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What Drove Papa John’s Revenue in 4Q17?

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4Q17 performance

In 4Q17, Papa John’s (PZZA) posted revenue of $467.6 million, which represents a rise of 6.4% from $439.6 million in 4Q16. The revenue growth was driven by one extra week of operation in 4Q17. Excluding the revenue contribution from the one extra week, Papa John’s revenue declined by 0.7%.

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Domestic company-owned restaurants

In 4Q17, the segment posted revenues of $210.8 million, which represents growth of 1.9% from $207.0 million in 4Q16. The revenue growth was driven by the net addition of six new restaurants in 2017 and one extra week of operations. However, some of the revenue growth was offset by a decline in SSSG (same-store sales growth) of 4.7%.

Domestic commissaries and others

The revenue from this segment rose 9.1% to $194.1 million in 4Q17 due to an increase in the unit count of franchised restaurants, one extra week of operations, and higher commodity prices. However, some of the growth was offset by negative SSSG. 

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International operations

During the quarter, the segment posted revenue of $35.8 million, which represents growth of 26.5% from $28.2 million in 4Q16. The revenue growth was driven by the net addition of 144 restaurants and positive SSSG of 2.6% in international markets.

Domestic franchising

The segment posted a revenue of $27.0 million in 4Q17, which represents growth of 2.0% from $26.4 million in 4Q16. The revenue growth was driven by the one extra week of operations. Some of the revenue growth was offset by a decline in royalty collection due to a decline in unit count and negative SSSG.

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Peer comparison

During the same period, Domino’s Pizza (DPZ) posted revenue growth of 8.8%, while the revenue of Yum! Brands (YUM) has fallen 16.3%.

Outlook

Analysts are expecting Papa John’s to post revenue of $1.76 billion in 2018, which represents a fall of 1.2% from $1.78 billion in 2017. Next, we’ll look at Papa John’s 4Q17 same-store sales growth.

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