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How Did Papa John’s Same-Store Sales Growth Trend in 4Q17?

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4Q17 performance

In 4Q17, Papa John’s (PZZA) posted SSSG (same-store sales growth) of 2.6% in the international market, while in North America, its SSSG fell 3.9%. In North America, the company-owned restaurants posted an SSSG decline of 4.7%, while franchised restaurants posted a decline of 3.5%.

Papa John’s SSSG in North America was negatively impacted by the underperformance of promotional offers. Also, the company’s investments in advertising failed to drive customer traffic at its restaurants. In international markets, Europe, Latin America, China, and the Middle East posted a strong performance with growth in customer traffic primarily driving the segment’s SSSG.

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Peer comparisons

In 4Q17, Domino’s Pizza (DPZ) posted SSSG of 3.8% in domestic company-owned restaurants, 4.2% in domestic franchised restaurants, and 2.5% in international franchised restaurants. Pizza Hut, operating under the umbrella of Yum! Brands (YUM), posted SSSG of 1.0% during the same period.

Outlook

For 2018, Papa John’s management is expecting its SSSG in North America to be in the range of -3.0% to 0%, while the SSSG in international markets is expected to be in the range of 3.0% to 5.0%. To slow down the decline in its SSSG, Papa John’s has hired new advertising and PR firms to improve its communication surrounding its use of higher quality ingredients. Also, the company has been focusing on its value proposition, the implementation of technological advancements, and the improvement of restaurant efficiencies to drive its SSSG.

Next, we’ll look at Papa John’s 4Q17 unit growth.

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