Papa John’s: Another Update on Response to Covid-19

Louisville / KY. (pj) Papa John’s International Inc., one of the world’s largest pizza delivery companies, provided an additional update on the ongoing business impact of the global coronavirus (Covid-19) pandemic, including preliminary estimated comparable sales information for the June month and second quarter fiscal periods. In light of the uncertainty and volatility related to the pandemic, the company has continued to provide this information on a monthly basis.

Rob Lynch, President + CEO said, «In June Papa John’s delivered a third consecutive month of double-digit sales growth in North America and strong growth internationally. Continued strong results reflect both the hard work of our team members and local franchisees, as well as the trust that we have earned from millions of customers who have relied on us to deliver high-quality pizza and other food throughout the pandemic.

«The events of the past few months have accelerated Papa John’s transformation into an innovation-driven organization, contributing to our strong business momentum today. This focus on innovation has enabled initiatives like ‘No Contact Delivery’ and Papadias, as well as an exciting pipeline of upcoming products. In addition, our work to create a more diverse and inclusive culture has helped us to become an employer of choice for over 20,000 new team members during the pandemic. Lastly, Papa John’s outperformance has allowed us to increase our investments through the Papa John’s Foundation into great non-profit organizations that serve our communities. While we still have much work to do, we are building the kind of company that is positioned for outstanding performance in the future.»

Preliminary Estimated Comparable Sales for June 2020 Fiscal Period and Second Quarter

Preliminary estimated comparable sales information for the five weeks ended June 28, 2020 (Period 6 of the fiscal year), and for the fiscal quarter ended June 28, 2020, relative to the same periods in the prior year are as follows:

Period 6 Second Quarter
Five weeks ended June 28, 2020 Three months ended June 28, 2020
Comparable sales growth (a)
Domestic company-owned restaurants 18.5% 22.6%
North America franchised restaurants 26.3% 29.6%
System-wide North America restaurants 24.4% 28.0%
System-wide international restaurants (b) 6.0% 5.3%
(a) Represents the change in year-over-year sales for the same base of restaurants for the same fiscal periods. Comparable sales results for restaurants operating outside of the United States are reported on a constant-dollar basis, which excludes the impact of foreign currency translation.
(b) Includes the impact of temporarily closed stores. Excluding those stores, comparable sales growth for system-wide international restaurants would have been approximately 12 percent in Period 6, and 13 percent in the Second Quarter.


Update on Temporary Restaurant Closures as a Result of Covid-19

Of the company’s approximately 2,100 international franchised stores, the number temporarily closed has declined to approximately 225, principally in Europe and Latin America, in accordance with government policies. Some international markets are open predominantly for delivery only, such as in the United Kingdom. In North America, almost all traditional restaurants remain open and fully operational. A number of non-traditional restaurants located in universities and stadiums are temporarily closed; these non-traditional locations are not material to the company’s revenues and operating results.

About Comparable Sales

The Company believes North America and international comparable sales growth information, as defined in the table above, is useful in analyzing its results since franchisees pay royalties and marketing fund contributions that are based on a percentage of franchise sales. Franchise sales also generate commissary revenue in the United States and in certain international markets. Franchise restaurant and comparable sales growth information is also useful for comparison to industry trends and evaluating the strength of our brand. Management believes the presentation of franchise restaurant sales growth, excluding the impact of foreign currency, provides investors with useful information regarding underlying sales trends and the impact of new unit growth without being impacted by swings in the external factor of foreign currency. Franchise restaurant sales are not included in the company’s revenues.