Papa Johns 2006 Annual Report Download - page 9

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(the rate cannot be below 2.0% without approval from Papa John’s). The restaurant-level and Co-op
marketing efforts are supported by print and electronic advertising materials that are produced by the
Papa John’s Marketing Fund, Inc., a non-profit corporation (the “Marketing Fund”). The Marketing Fund
produces and buys air time for Papa John’s national television commercials, in addition to other brand-
building activities, such as consumer research and public relations activities. All domestic Company-
owned and franchised Papa John’s restaurants are required to contribute a certain percentage of sales to
the Marketing Fund. The contribution rate to the Marketing Fund can be increased above the required
contribution rate if a majority of the domestic restaurants agree to such increase. The contribution
percentage was 2.6% during 2006, 2.25% during 2005, 3.25% for the period June through December
2004 and 2.0% from January through May 2004. Effective at the beginning of fiscal 2007, the
contribution percentage to the Marketing Fund increased to 2.7% and is expected to remain at that level
throughout 2007.
Restaurant-level marketing programs target the delivery area of each restaurant, making extensive use of
targeted print materials including direct mail and store-to-door couponing. The local marketing efforts
also include a variety of community-oriented activities with schools, sports teams and other
organizations. In markets in which Papa John’s has a significant presence, local marketing efforts are
supplemented with local radio and television advertising.
We provide both Company-owned and franchised restaurants with pre-approved print marketing
materials and with catalogs for the purchase of uniforms and promotional items. We also provide direct
marketing services to Company-owned and franchised restaurants using customer information gathered
by our proprietary point-of-sale technology (see “Company Operations – Point of Sale Technology”).
We have developed joint cross-marketing plans with certain third-party companies. For example, in 2006
we entered into a five-year marketing and partnership agreement with Six Flags theme parks, which
provides for cross-marketing activities. We will continue to explore additional cross-marketing
opportunities with third-party companies.
We have developed a system by which domestic Papa John’s restaurant customers in areas we service are
able to place orders online via the internet, including a new “plan ahead ordering” advance ordering
feature and Spanish language ordering capability. We receive a percentage-based fee from domestic
franchisees for online sales, in addition to royalties, for this service.
We offer our customers the opportunity to purchase a reloadable gift card marketed as the “Papa Card,”
in any denomination from $10 to $100. We also offer Papa Cards for sale to consumers through third-
party outlets and continue to explore other Papa Card distribution opportunities. The Papa Card may be
redeemed for delivery, carryout and online orders and is accepted at substantially all Papa John’s
traditional domestic restaurants.
Company Operations
Restaurant Personnel. A typical Papa John’s restaurant employs a restaurant manager, one or two
assistant managers and approximately 20 to 25 hourly team members, most of whom work part-time. The
manager is responsible for the day-to-day operation of the restaurant and maintaining Company-
established operating standards. The operating standards and other resources are contained in a
comprehensive operations manual supplied to each restaurant. We seek to hire experienced restaurant
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.