Papa John’s (PZZA) generates its revenue from company-operated restaurant sales, supply chain or revenue from commissaries, and franchisee fees and royalties collected from its franchisees. Company-owned restaurant sales and domestic commissaries generated 48.3% and 39%, respectively, of the total revenue in 2Q16.
In 2Q16, Papa John’s revenue increased 6% from $399 million in 2Q15 to $423 million. During the quarter, revenue from company-owned restaurants increased by 9.8%. Revenue from domestic franchised, international operations, and domestic commissaries increased 8.7%, 8.1%, and 0.9%, respectively.
Revenue growth was driven by strong same-store sales growth both in North America and in international markets. We’ll look more at same-store sales growth in the next part of this series.
In the last 12 months, the company has increased its unit count by 201. Of that number, 35 were company-owned, and 166 were franchised. The addition of company-owned restaurants increases the company’s revenue directly. Franchised restaurants contribute through increased royalties and franchise fees.
A decline in revenue from operations in China offset some of the revenue growth due to negative same-store sales growth and a decline in the number of company-owned restaurants.
Outlook for Papa John’s
Analysts expected Papa John’s to add 144 restaurants in the last two quarters. The increased units and positive same-store sales growth are expected to boost revenue in 3Q16 and 4Q16.
For fiscal 2016, analysts are expecting the company to post revenue of $1.7 billion, which represents a growth of 3.6% from $1.6 billion in 2015. The rise in same-store sales growth guidance for the North American market has caused analysts to raise their revenue estimates for fiscal 2016 by 0.8%. In 1Q17 and 2Q17, analysts are expecting the company to post revenue growth of 5.5% and 3.9%, respectively.