Papa Johns 2012 Annual Report Download - page 11

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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 television, radio, digital and print advertising, and
sports sponsorships. The rate of contribution and uses of the monies collected are determined by a
majority vote of the Co-op’s members. The contribution rate for Co-ops may generally not be below 2.0%
without approval from Papa John’s.
The restaurant-level and Co-op marketing efforts are supported by media, print, digital and electronic
advertising materials that are produced by Papa John’s Marketing Fund, Inc. (“PJMF”), an unconsolidated
non-profit corporation. PJMF produces and buys air time for Papa John’s national television commercials,
buys digital media such as banner advertising, paid search-engine advertising, social media advertising
and marketing, and SMS text and email, in addition to other brand-building activities, such as consumer
research and public relations activities. Domestic Company-owned and franchised Papa John’s restaurants
are required to contribute a certain minimum percentage of sales to PJMF. The contribution rate to PJMF
can be increased above the required minimum contribution rate if approved by the governing board of
PJMF up to certain levels, and beyond those levels if approved by a supermajority of domestic
restaurants. The contribution rate averaged 3.05% in 2010 and has been 4.0% since 2011.
We provide both Company-owned and franchised restaurants with pre-approved marketing materials and
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 – Domestic Point-of-Sale Technology”). In addition,
we provide database tools, templates and training that allow operators to set their own local email
marketing, text messaging and social media.
Our proprietary digital ordering platform allows customers to order online. Our platform includes “plan
ahead ordering,” Spanish-language ordering capability, and enhanced mobile web ordering for our
customers, including Papa John's iPhone® and Android® applications. We also have a Papa Rewards®
program, which is an online customer loyalty program designed to increase loyalty and frequency of
consumer use of our online/digital ordering platform. We receive a percentage-based fee from U.S.
franchisees for online sales, in addition to royalties, to defray development and operating costs associated
with our digital ordering platform.
We also offer our customers the opportunity to purchase a reloadable gift card marketed as the “Papa
Card.” The Papa Card is sold as either a plastic gift card purchased in our restaurants, or an online digital
card purchased at our web site. Additionally, we sell Papa Cards to consumers through third-party
retailers, sell bulk orders of cards to business entities and organizations, and continue to explore other
Papa Card distribution opportunities. The Papa Card may be redeemed for delivery, carryout, online and
mobile web orders and is accepted at all Papa John’s traditional domestic restaurants.
In international markets, we target customers who live or work within a small radius of a Papa John’s
restaurant. Certain markets can effectively use television and radio as part of their marketing strategies.
The majority of the marketing efforts include using print materials such as flyers, newspaper inserts, in-
store marketing materials, and to a growing extent, digital marketing such as display, search engine
marketing, email, and SMS text. Local marketing efforts, such as sponsoring or participating in
community events, sporting events and school programs, are also used to build customer awareness.
Company Operations
Domestic Restaurant Personnel. A typical Papa John’s Company-owned domestic restaurant employs a
restaurant manager and approximately 20 to 25 hourly team members, many of whom work part-time.