Papa Johns 2008 Annual Report Download - page 19

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12
operations services and support team, as well as regional vice presidents and international business
managers assigned to specific franchisee territories.
Franchise Operations. All franchisees are required to operate their Papa John’s restaurants in compliance
with our policies, standards and specifications, including matters such as menu items, ingredients,
materials, supplies, services, fixtures, furnishings, decor and signs. Each franchisee has full discretion to
determine the prices to be charged to its customers.
Franchise Advisory Council. We have a Franchise Advisory Council that consists of Company and
franchisee representatives of domestic restaurants. The Franchise Advisory Council and subcommittees
hold regular meetings to discuss new marketing ideas, operations, growth and other relevant issues.
Certain franchisees have formed an operators’ exchange group for the purpose of communicating and
addressing issues, needs and opportunities among its members and the Company.
We currently communicate with, and receive input from, our franchisees in several forms, including
through the Company’s Franchise Advisory Council, annual operations conferences, newsletters, national
conference calls and various regional meetings conducted with franchisees throughout the year. Monthly
webcasts are also conducted by the Company to discuss current operational, marketing or other issues
affecting the franchisees’ business. We are committed to communicating with our franchisees and
receiving input from them.
Reporting and Business Processes. We collect sales and other operating information from domestic Papa
John’s franchisees daily. We have agreements with substantially all Papa John’s domestic franchisees
permitting us to debit electronically the franchisees’ bank accounts for substantially all required
payments, including the payment of royalties, Marketing Fund contributions, risk management services,
online ordering fees and purchases from our print and promotions operations and QC Centers. This
system significantly reduces the resources needed to process receivables, improves cash flow and
mitigates the amount of past-due accounts related to these items. Domestic franchisees are required to
purchase and install the Papa John’s PROFIT System in their traditional restaurants (see “Company
Operations – Point of Sale Technology”).
Comprehensive Restaurant Measurement Program. As part of our effort to deliver on our brand promise
of “Better Ingredients. Better Pizza.”, we have implemented a comprehensive measurement program for
all domestic and international restaurants. The measurement program focuses on the quality of the pizza
and the customer service experience.
Industry and Competition
The United States Quick Service Restaurant pizza industry (“QSR Pizza”) is mature and highly
competitive with respect to price, service, location, food quality and variety. There are well-established
competitors with substantially greater financial and other resources than Papa John’s. Competitors
include international, national and regional chains, as well as a large number of local independent pizza
operators. Some of our competitors have been in existence for substantially longer periods than Papa
John’s and can have higher levels of restaurant penetration and a stronger, more developed brand
awareness in markets where we have restaurants. Based on independent third-party information, the QSR
Pizza category, which includes dine-in, carry-out and delivery, had sales of approximately $33.9 billion
in 2008, of which Papa John’s share was reported at 5.9%, an increase from 5.6% reported for 2007.
Within the QSR Pizza category, we believe our primary competitors are the national pizza chains,
including Pizza Hut, Domino’s and Little Caesars, as well as several regional chains and “take and bake”
concepts. A change in pricing or other marketing strategies of one or more of our competitors could have
an adverse impact on our sales and earnings. The QSR Pizza category has experienced little or no growth