Papa John's turns in strong domestic and international Q2

Aug. 1, 2012 | by Alicia Kelso
Papa John's turns in strong domestic and international Q2

Papa John's International Inc. today announced financial results for the second quarter ended June 24, including systemwide comparable sales growth of 5.7 for North America and 6.1 percent for international.

Other highlights include:

  • 40 worldwide net unit openings during the quarter; 90 have opened year-to-date;
  • 2012 earnings guidance raised to a range of $2.45 to $2.55; comparable sales guidance raised for both North America (updated guidance range of +2 percent to +3%) and International (updated guidance range of +4.0 percent to +5.5 percent);
  • Q2 2012 revenues were $318.6 million, an 8.5 percent increase from Q2 2011 revenues of $293.5 million;
  • Q2 2012 net income was $14.8 million compared to Q2 2011 net income of $12.1 million;
  • For the six months ended June 24, revenues were up 7.2 percent to $649.9 from the same period last year;
  • For the six month period, net income was $31.5 million, compared to $28.6 million for the same period last year.

"We had an outstanding second quarter as our system continued its strong sales momentum with significant comparable sales increases for our North American and International operations," said John Schnatter, Papa John's founder, chairman, and CEO.

Schnatter said the company has maintained this momentum – with positive or flat comps every quarter since since 2003 – by consistently delivering on the "Better Ingredients, Better Pizza" brand promise.

"We are also pleased that for the 11th time in 13 years, we earned the highest rating in the limited service restaurant category of the American Customer Satisfaction Index (ACSI) and highest rating ever by an individual brand," Schnatter said. "We also earned the highest score regarding product, service quality and customer loyalty for the pizza business. The ACSI win comes on heels being named brand of year in the 2012 Harris Poll EquiTrend Study."

International momentum

Global restaurant sales jumped 9.8 percent in the quarter, compared to 5.6 percent from the same period last year. This is compared to a 6.1 percent increase in systemwide North American units.

At June 24, there were 3,973 Papa John's restaurants operating in all 50 states and in 33 countries.

"Our 2012 development incentive plan has been well received by current and potential franchisees and we're on the doorstep of store 4,000 worldwide, with about 1,500 more in pipeline, the majority of which are scheduled to open in the next six years," Schnatter said.

"We are focused on international, we are dedicated to international," he added. "We have not seen a situation internationally where we have not been successful. The globe is a big place and we have a big job. The possibility of 10,000 is out there."

Two other topics briefly touched upon during the earnings call were the impact the Affordable Care Act will have on the company and the recent promotions of three executive team members.

Schnatter estimates that the Health Care Act, set to go into effect in 2014, will cost the company about 11 to 14 cents per pizza or 15 to 20 cents per order.

He also said the objective of this week's three promotions was to make sure Papa John's has a strong leadership team in place for the future.

"My number one job is to make sure we have a strong and deep succession plan. I'm not going anywhere, I love what I do, but I've got to give this next level the responsibility to run it just as well as I can," Schnatter said. "The only way to let people get better is to let them run the business. Great companies have a great bench and that's what we're doing."

Read more about operations management.

Topics: Business Strategy and Profitability, Franchising & Growth, Operations Management, Papa John's

Alicia Kelso
Alicia has been a professional journalist for 15 years. Her work with, and has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, and Franchise Asia magazine. View Alicia Kelso's profile on LinkedIn

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