Papa Johns 2007 Annual Report Download - page 13

6
Marketing Programs
All domestic Company-owned and franchised Papa John’s restaurants within a defined market are
required to join an area advertising cooperative (“Co-op”). Each member restaurant contributes a
percentage of sales to the Co-op for market-wide programs, such as radio, television and print
advertising. The rate of contribution and uses of the monies collected are determined by a majority vote
of the Co-op’s members (in most cases the contribution 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 2.7% during 2007, 2.6% during 2006
and 2.25% during 2005. The contribution percentage to the Marketing Fund is currently set at 2.7% for
2008.
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 and in 2007,
we entered into a four-year agreement with Live Nation amphitheaters. Both agreements provide 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 the “plan ahead ordering” advance ordering feature
and Spanish-language ordering capability. In addition, beginning in late 2007, our customers can order
via text messaging. 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