- Papa John's North America same-store sales rose 28% during Q2 2020, a record for the chain, Rob Lynch, Papa John's CEO, said on a company earnings call Thursday. The chain also added over 3 million new customers on digital channels alone, and saw increased retention and repeat rates among these diners, Lynch said.
- "We estimate that roughly half of last quarter's comp sales growth can be credited to the long-term, sustainable impact of our strategy, and the remainder reflecting favorable pandemic changes in customer behavior, which also present long-term growth opportunities," Lynch said on the call.
- The pizza chain reported revenue of $460.6 million for the period over $399.6 million last year, according to the company's earnings release, exceeding analysts estimates. Net income came in at $20.6 million compared to $8.3 million in the year-ago period.
Papa John's expects its same-store sales to continue improving into Q3, with domestic same-store sales up over 30% in July in North America, Lynch said on the call. Seventy-percent of the company's orders are placed on digital channels and mobile ordering is its fastest growing platform, Lynch said. He added that the company's loyalty program and marketing campaigns are accelerating the company's growth. The chain predicts consumer demand for delivery and pickup through their channels and third-parties will continue to drive sales growth in the coming months due to the pandemic.
The company's third-party delivery partnerships have also boosted performance, and the percentage of transactions delivered by aggregators was up more than 100% in Q2 versus Q1, Lynch said, adding that these transactions are highly incremental and profitable for the chain.
To meet sustained customer demand, the company plans to hire another 10,000 employees in the current quarter, on top of the 20,000 workers the chain added in Q2. Papa John's Q2 earnings build on a positive streak of strong same-store sales from the chain. May was the company's strongest month ever, with North American comparable store sales jumping 33.5%. These gains reflect the benefits that the U.S. pizza segment have experienced as a whole thanks to diner shifts toward pickup and delivery amid safer-at-home orders and dining room closures across the country.
Domino's Q2 same-store sales, for example, rose 16.1% compared to 3% during Q2 2019. Like Papa John's, the pizza chain saw new customer acquisition and repeat business driven by its delivery channels, and nearly 75% of its U.S. sales stem from digital channels, according to CEO Ritch Allison.
The questions going forward for major U.S. pizza chains are how long demand for pizza delivery will hold steady — Fortune predicts that this boon for the segment will soon wane — and how they will differentiate from one another in the meantime. Papa John's has been pleased with its increased marketing investment, much of which centers around brand ambassador Shaquille O'Neal. For Q2, the chain sold over 2 million Shaqaroni pizzas, Lynch said on the call, suggesting the strategy is resonating with customers.