Papa John’s International (NASDAQ:PZZA) executives outlined what they described as a broad transformation effort in 2025, while acknowledging mixed near-term performance and a cautious consumer environment heading into 2026. On the company’s fourth-quarter and full-year 2025 earnings call, leadership highlighted improvements in brand health, loyalty engagement, technology capabilities, and cost reduction initiatives, alongside plans to optimize the North America restaurant portfolio through refranchising and closures.
Management highlights transformation progress and demand trends
CEO Todd Penegor said 2025 included improvements across brand health, technology, innovation, customer experience, the restaurant fleet, and the company’s cost structure. He pointed to better value and quality perception and said the company’s loyalty base increased engagement, noting Papa Dough redemptions rose to 48% at the end of 2025 from 24% the prior year.
Internationally, Penegor said the company delivered 6% comparable sales growth in the quarter and has posted five consecutive quarters of positive comparable sales. He highlighted 7% comparable sales growth in the U.K. and strength in the Middle East, Asia Pacific, and Europe.
Value strategy and innovation pipeline: Pan Pizza, sandwiches, and sides
Penegor emphasized value initiatives including a 50% carryout offer in November, the $9.99 Create Your Own Pizza, and Papa Pairings. He said value perception scores improved mid-single digits versus last year despite aggressive competitive promotions. He added that the company is “significantly evolving” promotional intensity across third-party aggregators.
On innovation, Penegor said Papa John’s launched a new Pan Pizza platform at the end of January, describing it as an effort to fill a “menu gap.” He said early Pan Pizza mix is above expectations and that the company plans to expand Pan Pizza into priority international markets in the coming months.
He also discussed additional product and menu initiatives in development or testing, including:
- Oven-toasted sandwiches being tested in North America, with plans to begin testing in select international markets; management said test results show increased sales of non-pizza items.
- Expanded focus on side items at accessible price points to support ticket and Four-Wall margins; management cited early results from crispy coated chicken tenders and new dipping sauces in the U.K.
- A pilot of a protein crust pizza using protein-infused dough; management said customer feedback was “highly positive,” though it remains in early development.
- A forthcoming single-serving pizza tied to a brand partnership; management said details will be shared later.
Technology, loyalty, and local marketing co-ops
Penegor said the company launched new omni-channel iOS and Android apps early in the fourth quarter, consolidating onto a single modern code base. He said the updated app is delivering “strong early results,” including response times nearly 40% faster and a 70-basis-point improvement in conversion versus legacy platforms.
The company also announced a partnership with PAR Technology to migrate U.S. restaurant operations from a legacy system to PAR POS over the next two years. Penegor said the effort is intended to consolidate inventory management, make line operations, and AI-powered labor and inventory tools onto one platform and enable real-time insights, using existing hardware to minimize implementation expense.
Penegor and CFO Ravi Thanawala also discussed continued work with Google Cloud, including plans in the second quarter to launch advanced voice and group ordering and frictionless reordering for Papa Rewards members. Penegor said these tools are intended to simplify ordering and reduce cart abandonment.
On loyalty, management said Papa Rewards connects the company with nearly 41 million members. Thanawala said loyalty members placed 2.5 times more orders than non-rewards members in 2025.
Penegor also said the company reestablished advertising co-ops across 50 U.S. markets, with nearly half of North American system-wide sales supported by a co-op.
Portfolio optimization: closures, refranchising, and cost reduction plans
Thanawala, who also assumed the role of President of North America, said the company completed a strategic review of its restaurant fleet and identified approximately 300 underperforming restaurants across North America. He said most are franchise-owned, more than a decade old, produce average unit volumes (AUVs) below $600,000, and are “mostly operating at negative Four-Wall EBITDA.” The company expects to close the majority by the end of 2027, with about 200 closures in 2026. Management said these closures are expected to increase AUVs by at least 3%.
The company also is accelerating refranchising. Penegor said Papa John’s expects to reduce company-owned restaurants to a mid-single-digit percentage of the North America system. In November, the company refranchised 85 restaurants. Thanawala said the company is negotiating the refranchising of 29 additional restaurants in the Southeast and expects to finalize that transaction in the second quarter; he said it is expected to reduce 2026 consolidated revenues by about $9 million and increase adjusted EBITDA by about $1 million.
On costs, Penegor reiterated a plan for at least $60 million of North America system-wide supply chain cost savings, with $20 million to $25 million expected by the end of 2026. He also said the company identified at least $25 million of non-customer-facing corporate cost savings through 2027, with about $13 million expected in 2026. Thanawala said the company reduced its corporate workforce by about 7%.
Fourth-quarter results and 2026 guidance
Thanawala said global system-wide restaurant sales in the fourth quarter were $1.23 billion, down 1% in constant currency, as higher international comparable sales were offset by lower North America comparable sales. North America comparable sales decreased 5% in the quarter, driven by a 5.5% decrease in transaction comps. He said carryout grew 1% but was more than offset by declines in total delivery. In response to a question, the company said third-party delivery grew low single digits on a dollar basis in the quarter, while the decline came from first-party delivery.
Total consolidated revenue was $498 million, down 6%. Thanawala attributed the decline primarily to lower revenue at domestic company-owned restaurants (including the impact from refranchising 85 restaurants), North America Commissary, and lower advertising fund revenue, partially offset by higher international revenue.
Consolidated adjusted EBITDA in the fourth quarter decreased to $51 million, which management said reflected marketing investments and subsidies of about $8 million and about $2 million of higher management incentive compensation, partially offset by lower cost of sales tied to refranchising and commodity deflation. For full-year 2025, Thanawala said consolidated adjusted EBITDA was $201 million, including $21 million of incremental marketing investments.
For 2026, management guided for global system-wide sales ranging from flat to a low single-digit decline. The company expects North America comparable sales to decline 2% to 4% and international comparable sales to increase 2% to 4%. Thanawala said quarter-to-date comparable sales were down mid-single digits and that the company expects the first quarter to be the softest, with improvement anticipated in the second half driven by innovation, co-ops, and a new aggregator marketing strategy.
Papa John’s guided to 2026 consolidated adjusted EBITDA of $200 million to $210 million and said it expects to invest about $22 million in supplemental marketing and franchisee subsidies in 2026. The company also provided outlook items including net interest expense of $35 million to $40 million, adjusted depreciation and amortization of $70 million to $75 million, and capital expenditures of $70 million to $80 million.
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.
