With the National Football League around the corner, Papa John’s International, Inc. (PZZA) recently introduced the BOGO promotion offer, which provides one large one-topping pizza free with any order of large pizza at a regular price. The offer is valid through Jan. 28.
BOGO promotion is one of Papa John’s limited time offerings that play an important part in generating revenues for the company. Papa John's has been consistently delivering positive comps domestically as well as in the international markets over the past few quarters.
The company’s brand revitalization initiatives such as unit expansion and international expansion have contributed significantly to its comps growth. Also, the company is investing in technology-driven initiatives like digital ordering in order to capitalize on the digital wave that has hit the U.S. fast casual restaurant sector.
Moreover, menu innovation continues to drive revenues. Also, in order to appeal to health conscious customers, the company consistently focuses on providing healthy ingredients, such as high quality meat, fresh vegetables, sunflower oil, extra virgin olive oil, and spices.
However, a continuous rise in commodity costs would likely offset the benefits derived from these sales initiatives. Prices of food commodities are expected to continue to remain under pressure due to worldwide agricultural supply and demand imbalance and other macroeconomic factors.
In addition, the restaurant industry has been experiencing low consumption over the last few quarters. Despite moderate improvements in economic growth, consumers are increasing their spending only modestly as increase in jobs in 2014 is yet to translate into significantly higher wages. High interest rates, higher health care costs and still-tightened credit availability continue to hurt consumer discretionary spending in the U.S.
Papa John’s presently has a Zacks Rank #2 (Buy).
Some other stocks in the restaurant industry worth considering include Bob Evans Farms, Inc. (BOBE), Chanticleer Holdings, Inc. (HOTR) and Chipotle Mexican Grill, Inc. (CMG). All the three companies sport a Zacks Rank #2 (Buy).
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