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Understanding Papa John’s Efforts to Expand

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Current operations

By the end of 4Q16, Papa John’s (PZZA) was operating 5,097 restaurants, with 744 company-owned restaurants and 4,353 franchised restaurants. Overall, in 2016, the company increased its unit count by 204 units.

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Unit growth

In 2016, Papa John’s increased its domestic franchised restaurants by 58 units. During that period, 104 new restaurants were opened, while 42 were acquired from the company, and 63 units were closed. Notably, 25 were sold to the company.

Meanwhile, the count of international franchised restaurants rose 154 units in 2016. During that period, 226 new restaurants were opened, and 72 restaurants were closed.

In the past 12 months, the unit count of company-owned restaurants in North America has declined by five units. During that period, the company opened 13 new restaurants and acquired 25 restaurants from franchisees, while re-franchising 42 company-owned restaurants, and closing one unit. There was no change in the international company-owned restaurants unit count, which is at 42 units.

In the past 12 months, Papa John’s peer, Pizza Hut, operating under the umbrella of Yum! Brands (YUM), has increased its unit count by 342.

Outlook

Papa John’s management expects to increase its unit count by 4%–5% in 2017, and the majority of these openings are expected to happen in second half of 2017.

Continue to the next part for a look at Papa John’s EBIT margins.

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