Papa Johns 2001 Annual Report Download - page 2

2001 is a year that will not soon be forgotten.
The effects of an arduous economic environment and the
aftermath of the September 11th tragedy created numerous
challenges for our country to overcome. Like so many of
our fellow Americans, Team Papa John’s rose to meet the
challenges before us, revealing a team of great character
and determination.
In a year in which the pizza category showed negative
sales and traffic during much of the year, the Papa John’s
team made great strides in managing our business. We had
to sail our ship differently in the rough waters of 2001, but
by focusing on things within our control, we managed to
effectively weather the storm.
Last year, our two largest competitors poured on the
advertising dollars, while also lowering their price points.
We did just the opposite. In 2001, we spent $6.4 million less
on advertising at our corporate restaurants versus the previous
year (7.9% of sales versus 9.1% of sales the previous year)
and refused to engage in the “price wars.” Rather, the team
chose to give up some short-term transactions to focus on
perfecting the fundamentals of our business. Our restaurant
operators remain steadfast in their commitment to making a
superior product, providing world-class customer service and
becoming their community’s #1 neighborhood pizzeria.
This commitment to superiority and “Better
Ingredients. Better Pizza.” continues to earn praise from our
most important constituents—consumers:
•As reported in The Wall Street Journal
February 19, 2002, Papa John’s was once again
rated number one in customer satisfaction among
all national fast food restaurants in the American
Customer Satisfaction Index. This is the third
straight year we’ve received this honor!
•For the sixth consecutive year, Papa John’s received
the highest product quality rating among pizza
chains in Restaurants and Institutions’ Choice in
Chains consumer survey.
•Papa John’s was the top-rated national pizza chain
in the third annual Quick-Track Awards of
Excellence, a consumer research study on fast food
restaurants conducted by Sandelman & Associates.
•These national accolades are in addition to the
more than 60 local “Best Pizza” wins achieved by
Papa John’s throughout the U.S. over the last several
years, including significant wins last year in Atlanta,
Orlando, Phoenix and Washington, D.C.
Other notable accomplishments in 2001 include the
restructuring of our management team at corporate
(to ensure our system is set up to win); the realignment
of resources, such as marketing and training, to better
support our restaurants; as well as ongoing product testing
and quality improvement initiatives. Our team also did an
outstanding job of reducing our general and administrative
(“G&A”) costs last year, reducing G&A from 8.0% of
revenues in the fourth quarter of 2000 to 6.8% in the
fourth quarter of 2001.
“Constant Improvement” is one of our company’s
Core Values for good reason: we can always be better
tomorrow than we are today. To ensure Team Papa John’s
lives up to this standard, our senior management team
has set forth the following goals for 2002:
•Grow the Business
•Improve Operating Unit Profitability
•Better Control G&A/Corporate Spending
•Build the People who Build the Business
In the early years of Papa John’s, when we were building
our first restaurants in Indiana, we couldn’t rely on fancy
advertising to get our product into people’s hands and
mouths. We got involved with our community and
pounded the pavement to make sure folks tried our
pizza, knowing once they tried our superior-quality
product, they’d be hooked. As our tomato farmer out
west says, “It’s the food, stupid!” At the end of the day,
it’s all about the taste and quality of our pizza. All the
marketing and price-pointing gimmicks in the
world won’t win the loyalty of consumers.
A consistently superior product, delivered
with world-class customer service is what
I believe will keep customers coming back.
There will always be external forces
that affect our business. In tough times
(such as we experienced in 2001) it’s more
important than ever to focus on what we
can control and never forget who “brung
us to the dance.” Quality has been, and
always will be, the foundation upon which
Papa John’s success is built.
Sincerely,
John H. Schnatter
Founder, Chairman,
Chief Executive Officer
and President