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Battle of the Brands: Which Company is More Worthy of Franchisees’ Investment Dough, Little Caesars or Papa John’s?

by Brian Bixler on November 3, 2014

in Battle of the Brands, Franchise Chatter Guides, Pizza Franchises

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Papa John's vs. Little Caesar's Main

This Franchise Chatter guide on Papa John’s and Little Caesars was written by Brian Bixler.

In the world of pizza, two major brands, Pizza Hut and Domino’s, are the No. 1 and No. 2 market leaders, respectively. But what about the race for the No. 3 spot in the category? Most sources see it as a battle between Little Caesars and Papa John’s.

While the pizza segment overall showed little growth during the last year, major brands continue to challenge one another for market share as well as new franchisees. Both Little Caesars and Papa John’s are introducing new products and trying new advertising approaches to hold on to their current ranking among the biggest brands as well as grow in an increasingly competitive environment for all quick-service restaurants.

“Sales and unit growth in 2013 for the industry’s top seven pizza players was, like their core product, somewhat flat,” Nation’s Restaurant News reported this year. “The segment’s unit growth averaged just 1.3 percent—up 0.1 percent compared with the preceding year—while average system-wide sales inched up a modest 2.3 percent—down from 3.9 percent in the preceding year.”

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When QSR magazine issued its latest QSR 50 rankings, Pizza Hut and Domino’s took the top two spots in the pizza/pasta segment, as one might expect. Little Caesars came in at No. 3 based on system-wide sales and number of units, with Papa John’s following closely at No. 4. That was a switch from the previous year’s QSR rankings when it was the other way around—Papa John’s came in at No. 3 and Little Caesars at No. 4 in 2013. So which one is the better choice for investors?

The Histories

Little Caesars has been around for more than 50 years. The company was founded by husband and wife Mike and Marian Ilitch in 1959 when they opened their first location in Garden City, Mich., a suburb of Detroit. From the beginning, the brand was an innovator that relied on franchising to help it grow. A take-out restaurant without inside seating was unusual in Little Caesars’ early days.

In the 1980s, the brand was one of the first to offer two pizzas for the price of one, which it parlayed into a memorable ad slogan known as the Pizza!Pizza! deal. The company also created its own conveyor oven to bake pizza quickly for customers. Later, when it introduced Crazy Bread as a pizza accompaniment, other brands followed its lead, creating their own similar side orders. Most recently, the company began offering Hot-N-Ready pizzas, which are ready for pick-up at certain locations without customers calling in an order. The brand has always focused on value.

Papa John’s, on the other hand, has built its brand around quality and “better” ingredients than its competitors. Founder John Schnatter was schooled early in the pizza business, having worked at pizzerias while he was in high school and college. From that experience, he developed his own idea to start a company that would offer a quality pizza delivered to a customer’s door.

Once he received a business degree from Ball State University, Schnatter opened the first Papa John’s from a converted broom closet in a tavern owned by his father in Jeffersonville, Ind. Today, the headquarters are located in Jeffersontown, Ky., outside of Louisville.

Current Status

In its apples-to-apples comparison this year, QSR ranked Little Caesars higher than Papa John’s with $3 billion in sales and nearly 3,900 units, compared to $2.5 billion in sales and 3,200 units for Papa John’s. And even though Papa John’s had higher average sales per unit at $837,000 compared to Little Caesars’ $800,000, Little Caesars added 217 units in 2013 compared to 76 for Papa John’s.

An IBISWorld report on the pizza segment that was updated in 2014 ranked the top four brands similarly, estimating 8.1 percent market share for Little Caesars, compared to 6.5 percent market share for Papa John’s. Together with Pizza Hut and Domino’s, they represent 39.6 percent of total industry revenue, IBISWorld estimates.

While two reports rank Little Caesars as No. 3, the brand failed to make the 2014 Entrepreneur Franchise 500 list, while Papa John’s International ranked No. 27 on the prestigious list with 4,257 total units at the close of 2013.

Taste might be the one area where Little Caesars and Papa John’s have an edge over brand leaders Pizza Hut and Domino’s. In a cover story last summer, Consumer Reports surveyed its readers to determine the best and worst fast food in America. Among the four market leaders, Papa John’s ranked highest in terms of overall customer satisfaction, followed by Little Caesars, Domino’s and Pizza Hut, respectively. However, four other brands topped the list: Papa Murphy’s Take ‘N’ Bake Pizza was No. 1, followed by Jet’s Pizza, Marco’s Pizza and Round Table Pizza.

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Market Forces

In its report, IBISWorld noted that the industry’s largest operators have grown by successfully introducing new products and expanding their marketing and promotional activities. This is certainly true of both Little Caesars and Papa John’s.

In a recent interview with The Street website, founder Schnatter said Papa John’s has returned to its “culture of tinkering.” It offered a Greek pizza and a spicy pulled pork pizza over this summer and also launched a limited-time promotion of its ultimate meats pizza. This fall, it is introducing the Fritos Chili Pizza for a limited time.

For its part, Little Caesars introduced this summer its first limited-time pizza promotion in a decade with a pretzel-crust pepperoni pizza. In 2013 it added a deep-dish pizza to its core menu. According to Bloomberg Businessweek, the chain “doesn’t do much in limited-time offers or menu innovation,” but it quoted Senior Vice President of Global Marketing Edward Gleich as saying “there are more things in the pipeline” even as the company stays committed to keeping operations simple, as its model prescribes.

The pretzel-crust pizza is being offered this fall as a Hot-N-Ready product that is ready for pick-up anytime or which can be ordered ahead of time. Reportedly popular with consumers, the pretzel pizza helped Little Caesars score high with a very important consumer group: the millennials.

The commercial for the pretzel-crust pizza was the most memorable ad among millennials in September, according to a ranking from Nielsen and reported by Ad Age. The website said Nielsen Brand Effect, which ranks the top 10 ads among viewers ages 18 to 33, samples viewers to ask whether they remember ads, the brand of the ad, whether they liked the spot and whether it impacted their intent to purchase the product.

The article went on to say that compared to the average ad, Little Caesars’ spot was 2.59 times more likely to be remembered and associated with the correct brand among millennials.

The Millennials

As in many other sectors, attracting millennials is becoming increasingly necessary in the pizza segment with each brand seeming to come up with its own ways to attract the younger consumers—a topic explored recently by writer Nickey Friedman of Motley Fool website.

“Papa John’s takes great pride in achieving various technology ‘firsts,’ ” Freidman writes. “But Domino’s Pizza beat it to the punch lately with the ultimate in lazy and convenience.”

The writer acknowledges that Papa John’s was the first national pizza company to offer system-wide online ordering and text ordering, plus a digital loyalty-rewards program. It will likely be the first one to have more than half of its domestic sales coming from digital channels as well, Friedman writes.

Still, Domino’s stole some of Papa John’s thunder this summer by introducing a new voice-ordering app. Among its conveniences, the app stores credit card information, allows customers to order from other locations besides home, remembers previous orders and eliminates hold time and the need to spell out an address.

The technological competition that is seen to be between Papa John’s and Domino’s is good for both brands, says Motley Fool.
“The result…is that they have left the mom-and-pop stores and regional chains in the dust as consumers turn to digital orders more and more, even if it means giving up their more-favored local and traditional pizza store,” Friedman writes.

The Sports Connection

Papa John’s has other marketing efforts working for it in addition to technological ways to attract millennials. Most notably, it has hitched its wagon to the National Football League to help with promotion. Since 2010 it has been the official pizza sponsor of the NFL and even became part of the official coin toss at the Superbowl in 2013. As a result, Papa John’s became the brand most identified by avid NFL fans as an NFL sponsor, dethroning Gatorade, according to the results of an annual NFL sponsor awareness survey conducted by Turnkey Intelligence for SportsBusiness Journal/Daily.

In addition to also sponsoring several individual NFL teams, Papa John’s benefits from publicity generated by having two NFL superstars as franchisees. Denver Broncos quarterback Peyton Manning owns 21 Papa John’s stores in Colorado and the football player was featured in a series of commercials with Papa John’s CEO Schnatter to promote the company’s connection with the NFL. Former NFL player Jerome Bettis is also a Papa John’s franchisee.

Other Marketing Strategies

In addition to having a firm sports connection, which seems an ideal pairing for a pizza brand, Papa John’s also receives recognition for its charitable work. It has formed a partnership with Junior Achievement to offer work readiness, entrepreneurship and financial literacy to U.S. students, and the partnership has resulted in nearly $1.3 million in contributions to JA, according to the company’s website. Papa John’s also supports Boy Scouts of America in addition to making donations to such organizations as Make-A-Wish Foundation.

Meanwhile, some of Little Caesars’ own marketing strategies seem to be paying off as well. Its introduction of the $5 Hot-N-Ready Lunch Combo in 2014, as well as the complementing ad campaign, helped the brand gain more customers and achieve a higher value perception, according to research from YouGov’s BrandIndex.

“Little Caesars, more than any other of the big four chains, has maintained that value momentum through this point in 2014,” BrandIndex reports. Ads emphasizing the Hot-N-Ready Combo being ‘ready when you walk in’ sent the percentage of current Little Caesars customers who perceived value from 9 percent in March to 13 percent in August, its highest level in more than two years. It surpassed Domino’s and put it three percentage points behind Pizza Hut at 16 percent. Papa John’s value perception has held steady throughout 2014, coming in at 7 percent, the website announced.


While John Schnatter is the face of the eponymous Papa John’s, he has courted some controversy for the brand over the years. In late 2012, he interjected himself into American politics when he made public remarks about how business costs for Papa John’s units would increase due to additional expenses associated with the implementation of the Affordable Care Act and how franchisees would pass those expenses on to the consumer.

Investors considering partnering with either Little Caesars or Papa John’s should also know that Papa John’s is publicly traded, while Little Caesars is privately held by the Ilitch family as part of a food, sports and entertainment empire that also includes the Detroit Red Wings of the National Hockey League, the Detroit Tigers of Major League Baseball as well as holdings like the MotorCity Casino Hotel in Detroit and Blue Line Foodservice Distribution, among other companies. (Mike and Marian Ilitch have a joint net worth of $4 billion, landing the couple in the most recent Forbes 400 list at number 122.)

One of Little Caesars’ hometown newspapers Detroit Free Press has noted that the Ilitch family is notoriously secretive about sharing what it views as proprietary, competitive information, including financial information in sales and costs. The company responded swiftly this fall, however, to comments from Canadian radio personality Bob McCown who said the Ilitch family was interested in selling the Red Wings, Tigers and Little Caesars.

In a report by the Detroit News, Little Caesars General Manager Ken Holland said McCown’s comments were “absolutely not true.”

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