Industry Forces
There is large number of competing firms which are around the same size as Papa Johns. The rivalry among existing competitors in the Pizza industry is high Papa John’s is not only competing against its main competitors Pizza Hut and Dominos but against mom and pop local pizza parlors. Most of its competitors sell similar products to Papa John’s at more accessible prices, but what differentiates Papa John’s from its competitors is a key distinction strategy which is to offer superior quality products with fresh ingredients. They take their slogan “Better Ingredients. Better Pizza” (papajohns.com) very seriously. “Papa John's offers fresher and more natural ingredients than the competition; for example, the company uses unbleached …show more content…
Even though Pizza Hut, Domino, Papa John’s and Little Caesar’s dominate the industry, it is easy to start a pizza business nowadays. Even though the restaurant industry requires relative low initial capital requirements, they are comparative high fixed cost associated with it. Product differentiation is hard to acquire, Papa John has been able to achieve brand identification. Doing so by its constant passion to offer great quality Pizzas. Also, Papa John’s possessed a cost advantage with the partnership with BIBP commodities, Inc. This partnership protects the company from cheese prices volatility. The Pizza industry is a matured and saturated this leads to a slow industry …show more content…
For Papa John’s to continue to achieve their product quality they have one supplier for their whole chain. To reduce the cheese price volatility, Papa John’s partnered with a third-party formed by franchisees thus it allowed Papa John’s to purchase cheese from BIBP at a fixed quarterly price. Profits and losses from BIBP were then passed on to Papa John’s Forward pricing to stabilized food cost. Papa John’s mainly depends on QC Center businesses for supplies so if they decide to raise prices many of Papa John’s products could be affected. “ [D]omestic QC Centers, comprised of ten regional production and distribution centers in 2008, supply pizza dough, food products, paper products, small wares and cleaning supplies twice weekly to each restaurant. This system enables us to monitor and control product quality and consistency, while lowering food costs.” (wikinvest.com) For instance, if there is a specialty pizza promotion that contains a certain type of meat, consumers are most likely to purchase more of the promotion special. Following the increase in the demand for specialty pizza QC will be able increase the price of the
There is large number of competing firms which are around the same size as Papa Johns. The rivalry among existing competitors in the Pizza industry is high Papa John’s is not only competing against its main competitors Pizza Hut and Dominos but against mom and pop local pizza parlors. Most of its competitors sell similar products to Papa John’s at more accessible prices, but what differentiates Papa John’s from its competitors is a key distinction strategy which is to offer superior quality products with fresh ingredients. They take their slogan “Better Ingredients. Better Pizza” (papajohns.com) very seriously. “Papa John's offers fresher and more natural ingredients than the competition; for example, the company uses unbleached …show more content…
Even though Pizza Hut, Domino, Papa John’s and Little Caesar’s dominate the industry, it is easy to start a pizza business nowadays. Even though the restaurant industry requires relative low initial capital requirements, they are comparative high fixed cost associated with it. Product differentiation is hard to acquire, Papa John has been able to achieve brand identification. Doing so by its constant passion to offer great quality Pizzas. Also, Papa John’s possessed a cost advantage with the partnership with BIBP commodities, Inc. This partnership protects the company from cheese prices volatility. The Pizza industry is a matured and saturated this leads to a slow industry …show more content…
For Papa John’s to continue to achieve their product quality they have one supplier for their whole chain. To reduce the cheese price volatility, Papa John’s partnered with a third-party formed by franchisees thus it allowed Papa John’s to purchase cheese from BIBP at a fixed quarterly price. Profits and losses from BIBP were then passed on to Papa John’s Forward pricing to stabilized food cost. Papa John’s mainly depends on QC Center businesses for supplies so if they decide to raise prices many of Papa John’s products could be affected. “ [D]omestic QC Centers, comprised of ten regional production and distribution centers in 2008, supply pizza dough, food products, paper products, small wares and cleaning supplies twice weekly to each restaurant. This system enables us to monitor and control product quality and consistency, while lowering food costs.” (wikinvest.com) For instance, if there is a specialty pizza promotion that contains a certain type of meat, consumers are most likely to purchase more of the promotion special. Following the increase in the demand for specialty pizza QC will be able increase the price of the