17 years after launching, online orders now surpass call-in orders at Papa John's
Papa John's International founder and CEO John Schnatter says digital ordering is "the future of this business."
LOUISVILLE, Ky. (WDRB) -- The management of Louisville-based Papa John's International said it has turned a corner: Online orders have become more popular for the chain than call-in orders.
The company launched its online ordering system in the early 2000s, but the move was risky.
"We felt like that was where the world was headed," Papa John's founder and CEO John Schnatter said. "[But] it was $8 million, and I had to have board approval."
Schnatter worried he couldn't justify the cost because online orders represented only "like half a percent of sales" at that time, he said.
But 17 years later, it's a whole new world.
"Year after year, it has been flying double-digit growth over the last several years," said Mike Nettles, Papa John's senior vice president and chief information officer.
Online orders now account for more than 60 percent of Papa John's sales -- and over 70 percent in some markets, according to Nettles.
On the company's most recent earnings call with stock analysts in May, Schnatter said digital ordering -- whether through desktop, the Papa John's app or mobile site -- is "the future of this business."
"It simplifies everything," he told WDRB on Monday. "Instead of using the phones, all you have to worry about is getting the pizza and getting it out the door."
Papa John's main competitors -- Domino's and Pizza Hut -- also place a big emphasis on increasing digital ordering.
A Domino's spokeswoman said its sales are now about 60 percent digital. A spokeswoman for Louisville-based Yum Brands, parent company of Pizza Hut, did not respond to a request for comment.
Nettles said smartphones give Papa John's a lot more information about customers which can be used to make ordering faster and effortless.
"The ultimate guest experience for us is not having to ask you a bunch of questions," Nettles said. "It knows your home address. It already has a bunch of your contact information. It knows some of your favorites. It even knows where you're at when you're placing the order."
Plus, when employees aren't busy answering phones, they can toss more dough. As online orders climb, overall sales are climbing, Nettles said.
Last month a stock analyst asked Papa John's executives when they will see savings on labor costs because online ordering means less work for employees in the store.
But Nettles said automated ordering in the food industry doesn't necessarily mean fewer jobs because it can lead to more orders and bigger-ticket orders. Nettles came to Papa John's recently from Panera Bread, famous for its push to automate orders using in-store kiosks.
"I don't know many organizations that have totally been able to gut labor by putting in self-service," Nettles said. "In fact, if you do it properly, the guest orders more from you, and so if anything, it funds a more efficient labor model."
Nettles said the company has been trying to improve the experience by adding things like Papa Track, a way to follow the progress of a delivery pizza from start to finish -- allowing the customer to see when it enters the oven and when the driver is on the way.
Down the road, Nettles dreams about Papa John's being integrated with Netflix or with Amazon -- allowing customers of those services to order pizza through their apps.
"'Netflix and chill' is what they call it," Nettles said. "I wouldn't mind being a part of that chill."
Nettles said Papa John's will always have employees available to take orders over the phone -- as long as customers want to order that way. But it could be a person in a call center who then routes the order to the appropriate store.
"But as long as I've got a handful of guests that that's how they prefer to interact with me -- is the human experience, I don't want to turn anybody away," Nettles said.
WDRB.com business reporter Chris Otts contributed to this story. Copyright 2017 by WDRB News. All rights reserved.