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Interpreting Papa John’s Insistence on Quality and Customer Satisfaction

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Customer satisfaction: a key ingredient of success

Papa John’s International (PZZA) distinguishes itself from companies in its industry by utilizing natural ingredients and toppings that are considered to be healthier. The company focuses on building strong brand loyalty through quality products, operating efficiency, a committed team, and a strong marketing and franchise system.

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Papa John’s ACSI score

The ACSI (American Customer Satisfaction Index), which measures the satisfaction level of US household consumers with the quality of products and services, has given the highest rating—approximately 81—to Papa John’s as well as to Pizza Hut, which is a subsidiary of YUMI Brands (YUM). This was Papa John’s 13th time to top the chart in the past 15 years. The company marginally beat competitors Domino’s Pizza (DPZ) and Little Caesars in the following individual categories:

  • overall quality
  • product and service quality
  • customer expectations

McDonald’s Corporation (MCD) received a rating of 67, the lowest in the peer group.

How Papa John’s ensures quality in its products

Papa John’s relies on its QC (quality control) centers to maintain the quality and consistency of its products. In the US, all Papa John’s restaurants are required to buy dough and tomato sauce from QC centers, which delivers these ingredients to individual restaurants twice weekly in order to ensure consistency of food quality. For other food products, the restaurants have the option of purchasing from QC centers or other approved suppliers.

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To meet the particular tastes and customs of local consumers, international restaurants tend to have more diverse menus. But this makes it difficult for the company to maintain and deliver ingredients from its own QC centers. To address this difficulty, the company licenses QC centers to franchisees and non-franchisee third parties, which are required to meet food safety and quality standards as well as to be in compliance with all applicable laws. But in some international markets—the United Kingdom, Mexico, and China, to name a few—Papa John’s still operates full-service international QC centers.

Related ETFs

You can gain exposure to Papa John’s International (PZZA) by investing in the PowerShares Dynamic Leisure and Entertainment Portfolio (PEJ), which has approximately 2.2% of its total portfolio in PZZA. PZZA also makes up approximately 2.3% of the PowerShares Dynamic Food & Beverage Portfolio (PBJ).

Now let’s take a look at Papa John’s approach to technology.

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