Pirate's Cove

I’d assume this is happening to most of the pizza places, regardless of whether they delivery or not

Papa Johns’ prices are driving some customers away

Consumers are pulling back on discretionary spending, and Papa Johns is taking a hit.

Sales at North American locations open at least a year fell 1% in the quarter ending on June 25, compared to the same period last year, dragged down by high prices at the chain’s franchise locations.

“Some of the pricing … had gotten out in front of where the consumer was willing to spend,” said Papa Johns (PZZA) CEO Rob Lynch during a Thursday analyst call discussing the quarterly results. “April was the worst month that we’ve had since I’ve been at Papa Johns (PZZA),” in terms of sales at locations open at least a year, he said. Lynch joined Papa Johns (PZZA) in 2019.

Franchise operators have over the past year “been increasing their prices at a faster rate than our company-owned restaurants” to preserve profit margins as inflation has surged, Lynch said. Inflation has been cooling in recent months, but hit a 40-year high in June of last year. “As a result, they have experienced a larger decline in transactions relative to our company-owned restaurants this past quarter,” he said.

The vast majority, roughly 2,900 out of about 3,400 total North American Papa Johns restaurants, are franchised, according to the company. In general, franchise operators are able to set menu prices themselves, though the company may set a cap on pricing for certain promotions.

At company-owned restaurants open at least a year, sales grew in the quarter, but not enough to offset declines in franchised spots. The chain’s total sales were down 2% year over year in the second quarter.

The Democrat leaning meaning and the Biden admin can yammer all they want about inflation declining, but, the very fact is that prices are still up way above what they were pre-COVID, and even during 2020. It’s really that the rate of price increase has slowed. If I raise your price on a pizza $.50 a month for a year, but, now I’m only going to raise it $.10 this month, well, it’s still going up, just not as much.

Over the past few years (since Biden took office), companies have been hiking prices to promote or protect their own margins as their own costs have gone up. For a while, they said, many shoppers were surprisingly resilient, still buying despite the high prices.

But now, they’re pushing back – and not just at Papa Johns.

Prices of products made by Kraft Heinz (KHC), which include Lunchables, Capri Sun, Philadelphia cream cheese, Oscar Mayer, Kraft Mac and Cheese, Velveeta and other brands, are up about 11% this year.

It means fewer purchases, though the gross profit may look higher due to the inflated prices, the net profit is the same, so the net profit will decrease.

In fairness, you can’t blame this all on Biden: the root cause was China screwing around with Coronaviruses, and letting one out, by accident or intentionally. Then you blame mostly liberals for their lockdowns and such, and some Republicans, including Trump, share some blame. Then Biden comes into office, sees what’s starting to happen, and does, at best, nothing. But, many policies made this all worse, just like in other countries run by Leftists. Certainly, the higher cost of energy, especially fuel, constributes.

Also, all those extra fees will drive consumers away from delivery. If I order a pizza I expect it to be the price of the pizza and tax, maybe a small delivery fee. Then I’ll tip the driver. But, all these extras are put on, so, no. The only time I’ve ordered delivery in at least a decade was when I sick and waiting for the results of my COVID test, not wanting to expose people. That said, remember, the media would 100% be blaming this all on Trump and the Republicans if he was in the White House.