Papa Johns 2003 Annual Report Download - page 8

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managers and staff, provide comprehensive training on operations and managerial skills, and motivate
and retain them by providing opportunities for advancement and performance-based financial incentives.
Historically, we employed area supervisors, each of whom had responsibility for overseeing three to six
Company-owned restaurants. We also employed district managers who oversaw area supervisors and
managers within their respective markets. Beginning in 2003, we combined the area supervisor and
district manager positions into a director of operations position.
Restaurant Initiatives. During 2002 and 2003, several restaurant initiatives were undertaken with the
ultimate goal of improving the quality and consistency of the customer experience. The first of these
initiatives was the development of a systematic approach to monitor and evaluate key components of the
total customer experience, the refinement and enhancement of which is ongoing. A second initiative was
an across-the-board increase in base pay for restaurant general managers and assistant managers in an
effort to attract and retain the desired quality of individuals to these critical positions. In January 2003,
we realigned field operations management by combining the area supervisor and district manager
positions into a director of operations position. A director of operations is responsible for seven
restaurants on average, thus providing higher-quality direct support to our general managers and their
teams. The entire cost savings from the realignment was invested in increased staffing. In addition,
during 2003, we implemented a system-wide initiative to increase portions for several core pizza
products to enhance our customer experience.
We saw improved operational trends during 2003 as a result of these initiatives, including reduced
turnover at the general manager and assistant manager positions and improved product quality and
consistency. However, for the first nine months of 2003, the improvements did not result in increased
sales as the overall restaurant industry, the pizza category and the economy produced a challenging
environment. According to industry sources, customer traffic count has been relatively flat or declining
in the quick service restaurant pizza segment for the latest reported seven consecutive quarters.
Given the current industry and overall economic environment, management cannot predict when
operational improvements resulting from these initiatives or otherwise, may result in consistently
improving sales trends. However, we are encouraged that our Company-owned restaurants reported a
2.4% increase in comparable sales during the fourth quarter of 2003, a 5.8% increase in January 2004
and a 1.9% increase in February 2004.
Training and Education. We have a department dedicated to training and developing team members, as
well as assisting with new restaurant openings. With regional training locations across the country, we
are capable of training multiple operators during new program or product introductions. We provide an
on-site training team three days before and three days after the opening of any Company-owned or
franchised restaurant requesting assistance. Operations personnel, both corporate and franchise, complete
our management training program and on-going development programs in which instruction is given on
all aspects of our systems and operations. The programs include hands-on training and some classroom
instruction at an operating Papa John’s restaurant by a Company certified general training manager. Our
training includes new team member orientation, in-store and delivery training, core management skills
training, new product or program implementation and ongoing developmental programs.
Point of Sale Technology. Point of sale technology (our proprietary PROFIT SystemTM) is in place in all
domestic traditional Papa John’s restaurants and in substantially all Papa John’s international restaurants.
We believe this technology facilitates faster and more accurate order taking and pricing, reduces
paperwork and allows the restaurant manager to better monitor and control food and labor costs. We
believe the PROFIT System enhances restaurant-level marketing capabilities through the development of
a database containing information on customers and their buying habits with respect to our products.