Food & Beverage

Papa John's 'Shaq-sized' Q2 tramples predictions

Papa John's fare has apparently been filling a lot of customers' pandemic-weary hearts and stomachs over the past few months, as relayed in the company's stellar second-quarter financial results.

Papa John's Shaq-a-roni pizza, honoring brand spokesman, Shaquille Oneal, is one of the menu innovations credited with the brand's solid Q2. (Photo: File/provided)

August 6, 2020

Although analysts expected Papa John's to report a solid second-quarter performance — Zacks Consensus estimated a nearly 43% year-over-year earnings gain — no one predicted the 220% earnings gain that the chain posted Thursday morning. The Louisville, Kentucky-based company reported a net income of 48 cents per share, exceeding the 40 cents that Zacks had estimated.

"Faced with an unprecedented global challenge but guided by our values and purpose, Papa John's achieved record sales in the second quarter. …" Rob Lynch, Papa John's president and CEO, said in a company press release. "This was possible because of the dedication and hard work of our team members and local franchisees, as well as our work to create a more diverse, inclusive and innovative culture.

"Helping drive growth, our innovation pipeline continues firing on all cylinders with the launch of our hugely popular new Shaq-a-Roni pizza, which has generated over $2 million in charitable contributions that will go toward building the communities we serve."

Other key Q2 and half-year 2020 Papa John's highlights included:

• Second quarter sales grew 15% to $460.6 million.
• International comp sales up 5.3%, or 13.3% excluding pandemic-related temporary closures.
• 15.3% growth in consolidated revenues, which increased $61 million over Q2 2019.
• $4.3 million increase in North America franchising, primarily due to higher comparable sales of 29.7%.
• 65-cent diluted EPS for the six months that ended June 28, compared to 3 cents the previous year's period.
• 9.1% year-over-year increase in consolidated revenues for the first half of 2020.

Lynch said Papa John's forward momentum allowed it to bring on more than 20,000 employees in the second quarter, and it will add 10,000 during the third quarter.

Finally, the company said that as of the first quarter this year, the financial assistance it provided franchisees (beginning Q3 2018 after sales declines following problems with the brand's founder), are continuing through Q3. The company will provide approximately $12 to $15 million of temporary franchise support, of which the majority is expected to be marketing fund investments. The temporary franchise support will conclude in the third quarter of 2020, the company said.