Papa Johns 2000 Annual Report Download - page 9

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Pizza, an operator and franchisor of 206 delivery and carry-out pizza restaurants in the United Kingdom
(See “Note 3” of “Notes to Consolidated Financial Statements”). During 2000, 11 Perfect Pizza
franchised restaurants were opened and we converted eight Company-owned Perfect Pizza restaurants to
Papa John’ s units. During 2001, we plan to open approximately 15 to 20 restaurants domestically and
acquire an additional 20 restaurants from our franchisees and expect franchisees to open approximately
195 to 255 restaurants both domestically and internationally. Newer domestic market expansion is planned
for the West Coast, Mid-Atlantic states, and Rocky Mountain regions, in addition to building out existing
markets throughout the country. International expansion in 2001 is planned primarily in Mexico, Puerto
Rico, Venezuela, Costa Rica, Guatemala, Honduras, Saudi Arabia, Canada, Bahamas, and the United
Kingdom. The conversion of Perfect Pizza restaurants will continue during the next four or five years.
Our ability and the ability of our franchisees to open new restaurants is affected by a number of factors,
many of which are beyond our control and the control of our franchisees. These factors include, among
other things, selection and availability of suitable restaurant and QC Center sites, increases in food, paper
or labor costs, negotiation of suitable lease or financing terms, constraints on permitting and construction of
restaurants and the hiring, training and retention of management and other personnel. Accordingly, there
can be no assurance that we or our franchisees will be able to meet planned growth targets or open
restaurants in markets now targeted for expansion.
Our expansion strategy is to cluster restaurants in targeted markets, thereby increasing consumer
awareness and enabling us to take advantage of operational, distribution and advertising efficiencies. Our
experience in developing markets indicates that market penetration through the opening of multiple
restaurants within a particular market results in increased average restaurant sales in that market. We
have co-developed markets with some franchisees or divided markets among franchisees, and will
continue to utilize market co-development in the future. In determining which new markets to develop, we
consider many factors, including the size of the market, demographics and population trends, competition,
and availability and costs of real estate. Before entering a new market, we analyze detailed information
concerning these factors and each market is toured and evaluated by a member of our Development
department.
Menu
Papa John’ s restaurants offer a focused menu of high-quality pizza, breadsticks and cheesesticks, as well
as canned or bottled soft drinks. Papa John’ s traditional crust pizza is prepared using fresh dough (never
frozen), and our thin crust pizza is made with a prepared crust. Papa John’ s pizzas are made from hard
wheat flour, cheese made from 100% real mozzarella, fresh-packed pizza sauce made with vine-ripened
tomatoes (not from concentrate) and a proprietary mix of savory spices, and a choice of high-quality meat
(no artificial fillers) and vegetable toppings. Fresh onions and green peppers are purchased from local
produce suppliers or the QC Center system and sliced daily in the restaurants. Fresh baby portabella
mushrooms are purchased from the QC Center system, which delivers twice weekly. Each traditional
crust pizza is served with a container of our special garlic sauce and two pepperoncinis, and each thin
crust pizza is served with a container of special seasonings and two pepperoncinis. We believe our
focused menu helps create a strong identity among consumers and simplifies operations, resulting in lower
restaurant operating costs, improved food quality and consistency and superior customer service.
Additionally, we may from time to time test product variations or new products which are consistent with
our goal of simplified operations and superior customer service.