Papa Johns 2008 Annual Report Download - page 12

Download and view the complete annual report

Please find page 12 of the 2008 Papa Johns annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 114

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114

5
Most of our international Papa John’s restaurants are between 900 and 1,400 square feet; however, in
order to meet certain local customer preferences, several international restaurants have been opened in
larger spaces to accommodate both dine-in and restaurant-based delivery service, with an average of 35
to 100 seats. We will utilize dine-in service as part of our international growth strategy based on a
country-by-country evaluation of consumer preferences and trends.
We consider the location of a restaurant to be important and therefore devote significant resources to the
investigation and evaluation of potential sites. The site selection process includes a review of trade area
demographics, target population density and competitive factors. A member of our development team
inspects each potential domestic Company-owned restaurant location and substantially all franchised
restaurant locations and the surrounding market before a site is approved. Our restaurants are typically
located in strip shopping centers or freestanding buildings that provide visibility, curb appeal and
accessibility. Our restaurant design can be configured to fit a wide variety of building shapes and sizes,
which increases the number of suitable locations for our restaurants.
We provide layout and design services and recommendations for subcontractors, signage installers and
telephone systems to Papa John’s franchisees. Our franchisees can purchase complete new store
equipment packages through an approved third-party supplier. We sell replacement smallwares and
related items to our franchisees through our support services subsidiary, Preferred Marketing Solutions,
Inc.
Quality Control (“QC”) Centers; Strategic Supply Chain Management
Our domestic QC Centers, comprised of ten regional production and distribution centers in 2008, supply
pizza dough, food products, paper products, smallwares and cleaning supplies twice weekly to each
restaurant. This system enables us to monitor and control product quality and consistency, while
lowering food costs. Our full-service QC Centers are located in Louisville, Kentucky; Dallas, Texas;
Pittsburgh, Pennsylvania; Orlando, Florida; Raleigh, North Carolina; Denver, Colorado; Rotterdam, New
York; Portland, Oregon; Des Moines, Iowa; and Phoenix, Arizona. The QC Center system capacity is
continually evaluated in relation to planned restaurant growth, and facilities are developed or upgraded as
operational or economic conditions warrant. We consider the current QC Center system capacity
sufficient to accommodate domestic restaurant development for the next several years.
Our subsidiary, Papa John’s UK (“PJUK”), purchases its products from a third-party distribution center.
We own full-service QC Centers in Mexico City, Mexico; Cancun, Mexico and Beijing, China. The
primary difference between a full-service QC Center and a distribution center is that full-service QC
Centers produce fresh pizza dough in addition to providing other food and paper products used in our
restaurants. International full-service QC Centers, licensed to franchisees and non-franchisee third
parties, are generally located in the markets where our franchisees have restaurants. We expect future
international QC Centers to be licensed to franchisees or non-franchisee third parties; however, we may
open Company-owned QC Centers at our discretion. We also have the right to acquire licensed QC
Centers from our international licensees in certain circumstances.
We set quality standards for all products used in our restaurants and designate approved outside suppliers
of food and paper products that meet our quality standards. In order to ensure product quality and
consistency, all domestic Papa John’s restaurants are required to purchase tomato sauce and dough from
our QC Centers. Franchisees may purchase other goods directly from our QC Centers or approved
suppliers. National purchasing agreements with most of our suppliers generally result in volume
discounts to us, allowing us to sell products to our restaurants at prices we believe are below those
generally available in the marketplace. Within our domestic QC Center system, products are distributed