Papa John’s International, Inc. has released its financial results for the first quarter of 2025, revealing a mixed performance that has sparked interest among investors and analysts alike. The company reported total revenues of $518.3 million, marking a 1% increase from the previous year, and global system-wide restaurant sales of $1.22 billion, also up 1% year-over-year. However, the results were overshadowed by a decline in North America comparable sales, which fell by 3% overall, with domestic company-owned restaurants down 5% and North America franchised restaurants down 2%.
Despite the challenges in its core market, Papa John’s opened 47 new restaurants worldwide, including 18 in North America and 29 in international markets. The company’s international comparable sales showed resilience, rising by 3% compared to the prior year quarter. This expansion comes as part of Papa John’s strategic focus on growth and innovation, which CEO Todd Penegor emphasized during the earnings call.
“We are pleased with our continued progress in the first quarter to advance our transformation as we execute against our five key priorities,” Penegor stated. He noted that the company’s strategic investments in marketing and technology are driving early momentum, with customers responding positively to enhanced digital and loyalty experiences.
However, the net income for the quarter was $9 million, a significant decrease from $15 million in the same period last year. Adjusted EBITDA also fell to $50 million from $61 million, reflecting increased general and administrative expenses linked to marketing and loyalty investments. The diluted earnings per share (EPS) were reported at $0.27, down from $0.44 a year earlier, while adjusted diluted EPS was $0.36, compared to $0.67 last year.
Despite these figures, Papa John’s stock rose by 3.6% in premarket trading following the earnings announcement, reflecting investor optimism about the company's future. The stock has been under pressure, declining by 38.21% over the past six months, but its current valuation suggests potential upside, according to analysts.
The company continues to maintain a robust dividend policy, having paid out $15.2 million in cash dividends during the first quarter, equivalent to $0.46 per common share. On May 1, 2025, the Board of Directors declared a second quarter dividend of the same amount, payable on May 30, 2025, to stockholders of record as of May 19, 2025.
Looking ahead, Papa John’s has reiterated its guidance for 2025, expecting system-wide sales to increase by 2% to 5%, with North America comparable sales projected to be flat to up 2%. The company plans to open between 85 to 115 new restaurants in North America and 180 to 200 internationally. Adjusted EBITDA is forecasted to be between $200 million and $220 million.
Analysts noted that while the company exceeded revenue expectations, the EPS miss indicates ongoing challenges in balancing growth with profitability. The focus on product innovation and operational improvements is seen as crucial in addressing these challenges.
During the earnings call, CFO Ravi Thanawala expressed confidence in the company’s strategy, stating, "We are confident that we have the strategy in place to accelerate sales throughout the year." He emphasized the importance of maintaining a competitive edge in a challenging market environment.
Management highlighted the success of its loyalty program, which has added approximately 1 million new members in the first quarter, bringing the total to over 37 million. The company has also implemented a lower redemption threshold for rewards, which has resulted in increased customer engagement, despite a slight decline in overall order ticket size.
Papa John’s is also focusing on enhancing its technology infrastructure, with over 70% of sales made through its digital channels. The partnership with Google Cloud aims to improve customer engagement and streamline the ordering process, leveraging AI to personalize the customer experience.
As the company navigates a competitive landscape, it is also addressing challenges such as consumer confidence, inflationary pressures, and supply chain optimization. The management team remains focused on improving the customer experience and driving transaction growth, particularly in key promotional periods.
In summary, while Papa John’s faces headwinds in its North American market, its international operations and strategic initiatives provide a foundation for future growth. The company’s commitment to innovation, marketing, and customer engagement positions it well to adapt to changing market dynamics and consumer preferences.
With a clear roadmap for 2025 and beyond, Papa John’s aims to enhance its market share and deliver value for shareholders amidst ongoing challenges in the quick-service restaurant sector.
