failure Rate is 23%
If you don’t have enough money, franchising a restaurant like Papa John’s might be expensive. Papa John’s has a 23% failure rate among franchisees who took out SBA-backed franchise loans,
according to a 2012 report by the Unhappy franchisee. Nearly a quarter of individuals who used their homes or other personal property as security could not repay the loans.
These terrible tales of business failures are told. This only serves to show that, even when an idea is growing, not every site will be successful for a variety of reasons.
If you decide to pursue applying to manage a store, you must be able to fulfill their financial requirements as Papa John’s does not offer any funding support with franchising.
The Stagnant Pizza Market
Have you ever given the number of pizza franchises in your city any thought? You certainly have rivals from well-known companies like Pizza Hut, Domino’s, and even Chuck E. Cheese.
The business must also take into consideration other innovative pizza concepts, such as Blaze Pizza. Similar to Subway, this idea enables customers to watch their wood-fired pizza being prepared.
Of course, ma-and-pa pizza shops in the area compete as well.
There are many choices available for pizza, For Papa John’s to be competitive in this profitable but difficult market, innovation will need to continue.