Pod Insights Finshots Daily Why Papa John's wants another slice of India About this episode In today’s episode on 29th August, we tell you why the world’s third-largest pizza delivery company, Papa John’s, wants to take a second shot at India.
Transcript 0:00 Speaker 00 Hello folks, you're listening to Finchart's Daily. In today's episode, we tell you why the world's third largest pizza delivery company, Papa John's, wants to take a second shot at India. Before we begin, here's a quick word from Team Ditto. Life can be unpredictable and if the main earner is not around, the bills won't stop. That's why term insurance is so important. It gives your family a fixed payout so they can cover school fees, EMIs and daily expenses without stress. If you buy it early, you can get a one crore cover for as little as thousand rupees a month and the premium stays the same for your entire policy term. That's real peace of mind at a very small cost. And if you're not sure which plan is right for you, book a free call with Ditto.
0:43 Speaker 00 No spam, just honest guidance and we're trusted by over eight lakh people for their health and term insurance needs. Now, back to the story. There are usually two ways a company can capture market. One, it can take the first mover leap into uncharted waters, introducing a product no one's seen before. It breaks in, learns the ropes, adapts and grows with the market. Two, if the first mover has already nailed it, you still enter. Only this time, you play the challenger, trying to win by doing things differently. And every industry has both kind of players. In food delivery, Zomato set the pace while Swiggy and Rapido came in later as challengers. In quick commerce, Blinket took the early lead, followed by Zepto and Instamart.
1:27 Speaker 00 In ride hailing, Ola was the pioneer with Uber and Rapido following suit. But in today's story, we're zooming in on India's quick service restaurant that is QSR Market. More specifically, the pizza game. Here, there's no debate who the first mover is. It's Domino's and the challengers, Pizza Hut, Lapinios and a bunch of smaller regional brands. Now, whether you're a successful first mover or a competitor, it's not easy being either. Both need to fight hard to hold on to their slice of the pie because first movers don't always stay on the top forever. Except Domino's in India has managed to do exactly that. It entered the country in 1995, right when India was opening up its economy to the world.
2:11 Speaker 00 Back then, most people weren't exactly craving a foreign dish with bread, cheese and tomato sauce. But Domino's figured out what mattered most: price and taste. So, it created a range of affordable pizzas tailored to Indian palates. Veggie and toppings, tandoori flavors, pocket-friendly meals, the formula clicked. Even Pizza Hut tried to play the same card, but Domino's had already grabbed the first major advantage. And today, it controls more than half of India's organized pizza market and nearly 70% of online pizza delivery. Everyone else is still trying to catch up. Which makes it all the more surprising that Papa John's, another big American pizza chain, wants to return for another shot at India,
2:54 Speaker 00 despite failing miserably the first time. For context, Papa John's is the world's third-largest pizza chain. It quit India in 2017 after a disappointing decade-long run, but now it's back. Its first new store will open in Bengaluru in a couple of months, with plans to launch 650 outlets across the country over the next few years. But why try again after burning your fingers once, you ask? To answer that, let's rewind to why Papa John's failed the first time around. The simplest explanation is this: everything Domino's did right, Papa John's didn't. To begin with, when it entered India in 2006, its goal was to challenge Domino's and Pizza Hut.
3:35 Speaker 00 It saw booming middle class and aimed to ride the wave, but instead of adapting, it stuck to its American playbook. It positioned itself as a premium brand and stuck to the same US menu. That meant pizza stopped with red meats like pork and beef, items most Indians either don't eat for cultural or religious reasons. Domino's meanwhile had quickly realized that winning here meant bending to Indian taste and not the other way around. Papa John's also prized itself higher, but this was the era when India's millennials, the first generation to spend a significant chunk of their food budgets, nearly 10% compared to 3% for their parents, were discovering cheap Domino's pizzas.
4:16 Speaker 00 Domino's quickly became the go-to comfort food while Papa Jones was seen as the overpriced outsider. And then there was expansion. By 2017, Papa Jones had only 66 stores in 11 cities while Domino's had over 1,000 outlets across more than 200 cities. It aggressively moved into tier-two and tier-three towns, becoming the first international food chain in many smaller places. Add to that its famous 30 minutes of free delivery and consistent customer service and Domino's locked-in loyalty across the board. Put all this together and you'll see why Papa Jones simply couldn't keep up. With a weak strategy, slow expansion and managerial missteps, it was forced to bow out. And fast forward to today, things have changed even more.
5:01 Speaker 00 Domino's has ballooned to over 2,020 outlets in India. Its nearest competitor Pizza Hut has less than half that number and now regional pizza chains have muscled their way in too, grabbing nearly 30% of India's organised pizza market. India's La Pino's Pizza is even trying to take on the American giants at a national level. In other words, competition is tougher than ever and conditions aren't exactly favourable either. Discretionary spending has slowed with India's middle-class saving less. Input costs for QSRs have gone up and the price wars sparked by food-delivery platforms offering steep discounts have further squeezed margins. Even Domino's is an immune.
5:42 Speaker 00 When Papa Jones left India, its operating margin was just 4.6% compared to Domino's 9.7%. Today, Domino's revenues are growing in double digits most years and its operating margins have doubled to around 19%. But its net profit margins have actually fallen from 4.8% to 3.2% over the last decade, thanks to rising costs like rent and staff salaries. In short, even the market leader is struggling to protect its bottom line. So for Papa Jones, entering this battlefield will be anything but easy. Which brings us back to the question, why bother coming back? Well, maybe Papa Jones has been swept by the escape-competition effect.
6:26 Speaker 00 To understand what that means, now imagine a race where runners are shoulder to shoulder. The pressure doesn't make them drop out, rather it pushes them to run harder and find new techniques to win. Businesses often work the same way. Intense competition can force companies to put up their game, adopt new models or simply do things better. And perhaps Papa John's sees India not as a hopelessly saturated market but as a place where innovation could give it an edge. And the lure is obvious. India's pizza market is already worth 15,000 crore and is growing at 9.3% annually. The country has a massive young population and pizza penetration is still low compared
7:06 Speaker 00 to other global markets, which means there's plenty of headroom for growth, the pie itself is getting bigger, even if Domino's still hogs most of it. Plus, this time Papa John's is also entering with a new partner, PJP Investments Group, backed by Dubai-based Levant Capital. Now, PJP already operates over 100 Papa John's outlets across the UAE, Saudi Arabia and Jordan. In other words, they've got experience adapting the brand outside the US and dealing with diverse consumer bases that might just help them avoid the mistakes of the past. And maybe that's what it'll take, knowing what not to do. Sure, it might sound like Papa John's will have to copy Domino's or Pizza Hut, but if it wants to compete, it can't just copy paste.
7:51 Speaker 00 Instead, it'll have to carve out its own niche and offer something unique, just like its tagline, "Better ingredients, better pizza." Thank you for listening to today's episode. And if you want to share your feedback or suggestions, do drop us an email to [email protected] . Until next time.
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