News

Papa John’s sets operational guidance for 2011

December 20, 2010

Papa John's International Inc. has announced its projections for 2011, including a 16 percent increase in earnings per share and a global systemwide sales increase of 25 percent to 30 percent.

The 2011 estimate does not include the impact of the chain's franchisee-owned cheese purchasing company, BIBP Commodities Inc.

The projections highlighted include:

• 2011 earnings per share of $2.00 to $2.12, an increase of more than 16 percent as compared to the 2010 earnings range of $1.74 to $1.80 per share at the mid-point;
• The company will retire the BIBP deficit at 2010 year-end, projected to be approximately $14 million, as part of a multi-year National Marketing Fund agreement with franchisees;
• Projected 2011 North America systemwide same-store sales increase ranging from 1.5 to 2.5 percent;
• Projected 2011 International comps increases ranging from 1 to 3 percent and International total systemwide sales increase ranging from 25 to 30 percent.
• Projected 2011 worldwide net unit openings ranging from 190 to 220 (85 to 100 net openings for North America and 105 to 120 net openings for International);
• The 2011 guidance includes a scheduled increase in the domestic royalty rate from 4.75 to 5.0 percent, effective at the beginning of 2011.

The company also is realigning management responsibility for Hawaii, Alaska and Canada from International to the domestic operations team in order to better leverage existing infrastructure and systems. The realignment is expected to shift approximately $1.4 million of operating income from the International business segment to the North America Franchising business segment in 2011.

Significant 2011 operational assumptions

Total consolidated revenues are expected to increase 4 percent to 5 percent in 2011, due primarily to projected North America and International net unit and comparable sales growth, an increase in the domestic royalty rate and anticipated commodity cost increases.

Meanwhile, capital expenditures are expected to be approximately $35 to $40 million, which includes $6 million to $8 million for re-image costs at company-owned restaurants in connection with a domestic systemwide re-image program. Additionally, approximately $6 million to $7 million is related to new company-owned unit development in the U.S. and Beijing. The remainder of the capital expenditures is expected to consist of routine capital replacement and certain technology-related projects.

Papa John's will host its 2011 annual meeting of stockholders April 28, 2011, at the company's corporate offices in Louisville, Ky.