This morning Papa John’s announced a $200 million investment from hedge fund company Starboard Value. The company has also named Starboard Value CEO Jeffery Smith as Papa John’s new chairman. The investment is a bright spot after a well-documented year in hell for the struggling pizza company, including a drop in shares earlier this month after talks with other potential investors fell apart. And while a $200 million shot in the arm won’t single-handedly fix Papa John’s reputation, it could help the company once again compete more seriously with the likes of Pizza Hut and Domino’s.
A press release stated that half the $200 million investment will go towards repaying debt, and the remainder will be “providing financial flexibility that enables Papa John’s to invest capital to further advance its five strategic priorities.” Technology is one of them, and it should play big role in how Papa John’s allocates the new funds.
Since the chain’s struggles began around July 2012, other companies have released several noteworthy tech innovations that are changing the way they deliver pizza.
Some highlights are:
Pizza Hut took over as the official sponsor of the NFL. That’s not a tech development in and of itself, but it has allowed the Plano, TX-based company to push its digital rewards program to more people and try out new ways for customers to interact with the app. Pizza Hut also unveiled an autonomous pizza-making machine it’s calling a “mobile pizza factory” manned by a robotic arm that makes pizzas as a human drives to the delivery address.
Domino’s had already rolled out its Hotspots prior to the start of the Papa John’s saga. The company has since furthered its efforts in location-based technology by expanding its what3words partnership to the Middle East, which alleviates some of the friction and delays involved with delivering to regions with irregular and/or non-existent street address systems. The company also added an AI-powered loyalty campaign in 2018.
Even Little Caesar’s, who does not and may never deliver, has been hard at work on pizza innovation with the Pizza Portal, a self-service pickup station for mobile customers, and has a patent for a pizza-making robot.
Papa John’s hasn’t exactly been sitting around doing nothing. The company did revamp its rewards program at the end of 2018, making it easier and faster for customers to earn points and therefore free food. The move, however, seemed more a reaction to falling sales than a push for digital innovation.
That said, Papa John’s should continue to invest in its mobile ordering and rewards platform, fine-tuning the tech to make it as quick and effortless as possible for customers to order. CEO Steve Richie has stated in the past that millennials and Gen Z are an important audience to reach with new initiatives, so any revamping or new developments for mobile order should bear that in mind.
Drive-thru is another area Papa John’s could invest more in and differentiate itself. Dunkin’ set a standard last year with its tech-driven drive-thru, which offered a dedicated lane for pickup orders. Papa John’s could give its mobile rewards program a boost and get on the edge of a growing trend by incorporating a similar strategy at stores that have drive-thrus, and possibly even consider building more drive-thrus where space permits.
If space doesn’t permit (like the hole-in-the-wall location up the block here in Brooklyn), pizza lockers could do the trick. Imagine ordering and paying for a pizza via mobile app on your way home from work, swinging by Papa John’s after you climb out of the subway, and picking up a hot pie from a designated locker. I could see this working in a mega metropolis or even in the airport, where grabbing a slice you paid for on your app would be the fastest way to eat en route to a connecting flight.
Where do you think Papa John’s should spend its investment cash? Drop your thoughts into the comments below.
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