“First and foremost, we need to make sure we are living up to our brand promise of better ingredients, better pizza in everything we do,” Penegore, president and CEO of Papa John’s International (PZZA) , said during the chain’s fourth-quarter-earnings call last month.
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Penegore told analysts that 2024 was a year of transformation and realignment throughout the world’s third-largest pizza delivery company.
“We navigated a dynamic operating and competitive environment, while setting in motion near-term strategic priorities,” he said. “We’re encouraged by the progress and momentum we’re seeing as we enter 2025.”
Penegore called Q4 consistent with the Louisville, Ky., company’s expectations. Comparable sales, those from outlets open at least a year, improved over Q3.
The Papa John’s restaurant at 343 Grand Street, Manhattan, on Sunday, Feb. 25, 2024. The CEO is pleased with the company’s progress after a realignment.Shelby Knowles-Bloomberg via Getty Images
“While we recognize we still have work to do, we see many opportunities ahead to drive the business forward,” he said.
Penegore and company are in a tough sector: Restaurant consultants Aaron Allen & Associates note that “the $160 billion-plus global pizza industry is not for the faint of heart.”
“The U.S. pizza industry is among the most saturated in the world with one pizzeria for every [5.100] people,” the consultant said.
“That’s not slowing down chains with hustle, though,” it added. “In fact, the fast movers are cannibalizing others with a ferocity that should be cause for alarm for those not investing in the arms race that is shaping up.”
Domino’s (DPZ) is feeling the burn as its largest franchisee, Domino’s Pizza Enterprises, said in February that it would close 205 low-performing locations, including 172 in Japan. Other pizza chains have also shuttered locations.
In addition, the Trump administration’s tariff plans are making life difficult for fast-food chains.
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Half of U.S. adults are likely to cut back their spending at fast-food restaurants if tariffs lead to higher prices, according to a survey by CivicScience.
Penegore said Papa John’s emphasized amplifying its marketing message.
“Pizza is a game played nationally but won locally,” Penegore said. “And when we effectively reach the local consumer, especially in a value-focused environment, we win.”
Earlier this month Papa John’s introduced its “Meet the Makers” campaign, which is dedicated to highlighting its team members and the quality of its ingredients. The company also plans to make additional investments in its Papa Dough loyalty program.
“In 2025, we believe the greatest impact from our investments will come from driving increased frequency and shrinking the number of days it takes for future visits to occur by delivering personalized brand experiences that matter to our customers,” Penegore said.
Papa John’s beat Wall Street’s fourth-quarter earnings and revenue expectations, but the pizza chain’s comparable sales in the U.S. declined roughly 4% year over year during the quarter.
Same-store, or comparable, sales excluded new store openings or closures. They are an important metric for evaluating a business, since they help investors and managers understand whether growth is coming from existing locations or new ones.
“For analysts, same-store sales for retail companies often holds as much importance as the revenue and earnings numbers,” according to the Corporate Finance Institute.
Papa John’s expects North America comparable sales to be flat to up 2% in 2025. Through the first eight weeks of 2025, North America comparable sales were trending down 3% from the year-earlier period. That’s roughly 1.3 percentage points better than the trend from the fourth quarter.
“Looking ahead, we are confident on our path forward,” Penegore said. “We know Papa John’s has what it takes to be the best pizza makers across [quick service restaurants], deliver the experiences that customers crave, all while growing restaurant profitability and generating sustainable shareholder value over the long term.”
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Stifel analyst Chris O’Cull addressed same-store sales in his March 26 note to investors. The analyst lowered his price target on Papa John’s to $40 from $45 and kept a hold rating on the shares.
The firm updated its model to reflect the company’s new segment reporting and also reduced its projection for first-quarter comparable sales. Recent checks indicated domestic same-restaurant sales trends remain soft, O’Cull said.
BMO Capital lowered the investment firm’s price target on Papa John’s to $60 from $63 while affirming an outperform rating on the shares.
The company’s earnings exceeded the analyst consensus, largely reflecting favorable supply-chain profit, but the management also provided 2025 guidance below consensus for unit growth and earnings before interest, taxes, depreciation and amortization.
While its comparable-sales outlook met expectations, BMO sees risk in a challenging competitive and consumer backdrop, the firm said.
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