DPZ - 1 Strategy Giving Papa John's a Pizza Delivery Advantage
As restrictions remained in place across much of the country forbidding dine-in business, pizza delivery grew to nearly $20 billion in 2021 . The increased demand became a challenge, however, as labor shortages took hold across the entire restaurant industry. For major pizza chains, that labor shortage has specifically translated to a shortage of drivers and an inability to meet increased delivery demand. But Papa John's (NASDAQ: PZZA) has been able to overcome that obstacle, and get ahead of its rivals, because of some forward thinking.
The restaurant industry's workforce remains about 700,000 people below pre-pandemic numbers, according to the U.S. Bureau of Labor Statistics. This trend became especially clear during Q1 2022 earnings calls. Pizza Hut experienced a 6% drop in same-store sales. Executives attributed the loss to "capacity constraints" mainly from delivery driver shortages. Domino's (NYSE: DPZ) executives noted they "have a lot of work to do to restore growth" in the delivery channel, pointing to efforts – like outsourcing its call centers – to help stores be more efficient when they're short staffed.
But Papa John's was positive on the quarter. Not coincidentally, Papa John's was an early adopter of third-party aggregate partnerships, while its peers stuck to their own drivers. Those third-party networks have left the chain better able to fulfill delivery orders during peak hours.
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1 Strategy Giving Papa John's a Pizza Delivery Advantage