Papa John's net openings hit 10-year high

Papa John's International Inc. reported results for the fourth quarter and fiscal year ended Dec. 25, 2011, which included a 5.2 percent comparable sales jump, boosted by international growth.

Fourth quarter North American comps were up 1.7 percent. For the entire year, North American sales were up 3.4 percent, while international turned in a positive 5.1 percent.

Additionally, fourth quarter revenues jumped 6.8 percent from Q4 2010, to $306.2 million. The company's profits were $16 million in Q4, compared to $14 million during the same quarter in 2010.

Full year fiscal 2011 revenues were $1.22 billion, an 8.1 percent increase from full year fiscal 2010 revenues of $1.13 billion. Full year fiscal 2011 net income was $55.7 million, compared to full year fiscal 2010 net income of $51.9.

Revenue increases were primarily due to sales increases, North American franchise royalty increases and domestic commissary sales. International revenues grew as the brand's global footprint grew.

Notably, however, Papa John's positive results were partially offset because of higher commodity prices, primarily cheese.

"Papa John's had an exceptional fourth quarter and full year 2011. We achieved the highest net openings in 10 years and delivered our eighth consecutive year for even or positive comparable sales growth. Our brand remains resilient even in the face of what continues to be a challenging competitive and cost environment," said John Schnatter, Papa John's founder, chairman and CEO.

Global restaurant units, Q&A

After achieving its highest net openings in a decade, Papa John's system now includes more than 3,880 restaurants operating in all 50 states and 33 countries. This number includes 130 net new openings in the fourth quarter worldwide, and 237 net new units for the year.

Papa John's development pipeline as of the end of 2011 included approximately 1,550 restaurants (350 units in North America and 1,200 units internationally), the majority of which are scheduled to open over the next six years.

Internationally, the company expects to obtain profitability in 2012, according to its earnings call, which was held earlier today.

Papa John's executives evaded specifics, but they did touch upon the company's marketing efforts and online business. The brand's message highlighted quality throughout 2011, which allowed the company to command a bit higher price point than some of its biggest competitors, Schnatter said.

"We believe this commitment continues to resonate with the consumer. Quality always pays off in the long run, and it's gratifying to see consumers recognize better ingredients does mean a better product," he said.

Also of note from the earnings call, Andrew Varga, Papa John's CMO, said the company's recent Coin Toss Super Bowl promotion, and NFL partnership, provided a boon in online ordering, enrollment in Papa Rewards and visibility and awareness with new and existing customers. Specific results from the promotion won't be available until the first quarter earnings are posted.

Lance Tucker, Papa John's CFO, added that online orders for the company overall are north of 30 percent and that number is continuing to grow.

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