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UNCW BLA 361 - About Pizza Hut v Papa Johns

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Pizza Hut v. Papa John'sSour Dough: Pizza Hut v. Papa John'sBrandweek, May 21, 2001 by Jim EdwardsHow risky is comparative advertising? Consider what happened when two pizza giants went to court over increasingly puffed-up claims about each other's products.In the spring of 1997, Pizza Hut's then-president David Novak stood on the deck of a World War II aircraft carrier and declared "war" on "skimpy low-quality pizza." The act was filmed as a TV commercial by BBDO, New York, in which viewers were dared to find a better pizza than Pizza Hut's-a pretty unremarkable ad in a category that, historically has been littered with over-the-top ad strategies.At the time, Novak probably did not imagine that his publicity stunt would become the genesis of a nearly three-year legal fight that ultimately ended up in the U.S. Supreme Court. The dispute, which came to a conclusion on March 19, ran up lawyers' bills in the millions, exposed the often unappetizing ways in which Pizza Hut's pizzas are prepared and made the company the butt of newspaper editorial jokes across the nation. Even worse, it became a distraction at a time when Pizza Hut's business needed serious attention to revive flagging sales and a stagnant store-building program.For marketers, settling an advertising war in the courts poses some serious risks." You don't want to lose control of the information you send out to people about your brand," said John Allen, senior partner at consultancy Lippincott & Margulies, New York." A lawsuit is definitely the last resort."WIKIPEDIA:Papa John's Pizza (NASDAQ: PZZA) is the third largest carryout and delivery pizza restaurantin the United States behind Pizza Hut and Domino's Pizza; it is based in Louisville, Kentucky.Papa John's slogan is "Better Ingredients, Better Pizza." There are nearly 3,000 Papa John's stores in the U.S. and over 200 in the UK.The founder of Papa John's, John Schnatter, began his pizza career as a high school student at Rocky's Sub Pub in Jeffersonville, Indiana. He continued this while in college at Ball State University, working as a delivery driver for Greek's Pizzaria in Muncie. Upon graduating, he began working for his father, who was co-owner of the bar "Mick's Lounge," in Jeffersonville. In1984, he sold his car to buy out the other owner of the bar, knocked out a broom closet and started serving pizza to customers. Business started picking up, and soon enough Mick's Lounge was converted entirely into the first Papa John's restaurant.The corporation credits its growth to attention to quality and menu simplicity, contrasting that with other chains' focus on low prices and menu options. Pizzas failing to garner an eight on a ten point scale are discarded. Fewer options in crust styles and side dishes simplify inventory management and are meant to allow greater focus on what options there are, though Papa John's has recently moved toward the industry marketing trend of constantly adding and advertising new menu items. To further simplify in-store operations and to provide product consistency between stores, many functions such as dough production are carried out by an off-store commissary system.Papa John's primarily takes carryout and delivery orders although many stores have a few tables and chairs. Papa John's offers online ordering throughout the United States, automatically assigning all registered customers to the closest location.Despite its success, Papa John's has had its share of difficulties. In 1997, Pizza Hut sued Papa John's over its "Better Ingredients, Better Pizza" slogan, based on a series of advertisements that compared the ingredients of Papa John's and its competitors. At trial, the court agreed with Pizza Hut's claims that Papa John's slogan did not constitute statements of literal fact. In other words, the district court agreed with Pizza Hut's argument that "fresher ingredients" do not necessarily account for a "better" pizza. (Papa John's did indeed prove in court that it uses fresher ingredients.) This was overturned in court in 1999 when Papa John's appealed the decision.The motivation behind the lawsuit may have been the fact that Pizza Hut co-founder Frank Carney had become a Papa John's franchisee in 1994. By 2001 he owned 133 locations, with his franchise based in Houston, Texas.The structure of a Papa John's restaurant is the typical one seen in many fast food outlets, with a salaried store manager presiding over day-to-day operations, with several salaried or hourly assistant managers and shift managers presiding over in-store and delivery team members. Above the store management is an area supervisor (district operator (DO) in corporate stores), who is generally supervised by a franchisee or, in corporate stores, an operational vice president (OVP).Franchise stores can be bought and their owners pay a certain percentage of sales (5%) to Papa John's International, a portion of which are used for advertising and support. Corporate operations looks over franchisees to ensure brand consistency.As of January 26, 2003, there were 2,787 Papa John's restaurants (591 company-owned and 2,196 franchised) operating in 49 U.S. states and nine international markets. Papa John's International is a publicly traded company, with 30% of shares owned by John Schnatter.Papa John's became one of the first major pizza chains to include a dipping sauce with every order.Pizza Hut v. Papa John'sMarch 19, 2001Web posted at: 1940 GMTWASHINGTON (AP) -- Papa John's says its pizza is better than Pizza Hut's because it uses superior ingredients. On Monday, the Supreme Court declined to hear Pizza Hut's argument that the claim should be considered false advertising.The court, without comment, turned down an appeal by Pizza Hut, which won -- and then lost -- a false-advertising lawsuit against Papa John's. Pizza Hut said it should not have to prove that its rival's ads actually affected people's choices on what pizza to buy.Papa John's officials expressed relief that the case hadconcluded. "We obviously feel vindicated in this," saidKaren Sherman, spokeswoman for the Louisville-based PapaJohn's. "This battle is over now."Pizza Hut president Mike Rawlings said, "No advertiser hasever been able to defend a campaign that is deceptive on thebasis that the public doesn't care. We are disappointed the court did not seize this opportunity to clarify this matter for the benefit of consumers and responsible advertisers alike."Pizza Hut, a division of Tricon Global


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UNCW BLA 361 - About Pizza Hut v Papa Johns

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