Nov. 16, 2004
LOUISVILLE, Ky. — In an attempt to offset stagnant unit growth and record commodities costs, Papa John's is eliminating 70 positions from its corporate payroll in the fourth quarter.
This is the second round of corporate layoffs in two months.
According to a news release, the streamlining measure will reduce staff by approximately 13 percent. The move will cost the company $750,000 in severance payments in Q4, but it expects it will save $2.3 million over the course of 2005. Additionally, much of the expected savings is earmarked for reinvestment in store-level, margin-boosting initiatives.
"We appreciate the contribution these team members have made to our organization," said Papa John's founder and CEO John Schnatter. "While we are never pleased about making staff reductions, we are committed to making Papa John's as streamlined as possible while still giving our restaurants the support needed to deliver a superior-quality product and customer experience."
The company blamed brutal competition in the pizza category for revenue shortfalls and flat unit growth. Historically high costs for cheese, meats, linerboard, fuel and utilities costs have compounded profit woes, the release said.
The company expects its stock will be impacted slightly by the severance payouts, reducing per-share earnings in the fourth quarter by about 3 cents.
Currently there are 2,808 Papa John's stores (567 company-owned and 2,241 franchised) operating in 49 states and 18 international markets. Papa John's also franchises an additional 121 Perfect Pizza units in the U.K.
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