Papa Johns 2015 Annual Report Download - page 18

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5
We own full-service international QC Centers in the United Kingdom, Mexico City, Mexico and Beijing,
China. Other international QC Centers are licensed to franchisees or non-franchisee third parties and are
generally located in the markets where our franchisees have restaurants.
We set quality standards for all products used in Papa John’s restaurants and designate approved outside
suppliers of food and paper products that meet our quality standards. To ensure product quality and
consistency, all domestic Papa John’s restaurants are required to purchase tomato sauce and dough from
QC Centers. Franchisees may purchase other goods directly from our QC Centers or other approved
suppliers. National purchasing agreements with most of our suppliers generally result in volume discounts
to us, allowing us to sell products to our restaurants at prices we believe are below those generally
available to restaurants in the marketplace. Within our domestic QC Center system, products are
distributed to restaurants by leased refrigerated trucks operated by us.
Marketing Programs
Our local restaurant-level marketing programs target consumers within the delivery area of each
restaurant through the use of local television, radio, print materials, targeted direct mail, store-to-door
flyers, digital display advertising, email marketing, text messages and local social media. Local marketing
efforts also include a variety of community-oriented activities within schools, sports venues and other
organizations supported with some of the same advertising vehicles mentioned above.
Domestic Company-owned and franchised Papa John’s restaurants within a defined market may be
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 generally may
not be below 2% of sales 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”). PJMF is an
unconsolidated nonstock corporation designed to operate at break-even for the purpose of designing and
administering advertising and promotional programs for all participating domestic restaurants. PJMF
produces and buys air time for Papa John’s national television commercials, buys digital media such as
banner advertising, paid search-engine advertising, mobile marketing, social media advertising and
marketing, and SMS text and email. It also engages in 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 set at up to 3% of sales, if approved by the governing board of PJMF, and beyond that level if
approved by a supermajority of domestic restaurants. The contribution rate has been 4% since 2011.
Our proprietary digital ordering platform allows customers to order online. Our eCommerce platforms
include “plan ahead ordering,” Spanish-language ordering capability, Google Wallet® alternative
payment and enhanced mobile web ordering for our customers, including Papa John's iPhone® and
Android® applications. In April 2015, we introduced PayShare, a first-of-its-kind digital solution in the
pizza industry that lets customers immediately split their pizza bill. PayShare, powered by Venmo,
provides our customers a safe and secure option to simply and easily split the check on any mobile or
online order. Our Papa Rewards® program is an eCommerce customer loyalty program designed to
increase loyalty and frequency of consumer use of our eCommerce 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 eCommerce ordering platform.