What is the brand that strikes you first when you hear of the Italian Dish- PIZZA? It must be cheesy Domino’s or Pizza Hut. But it surely isn’t Papa John’s. Do you ever want Papa John’s Pizza to come back to India?
About Papa John’s Pizza
“BETTER INGREDIENTS. BETTER PIZZA. PAPA JOHN’S”, American franchise, Papa John’s, the fourth largest pizza delivery restaurant chain in the United States, headquartered in Jeffersontown, Kentucky was founded in 1984 by John Schnatter. It is a public company and traded in the NASDAQ stock market under the symbol “PZZA”. Rob Lynch is the CEO of the company at present. Papa John’s has over 5166 establishments including both franchise restaurants and company-owned stores. It has also opened its franchise in other countries: Russia, Spain, United Kingdom, Colombia, Mexico etc.
Papa John’s Pizza Plan for India
With the target to first capture the pizza market and attract the customers of Pizza Hut and Domino’s, Papa John’s planned to first open 4 outlets in India.
The reasons why he wanted to expand his business in India are:
- Mix culture and good tourism industry; Well known for its hospitality;
- Large market sector in Information Technology;
- Efficiency of consumer-food market in terms of national productivity, R&D and innovation;
- Manufacturing and Services are the twin engines of Indian Economy and accounted for 28.2% and 54.9% respectively, of India’s Gross Domestic Product;
- Pizza segment accounted for a major portion in the size of India’s fast food market.
The key objectives of Papa John’s Pizza were:
- To attract franchise partners all over the world;
- Glocalization of the menu as per Indian taste and culture;
- Going places literally to promote their brands and sale;
- Brand building through advertisement and local newspaper;
- Pricing and promotion as per the price change and the local people capacity to pay;
It’s Current Impact on India
Factors such as looking ahead to the next challenge gave Papa John the strength to achieve expected outputs. In the year 2006, the group of middle class income were increasing at a faster rate in India. Taking advantage of this situation, Papa John got ready to fight for a share in the Indian market where Pizza Hut and Domino’s had already established their presence. In its first phase, Papa John planned to open outlets in Delhi, Haryana, Punjab, Himachal Pradesh, Rajasthan, Uttar Pradesh and Uttaranchal. Om Pizza Eats India, master franchise for Papa John’s, opened the first Papa John’s Pizza outlet in June 2006, in Noida.
In December 2013, Avan Projects bought controlling stake in Om Pizza from TVS capita for Rs. 25 crores. Om pizza had been operating nearly 15 Papa John’s outlets with an annualised revenue of Rs. 25 crores with expected annual cash loss of Rs. 8-10 crores.
In November 2014, Papa John, Avan Projects and Global Franchise Architects announced Papa John’s Pizza merger with all the existing PIZZA CORNER stores in South India in the first quarter of 2015.This acquisition reinforced Papa John’s commitment to expand its presence in India by a minimum of 40 stores, specifically in Bangalore, Chennai and Hyderabad.
Its twitter account also states that by the end of 2015 they served in 11 cities in India: Bengaluru, Chennai, Hyderabad, Vellore, Mysore, Pune, Mumbai, Maddur, Mandya, Hosur, Tirupati which makes it very clear that outlets in Noida had already been closed by then.
Failure on leaving a mark on India
In 2016, they planned to expand their business in Southern and Western parts of India to reach a total of 100 outlets. However, their plan did not see the light of that day.
According to its 2017 financial filings they shut their remaining 66 doors and Papa John had to bid India a final goodbye.
The reasons why Papa John couldn’t succeed in India are:
- COMPETITION IN MARKET
One of the biggest challenges for a company to survive in the market is to keep up with its competitors. Papa John’s toughest competitors- Pizza Hut and Domino’s used the shortcomings of Papa John’s Pizza as a major advantage. Efficient and proper training was given to the employees. They trained people for letting them be helped by technology and not be controlled by technology; had a balance between brand building and EBITDA. Papa John’s Pizza lost all its customers to Domino’s and Pizza Hut.
Papa John’s Pizza’s net profitability was far behind than that of its competitors. In 2014, the net margin of Papa John’s was nearly 4.2% of the total sales whereas for Domino’s Pizza and Pizza Hut it was estimated to be 8.2% and 7.9% respectively. During this time, Papa John entered into an agreement with Pizza Corner for a merger without considering the risk of failures. It then became impossible for management to fuel their chains of opened stores.
Domino’s was way ahead of Papa John’s Pizza. How?
By the time Papa John came to India and expanded, it was already very late. Domino’s had already left a mark. In 2006, when Papa John’s set its fort in India Domino’s was already operating with 128 stores. By 2017, when Papa John’s drew it had only 66 stores in 11 cities of India compared to the 1127 Dominoes in 265 cities.
Domino’s was also the first food service company to successfully launch online and mobile ordering nationally in India.
Papa John’s couldn’t cope up with Domino’s fast delivery and sophisticated ordering technology.
Due to the first mover’s advantage Domino’s had already established its brand and was moving towards rural areas and smaller cities, which was the advantage that Papa John’s never had. Papa John’s Pizza was confined to a particular region.
Domino’s due to its huge presence and economies to scale could sell their pizza’s in a low profit margin, bearing lower costs thereby, keeping its price lower than that of Papa John’s Pizza.
- EMPLOYER-EMPLOYEE REALTIONSHIP
When it comes to efficiency in a food joint staffing plays a vital role. It can only be achieved through good training and healthy employer-employee relationship. Papa John’s lacked both. Papa John’s relied more on technology than on its staffs. Papa John’s employees were expected to be technically sound.
- BRAND IMAGE IN LIEU OF EBITDA
Earning before interests, taxes, depreciations and amortization helps in measuring the company’s overall financial performance. Indicators such as stock exchange, exchange rates, interest rates, assets, imports, exports manage the world economy. Instead of improving and working on their EBITDA, this pizza chain was focusing more on brand building. They were preoccupied with expanding their business in Southern India thereby, paying less to no attention to their existing stores. When sales declined, they announced their merger with Pizza Corner which required a huge investment. Do you think this merger was really important at that time?
Papa John’s Pizza Menu Unwelcomed By Indian
Any global company entering the boundary of a new country should focus more on glocalizing their product instead of selling their trademark global product. But Papa John’s failed to do so in India where the majority of population is that of Hindus. Selling pork here is frowned upon. However, Papa John’s didn’t remove its dish, “SUPER PAPA’S” from their menu which was looked down by the majority.
In South India the proportion of Hindus is even higher. The outlets were confined to the southern regions of the country. Pork eaters, although very few, belonged to north eastern parts of the country including Assam, Meghalaya, Nagaland, Manipur etc. Not keeping pork out of its menu played against the goodwill of the company. Therefore, there was no demand for these variants of pizza in Southern India. Unavailability of good quality meat in India is another reason.
Dominos and Pizza Hut had already won the hearts of the pizza lovers. The speciality dishes of Papa John’s displeased the Indians. Thus, there was a rapid decline in sales.
- NON-DISCLOSURE OF ‘BETTER INGREDIENTS’
Today, people want to know what they are consuming. They want to consume something that is natural, healthy and of high quality. Afterall, who wouldn’t want fresher, better ingredients in their pizza? The company decided to keep its ‘better ingredients’ as a secret. The company’s website had no relatable information regarding it. Realising that the customers want to know what they are actually consuming, fast food chains like McDonalds, Taco Bell and Subway voluntarily provided it. When it comes to India it is not only about food but surety served that matters. They even lacked maintaining relations with the customers it served. E-mails and voicemails went unanswered. People started thinking that Papa John’s is not thinking about its customers. It is asking customers for blind trust. Papa John’s had failed to realize that when you hoist your entire brand up on the idea of high-quality food, you’d better be able to back it up.
Future Road Ahead
When it comes to the PIZZA, Domino’s and Pizza Hut are the brands that strikes us Indians first because they have left a mark on our taste palettes which other companies failed to do. I can definitely say that Papa John’s was one of those companies.
I being born and bought up in West Bengal, personally had never heard of Papa John’s until now. I also believe that the other residents of this state also haven’t.
The competitors of Papa John’s, already stated earlier, succeeded in analysing the local market and making their global product local. These companies not being Indian companies were successful in capturing the Indian market which Papa John’s failed because they couldn’t provide local solutions to their global product.
They thought that the seventh largest country with the second highest population was just like any other country in the world who would eat anything and everything served to them. However, this was not the case. Being the country with second largest population also makes it the second largest market in the world which gives way to the companies to come out and try their products in the market. This adds on competition for any company coming to India. This is what Papa John’s failed to analyse. This failure of analysis led to the failure of Papa John’s in the Indian market.