Papa John's (PZZA) needs to drive some growth for the more than 40-year-old chain.
The company's stock price soared to an all-time high of $138.53 in late 2021 as demand for pizza surged during the coronavirus pandemic.
Investors have since lost interest as management missteps have led to poor value messaging and lackluster marketing, technology innovation and loyalty programs. The company's stock price is down about 75% from its all-time high, according to Yahoo Finance data.
"We got off track on the value proposition," Todd Penegor, who was named CEO of Papa John's last August, told Yahoo Finance at the ICR conference in Orlando.
Consumers were "totally attracted" to the $13.99 and $14.99 price points in the "Better Get You Some" campaign, which are significantly higher than those offered by competitors such as Domino's ( DPZ ) .
In its preliminary fourth-quarter results, Papa John's North American same-store sales fell 4% year over year. Both passenger traffic and ticket value fell by 2%.
For the entire fiscal year, North American same-store sales fell by 4%, with customer traffic falling by 3% and ticket value falling by 1%.
"There's still a lot of work to be done ... to get franchisee sales and economics back to normal," BTIG analyst Peter Saleh told Yahoo Finance.
Raising menu prices instead of working to increase order volumes is a recipe for disaster, Saleh said.
"The carriers that are winning in this market, Darden (DRI), Texas Roadhouse (TXRH), Wingstop (WING), they are pricing lower and are driving deals," he said.
Penegor said the chain needs to raise awareness of its value offerings, such as Papa Pairings, which allows diners to pair a medium single-topping pizza with a side, such as wings or dessert, for $6.99.
Getting more customers through the door will give them the opportunity to purchase more expensive items.
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"It's not just value for money," said Penegol, former CEO of Wendy's (WEN). “The whole experience is definitely worth the price you pay.”
Penegal noted that Papa John's app must be "more seamless" and hired former Wendy's executive Kevin Vasconi as chief digital and technology officer.
Wedbush analyst Nick Setyan said international same-store sales growth fell less than 1% for the full fiscal year but rose 2% in the fourth quarter, an encouraging sign for 2025.
Shares in rival Domino's rose just 1% last year, but Citi analyst Jon Tower called it "the leader in the category."
"As long as value remains front and center for guests ... (Domino's) will continue to gain market share," he told Yahoo Finance in a phone call. “I would be surprised if they experience massive disruption in the industry or lose market share in 2025.”
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This all comes after Papa John's increased its investment in North America last year as part of "Back Better 2.0."
The long-term strategy aims to increase same-store sales by shifting marketing dollars from local advertising to national advertising. As part of this, franchisees contribute 5% to 6% of their revenue to a national marketing fund rather than spending it on local advertising.
It didn't go as planned. Now, Penegor plans to change that. He believes that a 6% contribution to the national marketing fund and the authorization to advertise locally is an ideal solution to attract customers and generate more profits for the company and franchisees.
"We're going to have to rebalance that because it does impact our business," he said, adding that "our share of voice is declining year over year."
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Brooke DePalma is a senior reporter at Yahoo Finance. Follow her on Twitter: @Brooke DePalma Or send an email to bdipalma@yahoofinance.com.
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