Papa Johns 2009 Annual Report Download - page 13

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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 minimum percentage of sales to the Marketing Fund. The contribution
rate to the Marketing Fund can be increased above the required minimum contribution rate if approved
by the governing board of the Marketing Fund up to certain levels and beyond those levels if approved by
a supermajority of domestic restaurants. The contribution percentage increased to 2.82% for the last nine
months of 2009, from 2.7% effective for the first quarter of 2009 and for years 2008 and 2007. The
contribution percentage to the Marketing Fund is currently set to average 2.92% for 2010.
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 coupons. 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 a system by which domestic Papa John’s restaurant customers in areas we service are
able to place orders online at papajohns.com, including the “plan ahead ordering” advance ordering
feature and Spanish-language ordering capability. In addition, our customers can order via text messaging
and mobile web capabilities. We receive a percentage-based fee from domestic franchisees for online
sales, in addition to royalties, designed to cover the cost of 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 Company-owned domestic restaurant employs a restaurant
manager 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
personnel by providing opportunities for advancement and performance-based financial incentives.