Papa John's Pizza (NASDAQ: PZZA) is the third largest take-out and delivery pizza restaurant chain in the United States, behind Pizza Hut and Domino's Pizza.[1] It is based in Louisville, Kentucky. Papa John's slogan is "Better Ingredients. Better Pizza. Papa John's"
Internationally, there are over 3,300 Papa John's establishments, including over 2,600 in the U.S. and more than 500 in over 30 other countries.
Papa John's International, Inc. ranks as the third largest pizza chain in the United States, trailing only Pizza Hut (a division of YUM! Brands, Inc.) and Domino's, Inc. The company has built a chain of more than 2,800 pizza delivery and carry-out restaurants operating under the trademark "Papa John's" in 49 states, the District of Columbia, and 20 international markets. Approximately 570 of the outlets are company owned, with the remainder being franchised. The firm also franchises about 115 Perfect Pizza restaurants in the United Kingdom. After the opening of its first store in 1985, Papa John's grew rapidly through the late 1990s before settling in as a more mature company in the following decade. In a highly competitive segment of the restaurant industry, Papa John's has managed to carve out a highly profitable niche by offering a very limited menu consisting of pizza, breadsticks, cheese sticks, chicken strips, chicken wings, and canned or bottled soft drinks; and by using high-quality ingredients and touting them in its trademark slogan "Better Ingredients. Better Pizza." Company founder John Schnatter continues to hold about a 29 percent stake in the company.
Papa John’s International, Inc. (Papa John’s) operates and franchises pizza delivery and carryout restaurants and, in certain international markets, dine-in and restaurant-based delivery restaurants under the trademark Papa John’s. At December 26, 2010, there were 3,646 Papa John’s restaurants in operation, consisting of 612 Company-owned and 3,034 franchised restaurants operating domestically in all 50 states, the District of Columbia and Puerto Rico and in 32 countries. As of December 26, 2010, the Company had 775 Papa John's restaurants operating in 32 countries for its international operations. Papa John’s has six segments: domestic restaurants, domestic commissaries (Quality Control Centers), domestic franchising, international operations, variable interest entities (VIE) and all other business units. Domestic Papa John’s restaurants offers a menu of pizza along with side items, including breadsticks, cheese sticks, chicken strips and wings, dessert items and canned or bottled beverages. Its traditional crust pizza offers a container of its garlic sauce and a pepperoncini pepper.
The domestic restaurant segment consists of the operations of all domestic (domestic is defined as contiguous United States) Company-owned restaurants and derives its revenues principally from retail sales of pizza and side items. The domestic commissary segment consists of the operations of its regional dough production and product distribution centers and derives its revenues principally from the sale and distribution of food and paper products to domestic Company-owned and franchised restaurants. The domestic franchising segment consists of its franchise sales and support activities and derives its revenues from sales of franchise and development rights and collection of royalties from its domestic franchisees.
The international operations segment principally consists of its Company-owned restaurants and distribution sales to franchised Papa John’s restaurants located in the United Kingdom, Mexico and China, and its franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from its international franchisees. VIEs consist of entities, in which the Company is the primary beneficiary, and include consolidation of BIBP Commodities, Inc. (BIBP). All other business units that do not meet the quantitative thresholds for determining reportable segments consist of operations that derive revenues from the sale, principally to Company-owned and franchised restaurants, of printing and promotional items, risk management services, and information systems and related services used in restaurant operations and certain partnership development activities.
The Company’s domestic QC Centers, consisting of nine full-service regional production and distribution centers and one distribution-only center, supply pizza dough, food products, paper products, smallwares and cleaning supplies twice weekly to each restaurant. Its full-service QC Centers are located in Louisville, Kentucky; Dallas, Texas; Pittsburgh, Pennsylvania; Orlando, Florida; Raleigh, North Carolina; Denver, Colorado; Portland, Oregon; Des Moines, Iowa, and Phoenix, Arizona. The Company also operates a distribution-only center in Cranbury, New Jersey. The full-service QC Centers produce pizza dough in addition to providing other food and paper products used in its restaurants. Other international full-service QC Centers are licensed to franchisees and non-franchisee third parties, and are generally located in the markets where its franchisees have restaurants. PJ Food Service, Inc. (PJFS) is its wholly owned subsidiary that operates its domestic Company-owned QC Centers.
As of December 26, 2010, the Company opened 2,871 domestic units. Of the total 2,871 domestic units open, 591 or 21% were Company-owned (including 127 units owned in joint venture arrangements with franchisees, in which the Company has a majority ownership position). During the fiscal year ended December 26, 2010 (fiscal 2010), a total of 325 Papa John’s restaurants were opened, consisting of 13 Company-owned (five domestic and eight international) and 312 franchised restaurants (169 domestic and 143 international), while 148 Papa John’s restaurants closed during fiscal 2010, consisting of four Company-owned restaurants (two domestic and two international) and 144 franchised restaurants (82 domestic and 62 international). The 82 domestic franchise closings included the closure of 13 non-traditional event-based units. The international franchise closings included the closure of all 25 units in Saudi Arabia in connection with a franchisee restructuring.
In the early 2000s Papa John's considerably slowed down its expansion as it focused more on improving profitability in an environment highlighted by ongoing price competition, a slowing economy, and high cheese costs. The company began closing underperforming units in 2001, countering the more limited store openings. In 2003, for instance, 103 Papa John's restaurants were opened but 105 were shuttered. Growth was targeted to the West and Northeast. Looking for an edge in an increasingly competitive sector of the restaurant industry, Papa John's made another rare addition to the menu in September 2002 with the rollout of Papa's Chickenstrips, made from all-white-meat, boneless, breaded chicken. The company also began introducing specialty pizzas. On the overseas front, Papa John's entered China in 2003, its 14th international market, and it also converted 60 Perfect Pizza restaurants in the United Kingdom to the Papa John's format, reducing the Perfect Pizza chain to 135 locations.
Corporate revenues fell in both 2002 and 2003, dropping from $971.2 million to $917.4 million over that period. Net income fell from $47.2 million to $33.6 million during the same time span. This stagnation continued in 2004 when Papa John's announced plans to shutter about 120 more stores. Late in the year the company cut 70 positions across its corporate staff in order to reduce annual expenses by about $2.3 million. Around this same time, Papa's Wings chicken wings were added to the menu. For the year, systemwide sales increased just 0.1 percent. Five more international markets were entered during 2004: Russia, Trinidad, Peru, Bahrain, and Oman.
In a potential signal of a new era at the company, Papa John's hired Nigel Travis as president and CEO, replacing Schnatter, who remained chairman. Travis had served as president and COO of the Blockbuster Inc. video store chain from 2001 to 2004. A British national, Travis had an earlier five-year stint at Burger King Corporation, serving in various leadership positions for the fast-food company, which at the time was owned by the U.K. firm Grand Metropolitan plc. With sales for 2005 expected to remain stagnant or increase no more than 2 percent, Papa John's kept its expansion plans in check, anticipating opening 80 to 100 domestic units while closing a similar number. International operations were expected to grow by as many as 50 net units. It was clear that Papa John's had entered a much slower growth phase in its evolution, and that it had become nearly impossible for the company to reach a goal that Schnatter had set in the heady days of the late 1990s: overtaking Pizza Hut--thereby becoming the number one pizza chain--within ten years.
Principal Subsidiaries: Papa John's USA, Inc.; PJ Food Service, Inc.; PJFS of Mississippi, Inc.; Papa John's Support Services, Inc.; Risk Services Corp.; Capital Delivery, Ltd.; RSC Insurance Services Ltd. (Bermuda); Colonel's Limited, LLC; Papa John's (U.K.) Ltd.; Perfect Pizza Ltd. (U.K.); Perfect Pizza Holdings, Ltd. (U.K.).
Principal Competitors: Pizza Hut; Domino's, Inc.; Little Caesar Enterprises, Inc.
OVERALL
Beta: 0.58
Market Cap (Mil.): $843.02
Shares Outstanding (Mil.): 25.75
Annual Dividend: --
Yield (%): --
FINANCIALS
PZZA.OQ Industry Sector
P/E (TTM): 16.59 25.08 19.29
EPS (TTM): -3.34 -- --
ROI: 22.11 4.01 1.61
ROE: 25.09 6.05 2.45
Statistics:
Public Company
Incorporated: 1993
Employees: 14,610
Sales: $917.4 million (2003)
Stock Exchanges: NASDAQ
Ticker Symbol: PZZA
NAIC: 722211 Limited-Service Restaurants; 533110 Lessors of Nonfinancial Intangible Assets (Except Copyrighted Works)
Key Dates:
1984: John Schnatter and partner Bob Ehringer begin selling pizza out of a converted broom closet of Mick's Lounge in Jeffersonville, Indiana.
1985: Schnatter opens the first Papa John's restaurant in a retail space next to the bar.
1986: Franchising of Papa John's begins.
1989: Company headquarters are shifted to Louisville, Kentucky.
1993: Papa John's goes public, raising about $12 million through an initial public offering (IPO).
1996: The thousandth Papa John's is opened.
1998: International expansion begins with opening of units in Mexico and Puerto Rico.
1999: Company opens the 2,000th Papa John's restaurant; the U.K. pizza chain Perfect Pizza Holdings, Ltd. is acquired; Papa John's moves into third place among U.S. pizza chains.
2005: Nigel Travis is hired as president and CEO, with Schnatter remaining chairman.
Name Age Since Current Position
Schnatter, John 49 2011 Chairman of the Board, Chief Executive Officer
Tucker, Lance 42 2011 Chief Financial Officer, Senior Vice President, Treasurer
Thompson, Anthony 44 2010 Executive Vice President, North American Operations and President of PJ Food Service
Varga, Andrew 45 2009 Senior Vice President, Chief Marketing Officer
Sternberg, Christopher 45 2009 Senior Vice President - Corporate Communications, General Counsel
Calhoun, Annette 48 2011 Senior Vice President - Human Resources
O'Hern, Timothy 47 2009 Senior Vice President - Development
Sterrett, Thomas 50 2010 Senior Vice President - International
Cole, Norborne 69 2007 Lead Independent Director
Oney, Wade 49 2000 Director
Kirtley, Olivia 60 2003 Independent Director
Guarascio, Philip 69 2003 Independent Director
Street, William 72 2003 Independent Director
Shapiro, Mark 41 2011 Independent Director
Address:
2002 Papa John's Boulevard
P.O. Box 99900
Louisville, Kentucky 40299-2334
U.S.A.
Internationally, there are over 3,300 Papa John's establishments, including over 2,600 in the U.S. and more than 500 in over 30 other countries.
Papa John's International, Inc. ranks as the third largest pizza chain in the United States, trailing only Pizza Hut (a division of YUM! Brands, Inc.) and Domino's, Inc. The company has built a chain of more than 2,800 pizza delivery and carry-out restaurants operating under the trademark "Papa John's" in 49 states, the District of Columbia, and 20 international markets. Approximately 570 of the outlets are company owned, with the remainder being franchised. The firm also franchises about 115 Perfect Pizza restaurants in the United Kingdom. After the opening of its first store in 1985, Papa John's grew rapidly through the late 1990s before settling in as a more mature company in the following decade. In a highly competitive segment of the restaurant industry, Papa John's has managed to carve out a highly profitable niche by offering a very limited menu consisting of pizza, breadsticks, cheese sticks, chicken strips, chicken wings, and canned or bottled soft drinks; and by using high-quality ingredients and touting them in its trademark slogan "Better Ingredients. Better Pizza." Company founder John Schnatter continues to hold about a 29 percent stake in the company.
Papa John’s International, Inc. (Papa John’s) operates and franchises pizza delivery and carryout restaurants and, in certain international markets, dine-in and restaurant-based delivery restaurants under the trademark Papa John’s. At December 26, 2010, there were 3,646 Papa John’s restaurants in operation, consisting of 612 Company-owned and 3,034 franchised restaurants operating domestically in all 50 states, the District of Columbia and Puerto Rico and in 32 countries. As of December 26, 2010, the Company had 775 Papa John's restaurants operating in 32 countries for its international operations. Papa John’s has six segments: domestic restaurants, domestic commissaries (Quality Control Centers), domestic franchising, international operations, variable interest entities (VIE) and all other business units. Domestic Papa John’s restaurants offers a menu of pizza along with side items, including breadsticks, cheese sticks, chicken strips and wings, dessert items and canned or bottled beverages. Its traditional crust pizza offers a container of its garlic sauce and a pepperoncini pepper.
The domestic restaurant segment consists of the operations of all domestic (domestic is defined as contiguous United States) Company-owned restaurants and derives its revenues principally from retail sales of pizza and side items. The domestic commissary segment consists of the operations of its regional dough production and product distribution centers and derives its revenues principally from the sale and distribution of food and paper products to domestic Company-owned and franchised restaurants. The domestic franchising segment consists of its franchise sales and support activities and derives its revenues from sales of franchise and development rights and collection of royalties from its domestic franchisees.
The international operations segment principally consists of its Company-owned restaurants and distribution sales to franchised Papa John’s restaurants located in the United Kingdom, Mexico and China, and its franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from its international franchisees. VIEs consist of entities, in which the Company is the primary beneficiary, and include consolidation of BIBP Commodities, Inc. (BIBP). All other business units that do not meet the quantitative thresholds for determining reportable segments consist of operations that derive revenues from the sale, principally to Company-owned and franchised restaurants, of printing and promotional items, risk management services, and information systems and related services used in restaurant operations and certain partnership development activities.
The Company’s domestic QC Centers, consisting of nine full-service regional production and distribution centers and one distribution-only center, supply pizza dough, food products, paper products, smallwares and cleaning supplies twice weekly to each restaurant. Its full-service QC Centers are located in Louisville, Kentucky; Dallas, Texas; Pittsburgh, Pennsylvania; Orlando, Florida; Raleigh, North Carolina; Denver, Colorado; Portland, Oregon; Des Moines, Iowa, and Phoenix, Arizona. The Company also operates a distribution-only center in Cranbury, New Jersey. The full-service QC Centers produce pizza dough in addition to providing other food and paper products used in its restaurants. Other international full-service QC Centers are licensed to franchisees and non-franchisee third parties, and are generally located in the markets where its franchisees have restaurants. PJ Food Service, Inc. (PJFS) is its wholly owned subsidiary that operates its domestic Company-owned QC Centers.
As of December 26, 2010, the Company opened 2,871 domestic units. Of the total 2,871 domestic units open, 591 or 21% were Company-owned (including 127 units owned in joint venture arrangements with franchisees, in which the Company has a majority ownership position). During the fiscal year ended December 26, 2010 (fiscal 2010), a total of 325 Papa John’s restaurants were opened, consisting of 13 Company-owned (five domestic and eight international) and 312 franchised restaurants (169 domestic and 143 international), while 148 Papa John’s restaurants closed during fiscal 2010, consisting of four Company-owned restaurants (two domestic and two international) and 144 franchised restaurants (82 domestic and 62 international). The 82 domestic franchise closings included the closure of 13 non-traditional event-based units. The international franchise closings included the closure of all 25 units in Saudi Arabia in connection with a franchisee restructuring.
In the early 2000s Papa John's considerably slowed down its expansion as it focused more on improving profitability in an environment highlighted by ongoing price competition, a slowing economy, and high cheese costs. The company began closing underperforming units in 2001, countering the more limited store openings. In 2003, for instance, 103 Papa John's restaurants were opened but 105 were shuttered. Growth was targeted to the West and Northeast. Looking for an edge in an increasingly competitive sector of the restaurant industry, Papa John's made another rare addition to the menu in September 2002 with the rollout of Papa's Chickenstrips, made from all-white-meat, boneless, breaded chicken. The company also began introducing specialty pizzas. On the overseas front, Papa John's entered China in 2003, its 14th international market, and it also converted 60 Perfect Pizza restaurants in the United Kingdom to the Papa John's format, reducing the Perfect Pizza chain to 135 locations.
Corporate revenues fell in both 2002 and 2003, dropping from $971.2 million to $917.4 million over that period. Net income fell from $47.2 million to $33.6 million during the same time span. This stagnation continued in 2004 when Papa John's announced plans to shutter about 120 more stores. Late in the year the company cut 70 positions across its corporate staff in order to reduce annual expenses by about $2.3 million. Around this same time, Papa's Wings chicken wings were added to the menu. For the year, systemwide sales increased just 0.1 percent. Five more international markets were entered during 2004: Russia, Trinidad, Peru, Bahrain, and Oman.
In a potential signal of a new era at the company, Papa John's hired Nigel Travis as president and CEO, replacing Schnatter, who remained chairman. Travis had served as president and COO of the Blockbuster Inc. video store chain from 2001 to 2004. A British national, Travis had an earlier five-year stint at Burger King Corporation, serving in various leadership positions for the fast-food company, which at the time was owned by the U.K. firm Grand Metropolitan plc. With sales for 2005 expected to remain stagnant or increase no more than 2 percent, Papa John's kept its expansion plans in check, anticipating opening 80 to 100 domestic units while closing a similar number. International operations were expected to grow by as many as 50 net units. It was clear that Papa John's had entered a much slower growth phase in its evolution, and that it had become nearly impossible for the company to reach a goal that Schnatter had set in the heady days of the late 1990s: overtaking Pizza Hut--thereby becoming the number one pizza chain--within ten years.
Principal Subsidiaries: Papa John's USA, Inc.; PJ Food Service, Inc.; PJFS of Mississippi, Inc.; Papa John's Support Services, Inc.; Risk Services Corp.; Capital Delivery, Ltd.; RSC Insurance Services Ltd. (Bermuda); Colonel's Limited, LLC; Papa John's (U.K.) Ltd.; Perfect Pizza Ltd. (U.K.); Perfect Pizza Holdings, Ltd. (U.K.).
Principal Competitors: Pizza Hut; Domino's, Inc.; Little Caesar Enterprises, Inc.
OVERALL
Beta: 0.58
Market Cap (Mil.): $843.02
Shares Outstanding (Mil.): 25.75
Annual Dividend: --
Yield (%): --
FINANCIALS
PZZA.OQ Industry Sector
P/E (TTM): 16.59 25.08 19.29
EPS (TTM): -3.34 -- --
ROI: 22.11 4.01 1.61
ROE: 25.09 6.05 2.45
Statistics:
Public Company
Incorporated: 1993
Employees: 14,610
Sales: $917.4 million (2003)
Stock Exchanges: NASDAQ
Ticker Symbol: PZZA
NAIC: 722211 Limited-Service Restaurants; 533110 Lessors of Nonfinancial Intangible Assets (Except Copyrighted Works)
Key Dates:
1984: John Schnatter and partner Bob Ehringer begin selling pizza out of a converted broom closet of Mick's Lounge in Jeffersonville, Indiana.
1985: Schnatter opens the first Papa John's restaurant in a retail space next to the bar.
1986: Franchising of Papa John's begins.
1989: Company headquarters are shifted to Louisville, Kentucky.
1993: Papa John's goes public, raising about $12 million through an initial public offering (IPO).
1996: The thousandth Papa John's is opened.
1998: International expansion begins with opening of units in Mexico and Puerto Rico.
1999: Company opens the 2,000th Papa John's restaurant; the U.K. pizza chain Perfect Pizza Holdings, Ltd. is acquired; Papa John's moves into third place among U.S. pizza chains.
2005: Nigel Travis is hired as president and CEO, with Schnatter remaining chairman.
Name Age Since Current Position
Schnatter, John 49 2011 Chairman of the Board, Chief Executive Officer
Tucker, Lance 42 2011 Chief Financial Officer, Senior Vice President, Treasurer
Thompson, Anthony 44 2010 Executive Vice President, North American Operations and President of PJ Food Service
Varga, Andrew 45 2009 Senior Vice President, Chief Marketing Officer
Sternberg, Christopher 45 2009 Senior Vice President - Corporate Communications, General Counsel
Calhoun, Annette 48 2011 Senior Vice President - Human Resources
O'Hern, Timothy 47 2009 Senior Vice President - Development
Sterrett, Thomas 50 2010 Senior Vice President - International
Cole, Norborne 69 2007 Lead Independent Director
Oney, Wade 49 2000 Director
Kirtley, Olivia 60 2003 Independent Director
Guarascio, Philip 69 2003 Independent Director
Street, William 72 2003 Independent Director
Shapiro, Mark 41 2011 Independent Director
Address:
2002 Papa John's Boulevard
P.O. Box 99900
Louisville, Kentucky 40299-2334
U.S.A.
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