After discussing same-store sales growth in Part 3, we’ll look at another revenue driver—unit growth. Adding company-owned restaurants requires higher capital expenditure. Comparing companies’ unit growth can be a challenge due to different business models.
2Q17 unit growth
With its aggressive expansion policy, Domino’s Pizza (DPZ) outperformed its peers in terms of unit growth. By the end of 2Q17, the company operated 14,217 restaurants—396 company-owned restaurants and 13,821 franchised restaurants. In the last four quarters, the company posted unit growth of 9.9% by adding ten company-owned restaurants and 1,271 franchised restaurants.
Papa John’s (PZZA) had unit growth of 3.1%. By the end of 2Q17, Papa John’s operated 744 company-owned restaurants and 4,344 franchised restaurants. In the last four quarters, the company increased its franchised restaurants by 185 units, while company-owned restaurants fell by 32.
By the end of 2Q17, Pizza Hut, operating under Yum! Brands (YUM), operated 16,452 restaurants—352 company-owned restaurants and 16,100 franchised restaurants. In the last four quarters, the company increased its overall unit count by 274 units—growth of 1.7%. The company added 606 franchised restaurants, while its company-owned restaurants fell by 332 units. To improve its efficiency, Yum! Brands has been refranchising its restaurants. In 2Q16, the company refranchised 163 Pizza Hut restaurants.
In the next part, we’ll discuss analysts’ revenue estimates for the next four quarters.