Papa Johns plans to open 52 restaurants in the next five years across greater Philadelphia, Baltimore and Washington, D.C., through a franchisee as the global pizza chain reduces its percentage of corporate ownership.
Papa John's International, a chain that does business as Papa Johns and calls itself the world's third-largest pizza delivery company, said another franchisee took ownership of 85 of its shops around the mid-Atlantic region. The chain, based in Atlanta, Georgia, and Louisville, Kentucky, has about 6,000 restaurants in roughly 50 countries and territories.
Pie Investments, the owner that assumed control of the 85 restaurants from a joint venture run by a longtime franchise partner who is retiring, is now one of the largest domestic franchisees of the pizza delivery company.
In terms of the upcoming new restaurants, an estimated 33 are expected for Philly and another 19 for D.C. and Baltimore, a spokesperson for Papa Johns told CoStar News via email.
The moves come after Papa Johns President and CEO Todd Penegor said its total pizza sales had stagnated.
"We are navigating weaker consumer sentiment and a more promotional QSR marketplace, particularly in North America, resulting in mixed third-quarter performance," Penegor said during the company's third-quarter earnings call last month. "Global comparable sales were flat for the third quarter, while North America comparable sales decreased 2.7%."
Papa Johns plans to "accelerate our domestic refranchising program over the next two years" to increase its operational efficiency, Penegor also said. "In terms of scale, we expect to reduce our company restaurant ownership to a mid-single-digit percent of the North American system."
Refranchising with "well-capitalized, growing franchisees strengthens the long-term health of the Papa Johns system and unlocks future growth opportunities," said Penegor.
The chain's top executive added that there would be a combination of scaling up existing well-capitalized franchisees as well as working with others outside the Papa Johns network.
Last month, private equity giant Apollo Global Management withdrew a $2.1 billion offer to take Papa Johns private, according to a Reuters report. Penegor said during the earnings call, seemingly in reference to the report, that Papa Johns' management is open-minded about finding the right path to maximize shareholder value and would fully consider available alternatives to its current strategy.