The QSR pizza segment is in trouble. The advent of third-party delivery eroded the segment’s traditional advantage in the channel, and QSR competitors have modernized their digital infrastructure.
All three of the major pizza chains for which quarterly sales figures are available have either missed sales growth projections or seen significant erosion in recent quarters.
Papa Johns’ same-store sales fell by more than 8% last quarter, and the brand faced major closures as part of an ongoing turnaround effort. That turnaround includes significant investments in new technology meant to improve operations and simplify the customer experience, according to Kevin Vasconi, the chain’s chief digital and technology officer.
In the last 18 months, Papa Johns overhauled its technology strategy as part of a broader effort to renovate and modernize the brand, Vasconi said.
Papa Johns’ business is about 85% digital, and the chain was an early adopter of many digital ordering options, but in recent years, it lost some of its technological edge, he said.
“Our digital platform was a little long in the tooth,” Vasconi said.
So Papa Johns rebuilt its whole platform, and changed many of the technology tools it uses at the restaurant level and in consumer-facing applications. The point of all this change wasn’t to have the newest or the flashiest technology, but to rectify specific issues facing the pizza chain, Vasconi said.
“I don't think technology is the competitive advantage in and of itself, but I think applied to the business, applied to solving problems like taking the friction out of the ordering process, or making the ordering process speedy or making it accurate — or fun even — that’s how you use technology to win,” he said.
Sourcing a new POS
As part of the overhaul, Papa Johns re-evaluated the technological foundations of its restaurant operations, including platforms the brand built by itself — like its point-of-sale system.
“We kept coming back to [the fact that] we have a really old point-of-sale system. It's a good point-of-sale system, but we wrote it 30 years ago,” Vasconi said. “You know, it's older than some of my developers.”
The old system couldn’t quite keep up with the pace of limited-time offers, deals and pricing changes required by the competitive dynamics of the modern QSR sector, Vasconi said.
Papa Johns took a look at the state of the POS market to see how things had changed since the mid-90s, when it built the foundations of its in-house POS.
“We went through a pretty lengthy build vs. buy analysis, and we're really pretty impressed with the software that was available in the marketplace,” Vasconi said, before discussing its potential vendors with its franchisees.
The chain ultimately chose PAR Technology as its POS and back-office software provider and is in the process of rolling out PAR’s technology across thousands of restaurants.
The new system is easier for workers to use as well, Vasconi said, since it’s designed like an app interface, in contrast to the text-heavy interface of the old POS.
“When was the last time anybody got training on an app? You just know how to use apps,” Vasconi said. “Training's a lot faster, retention's much higher, accuracy is better.”
The new system displays information more clearly for the back-of-house, Vasconi said, and has a better order flow and use of color that makes it easier for workers to see build for new orders.
“It’s small things, but I think small things repeated thousands of times add up to big big benefits,” Vasconi said.
Artificial intelligence’s role
Papa Johns is using several artificial intelligence tools within its tech strategy, both in customer-facing situations and in operations.
Vasconi said that restaurant managers use AI tools to forecast sales, which helps with planning labor allocations. Over time, Vasconi said, this should help sales forecasts and scheduling become more efficient and accurate.
On the consumer side of things, Papa Johns launched an AI ordering assistant earlier this year, which it calls Lou AI. Vasconi said the company analyzed the possible use cases for AI before rolling it out.
“We only wanted to deploy AI if it could actually solve a customer problem,” Vasconi said.
The chatbot is designed to help consumers come up with large group orders and customize them by avoiding allergens or ingredients consumers disfavor. It can suggest possible group orders given the guidelines input by consumers.
“The whole idea here is to take all the stress out of this experience that people, believe it or not, still stress over,” Vasconi said. The AI agent can also suggest using loyalty points and can find available coupon codes and apply one to maximize consumer value, Vasconi said.
Broadly speaking, Vasconi said, consumer response has been positive and the AI tool has managed to speed up group ordering processes.
The company’s next step is using AI to improve the segmentation and relevance of its upsell efforts and loyalty offers, Vasconi said.
“We're not quite there, but we want to get to the point where almost every offer is individual, instead of these large segments of hundreds of thousands of people,” Vasconi said.
