Papa John's International Q1 Earnings Call Highlights

Key Points

• International sales were a bright spot, with comparable sales up 3.6% in Q1 and six straight quarters of growth. Gains in the U.K., Middle East, and Asia Pacific helped offset weakness elsewhere.
• North America remained under pressure as comparable sales fell mid-single digits due to lower transactions and softer new-customer acquisition. Papa John’s said it is leaning on value offers, loyalty growth, and menu changes to improve traffic.
• The turnaround plan is focused on product innovation and margin improvement, including new items like Pan Pizza, Oven-Toasted Sandwiches, and Cheesy Garlic Bread, plus technology upgrades, supply chain savings, and store closures. The company reiterated its 2026 outlook and expects consolidated adjusted EBITDA of $200 million to $210 million.

Papa John's International NASDAQ: PZZA executives said the pizza chain is continuing a broad transformation plan as it navigates softer North American demand, a promotional quick-service restaurant environment and a more cautious consumer.

On the company’s first-quarter 2026 earnings call, President and Chief Executive Officer Todd Penegor said Papa John’s is taking a “disciplined approach” that extends beyond price, focusing on customer value, restaurant-level margins, fleet improvement and franchisee support.

“While transformation work is neither linear nor instant, we are confident that the progress we are making in Papa John's transformation, combined with the strength of our brand and quality of our pizza, will fuel profitable growth and value creation over the long term,” Penegor said.

International sales remain a bright spot

Papa John’s international business delivered comparable sales growth of 3.6% in the first quarter, marking six consecutive quarters of positive comparable sales, according to Penegor. The company cited gains in Europe, the Middle East and Asia Pacific.

• Comparable sales in the U.K. rose 11%, accelerating from 7% in the fourth quarter, helped by operational execution, improved customer experience and higher media investment.
• Comparable sales in the Middle East increased 9%, driven by transaction growth.
• Asia Pacific comparable sales increased 5%, supported by strength in Korea, product innovation, partnerships and holiday demand.

Chief Financial Officer and President of North America Ravi Thanawala said international comparable sales grew 4% overall and that focus markets continued to outperform through new menu offerings, aggregator expansion, and improved brand and marketing performance.

North America pressured by lower transactions

North America comparable sales declined in the mid-single digits, which Penegor said was primarily driven by declining orders and lower new customer acquisition. Thanawala later said North American comparable sales were down 6.4% in the quarter, with check “effectively flat” and the sales pressure coming from transactions.

Thanawala said transaction losses were concentrated in orders containing only one pizza or no pizzas, while the company continued to see growth in multi-pizza orders. Penegor said pizza volumes were flat year over year when excluding two weeks affected by severe weather, and pies per order increased 5% versus last year. Weather had an impact of just under 40 basis points for the quarter, Thanawala said.

Penegor said Papa John’s added nearly 1 million loyalty members in the quarter and is approaching 42 million loyalty members overall. He said loyalty customers generate 5% higher ticket per order and order twice as often as non-loyalty members. Frequent and super-frequent customers together make up about 30% of the company’s customer base.

Still, Penegor said the company saw a mix shift toward smaller, non-specialty pizzas and lower sales of sides and desserts. He said Papa John’s is responding with value offers such as Buy One Pizza, Get One Free, a $9.99 three-topping offer and Papa Pairings.

New products and marketing are central to the turnaround plan

Papa John’s executives highlighted several product launches intended to attract new customers, improve mix and increase add-on sales. Penegor said the company introduced Pan Pizza at the end of January, calling it a “critical menu gap” and noting strong repurchase rates since launch. He said the company plans to expand Pan Pizza into several priority international markets.

The company also launched Oven-Toasted Sandwiches at the end of March, entering a new category. Penegor said the sandwiches are included in the Papa Pairings value offer and are already exceeding sales of Papadias without complicating restaurant make lines. He said restaurant teams responded positively to the removal of Papadias and Papa Bites, which he described during the question-and-answer session as “rhythm breakers” in restaurants.

Papa John’s introduced Cheesy Garlic Bread in April, using the same ciabatta bread as its sandwiches, and plans to sell its garlic sauce through 7,500 retail distribution points, including Walmart, Kroger, Albertsons and Safeway, beginning this summer.

The company also announced a global collaboration tied to the theatrical release of “Toy Story 5” on June 19. Penegor said the activation includes product innovation, custom packaging, an animated spot from Pixar Animation Studios, international collectibles at participating restaurants, an in-app game for Papa Rewards members and a lineup of personal pizzas. He said the company believes an 8-inch individual pizza could become a new innovation platform at a compelling price point.

Papa John’s has also reinstated advertising co-ops across the U.S. Penegor said 50% of the U.S. restaurant system is now supported by local co-ops across more than 50 markets, which he said should improve local targeting and relevance over time.

Technology, supply chain and store closures aimed at margins

Executives said Papa John’s is investing in technology to reduce friction in ordering and improve operations. Penegor said to-the-door delivery tracking is now a brand standard across the U.S. system. The company is also working with Google Cloud on digital ordering tools, including voice and group ordering, and has begun piloting a new PAR point-of-sale system.

Thanawala said improving four-wall profitability remains a core pillar of the company’s transformation. Papa John’s expects at least 200 basis points of store-level profitability improvement over the medium term through supply chain productivity, labor optimization, market optimization, coaching and incentives for franchisees. Penegor said the company captured $7 million of North American supply chain benefits in the first quarter and is on track to realize at least $25 million this year.

The company closed 44 of 300 identified North American locations in the first quarter. Thanawala said those locations are primarily older franchise units with average unit volumes below $600,000 and predominantly negative EBITDA. He said early results showed strong sales transfer to neighboring restaurants.

Revenue falls, guidance reiterated

Papa John’s reported global system-wide restaurant sales of $1.2 billion in the first quarter, down 3% in constant currency, as international gains were more than offset by North American weakness. Consolidated revenue was $479 million, down 8%.

Thanawala said domestic company-owned revenue declined by $31 million, primarily due to the refranchising of 85 corporate restaurants in the fourth quarter of 2025 and lower comparable sales. North America commissary revenue fell $18 million, mainly due to food cost deflation, partially offset by higher pricing. International revenue increased $4 million.

Consolidated adjusted EBITDA decreased $2 million to about $48 million. Domestic company-owned restaurants delivered four-wall EBITDA of $16.6 million and a four-wall margin of 11.9%, up 140 basis points.

The company reiterated its 2026 outlook. It expects global system-wide sales to range from flat to low-single-digit declines, North America comparable sales to decline 2% to 4%, and international comparable sales to increase 2% to 4%. Papa John’s also continues to expect consolidated adjusted EBITDA of $200 million to $210 million.

Thanawala said April North American comparable sales were trending slightly worse than the first quarter on a year-over-year basis but consistent with the first quarter on a three-year stack. He said the company expects sequential top-line improvement in the second half, supported by product innovation, marketing co-op activations, brand collaborations and an aggregator marketing strategy.

Papa John’s ended the quarter with total available liquidity of about $498 million and a covenant leverage ratio of 3.3 times. The company expects to open 40 to 50 gross new restaurants in North America in 2026 and 180 to 220 gross new international restaurants, while still expecting 200 North American closures.

About Papa John's International NASDAQ: PZZA

Papa John's International, Inc is a leading American pizza restaurant chain known for its focus on high-quality ingredients and consistent product offerings. Founded in 1984 by John Schnatter in Jeffersonville, Indiana, the company has grown to operate thousands of restaurants across the United States and in more than 40 international markets. Papa John's restaurants are primarily franchised, supported by a network of corporate-owned outlets that together drive brand standards, operational guidance and marketing efforts.

The core menu at Papa John's centers on a variety of hand-tossed and pan pizzas made with a signature stone-baked crust and topped with real cheese, vine-ripened tomato sauce and premium meats and vegetables.

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