Papa Johns Sticks to its Guns

by The Investment U Research Team

In an interesting footnote to the Pizza wars, Papa Johns (Nasdaq: PZZA) has decided not to expand its offerings into pasta and non-core pizza items.

We approve of the move to focus on their primary offerings and concerns over keeping product quality up. That kind of management focus and discipline will equate to bottom line profits.

Number one and two competitors, Pizza Hut (NYSE: YUM) and Domino’s (NYSE: DPZ), are looking to broaden their offerings by adding pastas, chicken wings and sandwich items.

And that makes sense for a brand like Pizza Hut, which has lots of eat-in restaurants. It needs to expand its brand appeal and revamp a tired image.

On the other hand, Domino’s time and money might be better spent improving the advertising and public perception instead of straying from their core products. It reminds us of the same issues Subway struggled with.

Subway started trying to be all things to all customers – adding exotic sandwiches and a variety of options – and the biggest effect was that it started missing the mark on its core products. Only now is Subway starting to correct that and cut down its menu offerings.

Domino’s could learn a thing or two from Subway on improving their core products, or they might look across the street to Papa Johns. Papa John seems to have things well under control.

Symbols mentioned in this article: PZZA, YUM and DPZ.

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