10q10k10q10k.net

What changed in PAPA JOHNS INTERNATIONAL INC's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of PAPA JOHNS INTERNATIONAL INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+399 added−435 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-29)

Top changes in PAPA JOHNS INTERNATIONAL INC's 2024 10-K

399 paragraphs added · 435 removed · 310 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

56 edited+10 added−31 removed29 unchanged
Biggest changeWe have implemented initiatives to diversify our workforce and leadership pipeline by recruiting, developing and supporting talent who represent our customers and communities, to embed policies and practices that ensure fairness, build trust and hold ourselves accountable, and to instill and reward behaviors across the organization that foster belonging and increase employee engagement, including required unconscious bias training for team members, and annual Diversity, Equity, and Inclusion (“DEI”) training for all team members, grant-making through the Papa John’s Foundation to national and local nonprofit partners for advancing DEI, our annual Week of Service and our eight global inclusion resource groups with leaders engaging across the organization. 7 Table of Contents Talent Attraction, Retention and Development Our ability to attract and retain hourly employees in our restaurants has become more challenging, especially as the job market has become more competitive.
Biggest changeWe embed policies and practices that ensure fairness and build trust, and encourage behaviors across the organization that foster belonging and increase employee engagement, including grant-making through the Papa John’s Foundation to national and local nonprofit partners, hosting our annual Week of Service and leveraging our global inclusion resource groups with leaders engaging across the organization.
Item 1. Business General Papa John’s International, Inc., a Delaware corporation (referred to as the “Company,” “Papa John’s,” “Papa Johns” or in the first person notations of “we,” “us” and “our”), operates and franchises pizza delivery and carryout restaurants and, in certain international markets, dine-in and delivery restaurants under the trademark “Papa Johns.” Papa John’s began operations in 1984.
Item 1. Business General Papa John’s International, Inc., a Delaware corporation (referred to as the “Company,” “Papa John’s,” “Papa Johns” or in the first person notations of “we,” “us” and “our”), operates and franchises pizza delivery and carryout restaurants and, in certain international markets, dine-in and delivery restaurants under the trademark “Papa Johns.” Papa Johns began operations in 1984.
In addition, to further support our team members’ development, we established our Dough & Degrees program, which allows our team members to earn a college degree for free or at a reduced tuition in partnership with Purdue University Global and the University of Maryland Global Campus, among others.
In addition, to further support our team members’ development, we established our Dough & Degrees program in 2019, which allows our team members to earn a college degree for free or at a reduced tuition in partnership with Purdue University Global and the University of Maryland Global Campus, among others.
We believe demand from international consumers will continue to increase as the demand for pizza delivery and carryout continues. We continue to execute on our growth strategy and expand throughout the world. With respect to the sale of franchises, we compete with many franchisors of restaurants and other business concepts.
We believe demand from international consumers will continue to increase as the demand for pizza delivery and carryout continues. We continue to execute on our growth strategy and expand throughout the world. 7 With respect to the sale of franchises, we compete with many franchisors of restaurants and other business concepts.
Each Domestic franchisee is required to purchase pizza sauce and dough from our Domestic QC Centers, and purchases substantially all other food products from our QC Centers. We also have one QC Center in Canada that produces and distributes fresh dough, which provides further support to our North American franchisees.
Each Domestic franchisee is required to purchase pizza sauce and dough from our Domestic QC Centers, and purchases substantially all other food products from our QC Centers. We also have one QC Center in Canada that produces and distributes fresh dough and provides further support to our North American franchisees.
In certain cases, development agreements may be negotiated at other-than-standard terms for fees and royalties, and we may offer various development and royalty incentives. Franchise Operations. All franchisees are required to operate their Papa John’s restaurants in compliance with our policies, standards and specifications, including matters such as menu items, ingredients, and restaurant design.
In certain cases, development agreements may be negotiated at other-than-standard terms for fees and royalties, and we may offer various development and royalty incentives. Franchise Operations. All franchisees are required to operate their Papa Johns restaurants in compliance with our policies, standards and specifications, including matters such as menu items, ingredients, and restaurant design.
PJMF produces and buys air time for Papa John’s national television commercials and advertises the Company’s products through digital media including banner advertising, paid search-engine advertising, mobile marketing, social media advertising and marketing, text messaging, and email. PJMF also engages in other brand-building activities, such as consumer research and public relations activities.
PJMF produces and buys air time for Papa Johns national television commercials and advertises the Company’s products through digital media including banner advertising, paid search-engine advertising, mobile marketing, social media advertising and marketing, text messaging, and email. PJMF also engages in other brand-building activities, such as consumer research and public relations activities.
For more information, see “Item 1A—Risk Factors—Industry and Macroeconomic Risks—Our profitability may suffer as a result of intense competition in the QSR Pizza industry.” Internationally, the pizza delivery model is not as mature as that of the Domestic market and presents a growth opportunity for Papa John’s.
For more information, see “Item 1A—Risk Factors—Industry and Macroeconomic Risks—Our profitability may suffer as a result of intense competition in the QSR Pizza industry.” Internationally, the pizza delivery model is not as mature as that of the Domestic market and presents a growth opportunity for Papa Johns.
Across our restaurants, QC Centers and corporate hubs, Papa Johns team members are valued for their contributions, treated equitably, encouraged to share their feedback and ideas, provided the tools needed to ensure their safety and total wellness and given ample opportunities to grow in their careers.
Across our restaurants, QC Centers and corporate hubs, Papa Johns team members are valued for their contributions, treated fairly, encouraged to share their feedback and ideas, provided the tools needed to ensure their safety and total wellness and given ample opportunities to grow in their careers.
In our International segment, we operate one International QC Center in the UK and other International QC Centers are operated by franchisees pursuant to license agreements or by other third parties. We depend on a sole source for our supply of garlic sauce and we source other key ingredients, including meat products, from a limited number of suppliers.
In our International segment, we operate one International QC Center in the United Kingdom and other International QC Centers are operated by franchisees pursuant to license agreements or by other third parties. We depend on a sole source for our supply of garlic sauce and we source other key ingredients, including meat products, from a limited number of suppliers.
The International segment also consists of distribution sales to Papa John’s restaurants located in the UK and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our International franchisees.
The International segment also consists of distribution sales to Papa Johns restaurants located in the UK and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our International franchisees.
Additional Information All of our periodic and current reports filed with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), are available, free of charge, through our website located at www.papajohns.com.
Additional Information All of our periodic and current reports filed with the SEC pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), are available, free of charge, through our website located at www.papajohns.com.
There is also active competition for management personnel, drivers and hourly team members, and attractive commercial real estate sites suitable for Papa John’s restaurants.
There is also active competition for management personnel, drivers and hourly team members, and attractive commercial real estate sites suitable for Papa Johns restaurants.
All others All other business units that do not meet the quantitative thresholds for determining reportable segments, which are not operating segments, are referred to as “all others.” These consist of operations that derive revenues from franchise contributions to our marketing funds and the sale, principally to Company-owned and franchised restaurants, of information systems and related services used in restaurant operations, including our point-of-sale system, online and other technology-based ordering platforms, and printing and promotional items.
All other All other business units that do not meet the quantitative or qualitative thresholds for determining reportable segments, which are not operating segments, are referred to as “all other.” These consist of operations that derive revenues from franchise contributions to our marketing funds and the sale, principally to Company-owned and franchised restaurants, of information systems and related services used in restaurant operations, including our point-of-sale system, online and other technology-based ordering platforms.
Our current standard franchise agreement requires the franchisee to pay a royalty fee of 5% of sales, and the majority of our existing franchised restaurants have a 5% contractual royalty rate in effect. Incentives offered from time to time to franchisees may reduce the contractual royalty rate paid.
Our current standard franchise agreement requires the franchisee to pay a royalty fee of 5% of sales, net of certain taxes and refunds, and the majority of our existing franchised restaurants have a 5% contractual royalty rate in effect. Incentives offered from time to time to franchisees may reduce the contractual royalty rate paid.
Some of our competitors have been in existence for substantially longer periods than Papa John’s, have substantially greater resources than Papa John’s and can have higher levels of restaurant penetration and stronger, more developed brand 8 Table of Contents awareness in markets where we compete. Competition from delivery aggregators and other food delivery concepts also continues to increase.
Some of our competitors have been in existence for substantially longer periods than Papa Johns, have substantially greater resources than Papa Johns and can have higher levels of restaurant penetration and stronger, more developed brand awareness in markets where we compete. Competition from delivery aggregators and other food delivery concepts also continues to increase.
The laws of several states also regulate substantive aspects of the franchisor-franchisee relationship. The FTC requires us to furnish to prospective franchisees a franchise disclosure document containing prescribed information.
The FTC requires us to furnish to prospective franchisees a franchise disclosure document containing prescribed information. Many states also regulate substantive aspects of the franchisor-franchisee relationship.
During 2023, we had no material environmental compliance-related capital expenditures, and no such material expenditures are anticipated in 2024.
During 2024, we had no material environmental compliance-related capital expenditures, and no such material expenditures are anticipated in 2025.
We have co-developed Domestic markets with some franchisees or divided markets among franchisees and will continue to use market co-development in the future, where 5 Table of Contents appropriate. Our Domestic Company-owned markets are comprised of strong performing restaurants and make them attractive locations either as Company-owned or franchised.
We have co-developed Domestic markets with some franchisees or divided markets among franchisees and will continue to use market co-development in the future, where appropriate. Our Domestic Company-owned markets are comprised of strong performing restaurants making them attractive locations either as Company-owned or franchised.
We also make available to our team members several benefits designed to promote an inclusive workplace like paid parental leave, adoption support, and health plans that are available to dependents, spouses, and domestic partners. We offer eligible team members a 401(k) plan, with a competitive Company matching component to encourage retirement savings.
We also make available to our team members several benefits like paid parental leave, adoption support, and health plans that are available to dependents, spouses, and domestic partners. We offer eligible team members a 401(k) plan, with a competitive Company matching component to encourage retirement savings.
As such, we are committed to providing competitive pay and benefits to attract and retain talent, whether in our Domestic Company-owned restaurants, in our supply chain centers or in our corporate offices. We pay competitive wages to our front line team members in our Domestic Company-owned restaurants. Papa John’s offers a comprehensive benefits package to eligible team members.
As such, we are committed to providing competitive pay and benefits to attract and retain talent, whether in our Domestic Company-owned restaurants, in our supply chain centers or in our restaurant support centers. We pay competitive wages to our front line team members in our Domestic Company-owned restaurants. Papa Johns offers a comprehensive benefits package to eligible team members.
Diversity, Equity and Inclusion At Papa Johns, we welcome a wide array of voices to our table. A diverse, inclusive environment is essential to attracting the talent that makes Papa Johns the world’s best pizza delivery company. As such, we welcome all entrepreneurial spirits, innovators and pizza lovers.
Culture At Papa Johns, we welcome a wide array of voices to our table. An inclusive environment is essential to attracting the talent that makes Papa Johns the world’s best pizza delivery company. As such, we welcome all entrepreneurial spirits, innovators and pizza lovers.
However, many state franchise laws limit our ability as a franchisor to terminate or refuse to renew a franchise. International Development and Franchise Agreements. In international markets, we have either a development agreement or a master franchise agreement with a franchisee for the opening of a specified number of restaurants within a defined period of time and specified geographic area.
However, many state franchise laws limit our ability as a franchisor to terminate or refuse to renew a franchise. International Development Agreements. In international markets, we generally enter into a development agreement with master franchise rights for the opening of a specified number of restaurants within a defined period of time and specified geographic area.
Beyond basic insurance programs, Papa John’s offers wellness services to help team members manage and optimize their health and well-being. These no-cost programs include smoking cessation, diabetes and hypertension management, weight management, and mental health support through Papa John’s employee assistance program for all part-time and full-time team members and their dependents.
In addition, Papa Johns offers wellness services to help team members manage and optimize their health and well-being. These no-cost programs include smoking cessation, diabetes and hypertension management, weight management, and mental health support through the Papa Johns employee assistance program for all part-time and full-time team members and their dependents.
Loans made to franchisees can bear interest at fixed or floating rates and in most cases are secured by the fixtures, equipment and signage of the restaurant and/or are guaranteed by the franchise owners. At December 31, 2023 , net loans outstanding totaled $17.5 million . S ee “Note 2.
Loans made to franchisees can bear interest at fixed or floating rates and in most cases are secured by the fixtures, equipment and signage of the restaurant and/or are guaranteed by the franchise owners. At December 29, 2024 , net loans outstanding totaled $13.8 million . S ee “Note 2.
Domestic Company-owned and franchised Papa John’s restaurants are required to contribute a certain minimum percentage of sales to PJMF. In international markets, our marketing focuses on reaching customers who live or work within a small radius of a Papa John’s restaurant.
Domestic Company-owned and franchised Papa Johns restaurants are required to contribute a certain percentage of sales to PJMF. In international markets, our marketing focuses on reaching customers who live or work within a trading area of a Papa Johns restaurant.
The legal and regulatory landscape for privacy and data protection continues to evolve, and there has been an increase in attention given to privacy and data protection issues with the potential to impact our business.
Privacy and Data Protection We are subject to privacy and data protection laws and regulations globally. The legal and regulatory landscape for privacy and data protection continues to evolve, and there has been an increase in attention given to privacy and data protection issues with the potential to impact our business.
Our franchisees are independent business owners, so their employees are not our employees and therefore are not included in our employee count. We estimate the total number of persons in the Papa John’s system, including our team members, franchisees and the team members of franchisees, was approximately 107,000 as of December 31, 2023 .
Our franchisees are independent business owners, so their employees are not our employees and therefore are not included in our employee count. We estimate the total number of persons in the Papa Johns system, including our team members, franchisees and the team members of franchisees, was approximately 104,000 as of December 29, 2024 .
Papa John’s also makes available the “Papa Cares” program that provides corporate office team members an onsite health clinic that provides a wide range of primary care services for adults, adolescents and children.
Papa Johns also makes available the “Papa Cares” program that provides restaurant support center team members an onsite health clinic that provides a wide range of primary care services for adults, adolescents and children.
As of December 31, 2023, we employed approximately 13,200 persons, of whom approximately 10,600 were team members at Company-owned restaurants, approximately 700 were management personnel at Company-owned restaurants, approximately 700 were corporate personnel and approximately 1,200 were QC Center team members. Our team members are non-unionized, and most restaurant team members work part-time and are paid on an hourly basis.
As of December 29, 2024, we employed approximately 11,400 persons, of whom approximately 8,800 were team members at Company-owned restaurants, approximately 700 were management personnel at Company-owned restaurants, approximately 700 were corporate personnel and approximately 1,200 were QC Center team members. Our team members are non-unionized, and most restaurant team members work part-time and are paid on an hourly basis.
National, state and local government regulations or initiatives, including health care legislation, “living wage,” or other current or proposed regulations, and increases in minimum wage rates affect Papa John’s as well as others within the restaurant industry.
National, state and local government regulations or initiatives, including health care legislation, “living wage,” or other current or proposed regulations, and increases in minimum wage rates affect Papa John’s as well as others within the restaurant industry. We are also subject to applicable laws in each international jurisdiction in which we operate.
State laws that regulate the franchisor-franchisee relationship presently exist in a significant number of states, and bills have been introduced in Congress from time to time that would provide for federal regulation of the U.S. franchisor-franchisee relationship in certain respects if such bills were enacted.
State laws governing the franchisor-franchisee relationship presently exist in a significant number of states, and bills have been, and may in the future, be introduced in Congress that, if enacted, would provide for federal regulation certain aspects of the U.S. franchisor-franchisee relationship.
To meet job candidates where they live, and gain a deeper understanding of their personal, educational and professional goals, we sponsor and attend job fairs, scholarship programs and university and professional organization events and offer our team members hiring and referral bonuses. Our recruiting strategy aims to diversify the candidate pool for all manager level and above positions.
To meet job candidates where they live, and gain a deeper understanding of their personal, educational and 6 professional goals, we sponsor and attend job fairs, scholarship programs and university and professional organization events and offer our team members hiring and referral bonuses.
For international markets with sub-franchise agreements, the effective sub-franchise royalty received by the Company is generally 3% of sales and the master franchisee generally receives a royalty of 2% of sales. The remaining terms applicable to the operation of individual restaurants are substantially equivalent to the terms of our Domestic franchise agreement.
For international agreements with master franchise rights, the master franchisee generally sets its own sub-franchise royalty but the sub-franchise royalty received by the Company is generally 3% of sales, net of certain taxes and refunds. The remaining terms applicable to the operation of individual restaurants are substantially equivalent to the terms of our Domestic franchise agreement.
These sales, while not included in the Company’s revenues, contribute to our royalty revenues, franchisee marketing fund contributions, and commissary revenue. 4 Table of Contents North America commissary The North America commissary segment comprises 11 full-service regional dough production and distribution centers (Quality Control Centers, or “QC Centers”) in the United States, which supply pizza sauce, dough, food products, paper products, smallwares and cleaning supplies twice weekly to each traditional restaurant served.
North America commissary The North America commissary segment comprises 11 full-service regional dough production and distribution centers (Quality Control Centers, or “QC Centers”) in the United States, which supply pizza sauce, dough, food products, paper products, smallwares and cleaning supplies twice weekly to each traditional restaurant served.
This includes recently enacted laws and regulations in the United States and in other countries which require notification to individuals and government authorities of breaches involving certain categories of personal information.
This includes recently enacted Securities and Exchange Commission (“SEC”) regulations and existing breach notification laws and regulations in the United States and in other countries which require notification to individuals and government authorities of breaches involving certain categories of personal information. We also expect more states in the United States to enact data privacy laws and regulations in the future.
Our QC Centers and restaurant operations undergo annual safety audits, as well as random safety checks by regional safety managers and field safety coordinators. Industry and Competition The United States Quick Service Restaurant pizza (“QSR Pizza”) industry is mature and highly competitive with respect to price, service, location, food quality, customer loyalty programs and product innovation.
Our QC Centers and restaurant operations are evaluated through comprehensive annual risk assessments, as well as unannounced inspections conducted by our corporate safety and security teams. Industry and Competition The United States Quick Service Restaurant pizza (“QSR Pizza”) industry is mature and highly competitive with respect to price, service, location, food quality, customer loyalty programs and product innovation.
At December 31, 2023, there were 5,906 Papa John’s restaurants in operation, consisting of 648 Company-owned and 5,258 franchised restaurants operating in 50 countries and territories. Our Company-owned restaurants include 98 restaurants operated under three joint venture arrangements.
At December 29, 2024, there were 6,030 Papa Johns restaurants in operation, consisting of 552 Company-owned and 5,478 franchised restaurants operating in 51 countries and territories. Our Company-owned restaurants include 98 restaurants operated under three joint venture arrangements.
As of December 31, 2023, there were 2,473 International restaurants, comprised of 117 Company-owned restaurants in the UK and 2,356 franchised restaurants. The Company currently operates one International QC Center in the UK.
As of December 29, 2024, there were 2,516 International restaurants, comprised of 13 Company-owned restaurants in the United Kingdom and 2,503 franchised restaurants. The Company currently operates one International QC Center in the UK.
Significant Accounting Policies” of “ Notes to Consolidated Financial Statements ” for additional information. 6 Table of Contents Marketing Programs Our Domestic marketing strategy consists of national advertising via television, print, direct mail, digital, mobile marketing and social media channels.
Significant Accounting Policies” of “ Notes to Consolidated Financial Statements ” for additional information. 5 Marketing Programs Our Domestic marketing strategy consists of national advertising via television, print, direct mail, digital, mobile marketing and social media channels. Our digital marketing activities have increased significantly over the past several years in response to increasing customer use of online and mobile technology.
North America franchising The North America franchising segment consists of our franchise sales and support activities and derives its revenues from the sale of franchise and development rights and the collection of royalties from our franchisees located in the United States and Canada.
Operating Company-owned restaurants allows us to improve operations, training, marketing and quality standards for the benefit of the entire Papa Johns system. 3 North America franchising The North America franchising segment consists of our franchise sales and support activities and derives its revenues from the sale of franchise and development rights and the collection of royalties from our franchisees located in the United States and Canada.
Any changes in privacy and data protection laws or regulations could also adversely impact the way we use e-mail, text messages and other marketing techniques and could require changes in our marketing strategies. We have a privacy policy posted on our website at www.papajohns.com.
Any changes in privacy and data protection laws or regulations could also adversely impact the way we use e-mail, text messages and other marketing techniques and could require changes to our marketing strategies. The security of our 8 financial data, customer information and other personal information is a priority for us.
PJMF is a consolidated nonstock corporation, designed to operate at break-even for the purpose of designing and administering advertising and promotional programs for all participating Domestic restaurants.
The domestic marketing efforts are supported by media, print, digital and electronic advertising materials that are produced by Papa John’s Marketing Fund, Inc. (“PJMF”), our national marketing fund. PJMF is a consolidated nonstock corporation, designed to operate at break-even for the purpose of designing and administering advertising and promotional programs for all participating Domestic restaurants.
Segment Information ” of “Notes to Consolidated Financial Statements” for financial information about our segments.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Note 23. Segment Information ” of “Notes to Consolidated Financial Statements” for financial information about our segments.
Our North American franchised restaurants, which included 2,519 restaurants in the full year’s comparable base for 2023, generated average annual unit sales of $1.2 million.
Our North American franchised restaurants, which included 2,541 restaurants in the full year’s comparable base for 2024, generated average annual unit sales of $1.1 million. These sales, while not included in the Company’s revenues, contribute to our royalty revenues, franchisee marketing fund contributions, and commissary revenue.
Of the total 3,433 North American restaurants open as of December 31, 2023, 531 units, or approximately 15% , were Company-owned. In 2023, the 512 Domestic Company-owned restaurants included in the full year’s comparable restaurant base generated average annual unit sales of $1.4 million.
In 2024, the 520 Domestic Company-owned restaurants included in the full year’s comparable restaurant base generated average annual unit sales of $1.3 million.
Domestic Company-owned and franchised Papa John’s restaurants within a defined market may, but are not required to, join an area advertising cooperative (“Co-op”). Each member restaurant contributes a percentage of sales to the Co-op for market-wide programs, such as television, radio, digital and print advertising, and sports sponsorships.
Local advertising, such as television, radio, print, direct mail, restaurant-to-door flyers, digital, mobile marketing and local social media channels is currently optional for franchisees. Domestic Company-owned and franchised Papa Johns restaurants within a defined market may, but are not required to, join an area advertising cooperative (“Co-op”).
Under a master franchise agreement, the franchisee has the right to sub-franchise a portion of the development to one or more sub-franchisees approved by us. Our current standard international master franchise and development agreements provide for payment to us of a royalty fee of 5% of sales.
Under a development agreement with master franchise rights, the franchisee has the right to sub-franchise a portion of the development to one or more sub-franchisees approved by us. A unit license agreement is generally executed once a franchisee secures a location.
The security of our financial data, customer information and other personal information is a priority for us. Trademarks, Copyrights and Domain Names We protect our intellectual property through a combination of patents, copyrights, trademarks and trade secrets, foreign intellectual property laws, confidentiality agreements and other contractual provisions.
We have a privacy policy posted on our website at www.papajohns.com. Information on our website is not incorporated by reference herein and is not a part of this Form 10-K. Trademarks, Copyrights and Domain Names We protect our intellectual property through a combination of patents, copyrights, trademarks and trade secrets, foreign intellectual property laws, confidentiality agreements and other contractual provisions.
Similarly to our Domestic Company-owned restaurant growth strategy, our International strategy has shown to build higher consumer awareness, increased market share, and improved operational efficiencies. In the second and third quarters of 2023, we acquired 118 formerly-franchised restaurants in the UK as Company-owned restaurants.
Similar to our Domestic Company-owned restaurant growth strategy, our International strategy has shown to build higher consumer awareness, increased market share, and improved operational efficiencies. Franchise Program We continue to attract qualified and experienced franchisees, whom we consider to be a vital part of our system’s continued growth.
Creating an inclusive and diverse culture that supports and values team members is important to attracting and retaining talented, dedicated employees.
Talent Attraction, Retention and Development Creating a culture of connectedness and belonging that supports and values team members is important to attracting and retaining talented, dedicated employees and bringing more innovative thinking and better ideas and solutions to our business.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us, at www.sec.gov. The references to these website addresses do not constitute incorporation by reference of the information contained on the websites, which should not be considered part of this document.
The references to our website addresses do not constitute incorporation by reference of the information contained on the websites, which should not be considered part of this Form 10-K.
Workplace Health and Safety As part of the Company’s enterprise-wide safety management system, we invest in training, technology and people to protect both our customers and team members. All Papa John’s team members, from those at our corporate offices to those working in our warehouses and restaurants, receive annual safety training based on the requirements of their roles.
Workplace Health and Safety As part of the Company’s enterprise-wide safety and security management system, we are committed to strategically investing in advanced training, technology and people to ensure the highest level of protection for our customers and team members.
The rate of contribution and uses of the monies collected are determined by a majority vote of the Co-op’s members. The national marketing efforts are supported by media, print, digital and electronic advertising materials that are produced by Papa John’s Marketing Fund, Inc. (“PJMF”), our national marketing fund.
Each member restaurant contributes a percentage of sales to the Co-op for market-wide programs, such as television, radio, digital and print advertising, and sports sponsorships. The rate of contribution and uses of the monies collected are determined by a majority vote of the Co-op’s members.
Domestic Company-owned Restaurants The Domestic Company-owned restaurant segment consists of the operations of all Domestic Company-owned restaurants and derives its revenues principally from retail sales of pizza, Papadias, and side items, including breadsticks, Papa Bites, cheesesticks, boneless chicken wings and bone-in chicken wings, dessert items and canned or bottled beverages.
Domestic Company-owned Restaurants The Domestic Company-owned restaurant segment consists of the operations of all Domestic Company-owned restaurants and derives its revenues principally from retail sales of pizza and other food and beverage products. Of the total 3,514 North American restaurants open as of December 29, 2024, 539 units, or approximately 15% , were Company-owned.
See “Recent Business Matters” in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Segment Overview Papa John’s has four defined reportable segments: Domestic Company-owned restaurants, North America franchising, North America commissaries (Quality Control Centers), and International.
Partnering with and evolving our franchisee base to be growth oriented – focusing on increasing our market share through strategic new restaurant development in priority markets. Segment Overview Papa Johns has four defined reportable segments: Domestic Company-owned restaurants, North America franchising, North America commissaries (Quality Control Centers), and International.
Removed
Papa John’s is driven by five strategic priorities: Build a culture of leaders who believe in diversity, inclusivity and winning. A diverse, inclusive environment is essential to attracting the talent that makes Papa Johns the world’s best pizza delivery company. See the “Human Capital” section below where we discuss our ongoing initiatives in this area.
Added
As Papa Johns transforms its business to accelerate profitable growth in its restaurant system, it is focused on the following strategic priorities: Focusing on our core product proposition and improving innovation across the barbell. Traditional, superior-quality pizza is the foundation of our success. Consumers know us for BETTER INGREDIENTS.
Removed
Re-establish the superiority of our pizza via commercial platforms. We believe that using high quality ingredients leads to superior quality pizzas. Our original crust pizza dough is made from six simple ingredients and is fresh, never frozen. We also top our pizzas with our signature pizza sauce made with vine-ripened tomatoes, real cheese and meat full of flavor, not filler.
Added
BETTER PIZZA. and we need to deliver on this promise consistently, every day, to every customer, across every restaurant. Amplifying our marketing message to drive customer consideration and call to action across target segments by emphasizing quality and value.
Removed
Our marketing and menu strategies focus on craveable products that provide both value and variety to our customers, drive sales and importantly, do not add significant complexity to our restaurant operations or to supply chain needs. We continue to make purposeful additions to our menu, ensuring these additions are well-timed for our growth, without sacrificing our premium quality.
Added
Our approach will leverage our individualized knowledge of our customers and vast consumer data to create more personalized offers, differentiate our brand through creativity and disruption and will include incremental investments to reach a wider audience through traditional and digital advertising, ensuring a strong presence in key regional and local markets.
Removed
This deliberate strategy focuses on innovation that adds value to our system rather than short-term discounts, contributing to more productive ticket growth and, most importantly, higher customer satisfaction.
Added
Investing in our technology to enable commercial and operational efficiency through improvements to the end-to-end digital customer experience, and our customer relationship management platform. With most of our sales occurring through digital channels, we believe these investments will improve conversion and reduce friction within our customer experience.
Removed
We believe in the importance of providing options that appeal to our customers’ diverse dietary needs and preferences, and our nutritionists and food innovation teams are continuously looking for ways to reflect this in our menu. Our product innovations form the foundation of our strategy for growing comparable sales and improving unit economics.
Added
Differentiating our customer experience to meet and exceed the convenience, value and quality expectations of the customer in every channel. By simplifying our processes, optimizing our menu, and employing technology, our teams will be set up to be the best pizza makers in the business while ensuring a frictionless experience to drive purchase and build loyalty.
Removed
Improve unit-level profitability and performance of our Company and franchisee restaurants . We continue to take proactive steps to drive profitable growth through targeted strategies. This includes growing ticket and transactions through menu innovations, customer insights, media efficiency, strategic pricing actions and development incentives.
Added
Development At December 29, 2024, there were 6,030 Papa John’s restaurants operating in 51 countries and territories , as follows: Domestic Company Owned Franchised North America Total North America International Company Owned International Franchised Total International System-wide December 31, 2023 531 2,902 3,433 117 2,356 2,473 5,906 Opened 22 90 112 — 198 198 310 Closed — (31) (31) (43) (112) (155) (186) Sold — (1) (1) — — — (1) Acquired 1 — 1 — — — 1 Refranchised (15) 15 — (61) 61 — — December 29, 2024 539 2,975 3,514 13 2,503 2,516 6,030 Net unit growth/(decline) 8 73 81 (104) 147 43 124 4 Our Domestic Company-owned restaurant growth strategy is to continue to open restaurants in existing markets as appropriate, thereby increasing consumer awareness, increasing market share, improving customer service and enabling us to take advantage of operational and marketing scale efficiencies.
Removed
In addition to increasing average unit volumes, our strategy focuses on further sharpening our execution and driving BETTER customer experience for faster service while optimizing labor allocation, enhancing operational efficiencies and effectively managing margins. We continue to look for ways to incent growth and improve restaurant margins.
Added
Our current standard international development agreements and unit license agreements provide for payment to us of a royalty fee of 5% of sales net of certain taxes and refunds.
Removed
Beginning in 2024, we will increase the fixed operating margin that our Domestic commissaries charge. At the same time, we are offering new opportunities for our franchisees to earn annual incentive-based rebates as they increase volume and open new restaurants, which will drive continued supply chain productivity for our system. See “Recent Business Matters” in Part II, Item 7.
Added
All Papa Johns team members, from those at our restaurant support centers to those working in our warehouses and restaurants, undergo annual safety and security training designed to address the unique requirements of their roles.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations. Leverage our technology infrastructure to drive our business operations. We utilize technology to deliver a better customer experience, improve operational efficiencies and inform our decision-making . Approximately 85% of our Domestic sales are through digital channels, including website, apps, third party aggregators, and centralized call centers.
Added
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us, at www.sec.gov. We routinely use our investor relations website, at ir.papajohns.com, as a primary channel for disclosing key information to our investors.
Removed
We believe that this technology leadership edge provides a competitive advantage when compared with other QSR models. We continue to invest in technology and data science to enhance our digital capabilities for both our customers as well as our employees.
Added
We may use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor our investor relations website, in addition to following our press releases, filings with the SEC, public conference calls, presentations, and webcasts.
Removed
We remain committed to meeting customers where they want to order from us and to giving them high quality innovative products, providing great value, and delivering excellent service, regardless of the channel in which they order. Our loyalty program (“Papa Rewards”) and one-to-one marketing platforms help us retain loyal customers and drive frequency and ticket on our own ordering channels.
Removed
We have also been a leader in the use of third-party domestic delivery 3 Table of Contents aggregators since 2019. A s new national pizza chains arrive on the platform, the pizza category has continued to expand its share of the overall aggregator market because it’s a great product for home delivery .
Removed
Our integrations with the aggregator marketplaces and our nationwide integration with a third-party delivery service provider have been key tools allowing us to continue to meet our customers in the channel of their choice.
Removed
The “on-demand” labor that the aggregators provide through their “delivery as a service” model allows us to increase our volume in growing day parts like lunch and late night, when the unpredictable demand can make it difficult to predict staffing needs. Profitably expand our footprint domestically and internationally.

… 17 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

99 edited+13 added−11 removed117 unchanged
Biggest changeThird-party business processes we utilize include information technology, gift card authorization and processing, other payment processing, benefits, and other accounting and business services. We conduct third-party due diligence and seek to obtain contractual assurance that our vendors will maintain adequate controls, such as adequate security against cybersecurity incidents.
Biggest changeWe depend on the performance of suppliers, aggregators and other third parties in our business operations. In some cases, we rely on a relatively small number of third-party vendors to support these critical business processes and services. Third-party business processes we utilize include information technology, gift card authorization and processing, other payment processing, benefits, and other accounting and business services.
Our International operations could be negatively impacted by volatility and instability in international economic, political, security, or health conditions in the countries in which the Company or our franchisees operate, especially in emerging markets. In addition, there are risks associated with differing business and social cultures and consumer preferences.
Our International operations and franchisees could be negatively impacted by volatility and instability in international economic, political, security, or health conditions in the countries in which the Company or our franchisees operate, especially in emerging markets. In addition, there are risks associated with differing business and social cultures and consumer preferences.
Our ability to recapitalize, incur additional debt and take a number of other actions that are not prohibited by the Indenture or the Credit Agreement could have the effect of exacerbating the risks associated with our substantial indebtedness or diminishing our ability to make payments on our substantial indebtedness when due, which would reduce the availability of cash flow to fund acquisitions, working capital, capital expenditures, other growth opportunities and other general corporate purposes.
Our ability to recapitalize, refinance, incur additional debt and take a number of other actions that are not prohibited by the Indenture or the Credit Agreement could have the effect of exacerbating the risks associated with our substantial indebtedness or diminishing our ability to make payments on our substantial indebtedness when due, which would reduce the availability of cash flow to fund acquisitions, working capital, capital expenditures, other growth opportunities and other general corporate purposes.
Changes in consumer preferences and trends could negatively affect us (for example, changes in consumer perceptions of certain ingredients that could cause consumers to avoid pizza or some of its ingredients in favor of foods that are or are perceived as healthier, lower-calorie, amenable to certain diets or lower in carbohydrates or otherwise based on their ingredients or nutritional content) or reduced consumption of pizza as a result of new weight loss drugs, such as GLP inhibitors and others.
Changes in consumer preferences and trends could negatively affect us (for example, changes in consumer perceptions of certain ingredients that could cause consumers to avoid pizza or some of its ingredients in favor of foods that are or are perceived as healthier, lower-calorie, amenable to certain diets or lower in carbohydrates or otherwise based on their ingredients or nutritional content) or reduced consumption of pizza as a result of weight loss drugs, such as GLP inhibitors and others.
We have incurred and expect to continue to incur certain non-recurring corporate reorganization costs, including the ongoing restructuring of our international business, and these expenses have impacted and could adversely impact our results of operations during the relevant period, reduce our cash position and/or result in an impairment risk related to these assets.
We have incurred and expect to continue to incur certain non-recurring corporate reorganization costs, including the ongoing restructuring and transformation of our international business, and these expenses have impacted and could adversely impact our results of operations during the relevant period, reduce our cash position and/or result in an impairment risk related to these assets.
Credit risk is due to the possible failure of the counterparty to perform under the terms of the derivative contract. General Risks Natural disasters, hostilities, social unrest, severe weather and other catastrophic events may disrupt our operations or supply chain.
Credit risk is due to the possible failure of the counterparty to perform under the terms of the derivative contract. 19 General Risks Natural disasters, hostilities, social unrest, severe weather and other catastrophic events may disrupt our operations or supply chain.
Enforcement of existing laws and regulations, changes in legal requirements, and/or evolving interpretations of existing regulatory requirements may result in increased compliance costs and create other obligations, financial or otherwise, that could adversely affect our business, financial condition or operating results.
Enforcement of existing laws and regulations, changes in legal requirements, and/or evolving interpretations of existing regulatory requirements may result in increased compliance costs and create other obligations, financial or otherwise, that could adversely affect our business, financial condition or operating results, and our franchisees.
Increased costs associated with recruiting, motivating and retaining qualified employees to work in Company-owned and franchised restaurants have had, and may in the future have, a negative impact on our Company-owned restaurant margins and the margins of franchised restaurants.
Increased costs associated with recruiting, motivating and retaining qualified employees to work in Company-owned and franchised restaurants have had, and may in the future have, a negative impact on our 14 Company-owned restaurant margins and the margins of franchised restaurants.
Retention limits generally range up to $0.5 million with even higher retention limits for certain types of coverage. These insurance programs may not be adequate to protect us, and it may be difficult or impossible to obtain additional coverage or maintain current coverage at a reasonable cost. We also have experienced claims volatility and high costs for our insurance programs.
Retention limits generally range up to $0.8 million with even higher retention limits for certain types of coverage. These insurance programs may not be adequate to protect us, and it may be difficult or impossible to obtain additional coverage or maintain current coverage at a reasonable cost. We also have experienced claims volatility and high costs for our insurance programs.
Our substantial level of indebtedness could have important consequences, including the following: • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, growth opportunities, acquisitions and other general corporate purposes; 19 Table of Contents • increase our vulnerability to and limit our flexibility in planning for, or reacting to, changes in our business, the industry in which we operate, regulatory and economic conditions; • expose us to the risk of increased interest rates as borrowings under our Credit Agreement will be subject to variable rates of interest; • increase our vulnerability to a downgrade of our credit rating, which could adversely affect our cost of funds, liquidity and access to capital markets; • place us at a competitive disadvantage compared to our competitors that have less debt; and • limit our ability to borrow additional funds.
Our substantial level of indebtedness could have important consequences, including the following: • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, growth opportunities, acquisitions and other general corporate purposes; • increase our vulnerability to and limit our flexibility in planning for, or reacting to, changes in our business, the industry in which we operate, regulatory and economic conditions; • expose us to the risk of increased interest rates as borrowings under our Credit Agreement will be subject to variable rates of interest; • increase our vulnerability to a downgrade of our credit rating, which could adversely affect our cost of funds, liquidity and access to capital markets; • place us at a competitive disadvantage compared to our competitors that have less debt; and 18 • limit our ability to borrow additional funds.
Consumer perceptions of our brand are affected by a variety of factors, such as the nutritional content and preparation of our food, the quality of the ingredients we use, our marketing and advertising, our corporate culture, our policies and systems related to DEI, our business practices, our engagement in local communities and the manner in which we source the commodities we use.
Consumer perceptions of our brand are affected by a variety of factors, such as the nutritional content and preparation of our food, the quality of the ingredients we use, our marketing and advertising, our corporate culture, our policies and systems related to corporate responsibility, our business practices, our engagement in local communities and the manner in which we source the commodities we use.
Any future restrictions in federal, state or foreign laws regarding marketing and solicitation or Domestic or International data protection laws that govern these activities could adversely affect the continuing effectiveness of email, text messages, social media and postal mailing techniques and could force changes in our marketing strategies.
Any future restrictions in federal, state or foreign laws regarding marketing and solicitation or Domestic or International data protection laws that govern these activities could adversely affect the continuing effectiveness of email, text messages, social media, behavioral advertising, and postal mailing techniques and could force changes in our marketing strategies.
A significant increase in federal or state minimum wage requirement could adversely impact our financial condition and results of operations, and the viability of our franchisees restaurants in certain markets. Additionally, while we do not currently have a unionized workforce, certain employees of other companies in our industry have recently become unionized.
A significant increase in federal or state minimum wage requirement could adversely impact our financial condition and results of operations, and the viability of our franchisees restaurants in certain markets. Additionally, while we do not currently have a unionized workforce, certain employees of other companies in our industry have unionized.
The occurrence of a natural disaster, hostilities, cyber-attack, social unrest, terrorist activity, outbreak of an epidemic, a pandemic or other widespread health crisis, power outages, severe weather (such as tornados, hurricanes, blizzards, ice storms, floods, heat waves, etc.) or other catastrophic events may disrupt our operations or supply chain and result in the closure of our restaurants (Company-owned or franchised), our corporate offices, any of our QC Centers or the facilities of our suppliers, and can adversely affect consumer spending, consumer confidence levels and supply availability and costs, any of which could materially adversely affect our results of operations.
The occurrence of a natural disaster, hostilities, cyber-attack, social unrest, terrorist activity, outbreak of an epidemic, a pandemic or other widespread health crisis, power outages, severe weather (such as tornados, hurricanes, blizzards, ice storms, floods, heat waves, etc.) or other catastrophic events may disrupt our operations or supply chain and result in the closure of our restaurants (Company-owned or franchised), our restaurant support centers, any of our QC Centers or the facilities of our suppliers, and can adversely affect consumer spending, consumer confidence levels and supply availability and costs, any of which could materially adversely affect our results of operations.
We and our franchisees have experienced, and could continue to experience, a shortage of labor for restaurant positions due to job market trends and conditions, which shortage has increased our and our franchisees’ labor expenses and could decrease the pool of available qualified talent for key functions.
We and our franchisees have experienced, and could continue to experience, a shortage of labor for restaurant positions due to job market trends, conditions, and immigration policies, which shortage has increased our and our franchisees’ labor expenses and could decrease the pool of available qualified talent for key functions.
If this occurs, we may need to develop alternative marketing strategies, which may not be as effective and could impact the amount and timing of our revenues. 15 Table of Contents Higher labor costs, increased competition for qualified team members and ensuring adequate staffing in our restaurants and QC Centers increase the cost of doing business.
If this occurs, we may need to develop alternative marketing strategies, which may not be as effective and could impact the amount and timing of our revenues. Higher labor costs, increased competition for qualified team members and ensuring adequate staffing in our restaurants and QC Centers increase the cost of doing business.
If a significant portion of our corporate or franchisee’s workforce were to become unionized, labor costs could increase and our business could be negatively affected by union requirements that increase costs, disrupt business, reduce flexibility and affect the employer-employee relationship. Further, corporate or franchisees’ response to any union organizing efforts could negatively impact how our brand is perceived.
If a significant portion of our corporate or franchisee’s workforce were to unionize, labor costs could increase and our business could be negatively affected by union requirements that increase costs, disrupt business, reduce flexibility and affect the employer-employee relationship. Further, corporate or franchisees’ response to any union organizing efforts could negatively impact how our brand is perceived.
As a result of any corporate reorganization, we could face turnover in our corporate offices and international support teams that could distract our employees, decrease employee morale, harm our reputation, and negatively impact the overall performance of our corporate support teams. These or other similar risks, may adversely affect our business, results of operations and financial condition.
As a result of any corporate reorganization, we could face turnover in our restaurant support centers and international support teams that could distract our employees, decrease employee morale, harm our reputation, and negatively impact the overall performance of our corporate support teams. These or other similar risks, may adversely affect our business, results of operations and financial condition.
Our 16 Table of Contents failure to adequately invest in new technology and adapt to technological developments and industry trends, particularly our digital ordering capabilities, could result in a loss of customers and related market share. Notwithstanding adequate investment in new technology, our marketing and technology initiatives may not be successful in improving our comparable sales results.
Our failure to adequately invest in new technology and adapt to technological developments and industry trends, particularly our digital ordering capabilities, could result in a loss of customers and related market share. Notwithstanding adequate investment in new technology, our marketing and technology initiatives may not be successful in improving our comparable sales results.
The Company has no company-owned restaurants in Russia or Ukraine and has suspended corporate support for its master franchisee in Russia, which operates and supplies all 188 franchised Papa John’s restaurants there. The Company is unable to predict how long the current environment will last or if it will resume corporate support to impacted franchised restaurants.
The Company has no company-owned restaurants in Russia or Ukraine and has suspended corporate support for its master franchisee in Russia, which operates and supplies all franchised Papa Johns restaurants there. The Company is unable to predict how long the current environment will last or if it will resume corporate support to impacted franchised restaurants.
Sales made by our franchisees in international markets and certain loans we provide to such franchisees are denominated in their local currencies, and fluctuations in the U.S. dollar occur relative to the local currencies. Accordingly, changes in currency exchange rates will cause our revenues, investment income and operating results to fluctuate.
Sales made by our franchisees in international markets and certain loans we previously provided to such franchisees are denominated in their local currencies, and fluctuations in the U.S. dollar occur relative to the local currencies. Accordingly, changes in currency exchange rates will cause our revenues, investment income and operating results to fluctuate.
Climate change may have an adverse impact on our business. We operate in 50 countries globally and recognize that there are inherent climate-related risks wherever business is conducted.
Climate change may have an adverse impact on our business. We operate in 51 countries globally and recognize that there are inherent climate-related risks wherever business is conducted.
Such events have the potential to disrupt our and our franchisees’ operations, cause restaurant closures, disrupt the business of our third-party suppliers and impact our customers, all of which may cause us to suffer losses and additional costs to maintain or resume operations. Increasingly complex laws and regulations could adversely affect our business.
Such events have the potential to disrupt our and our franchisees’ operations, cause restaurant closures, disrupt the business of our third-party suppliers and impact our customers, all of which may cause us to suffer losses and additional costs to maintain or resume operations. Increasingly complex laws and regulations, and any changes to law and regulations, could adversely affect our business.
This franchisee support may not be sufficient to keep restaurants in the United Kingdom from closing, particularly if current economic conditions worsen, or our franchisees may not be able to repay their loans, pay royalties, and/or make rent payments under sub-leases with us.
This franchisee support may not be sufficient to keep restaurants in the UK from closing, particularly if current economic conditions worsen, or our franchisees may not be able to repay their loans, pay royalties, and/or make rent payments under sub-leases with us.
An economic downturn or recession, including deterioration in the economic conditions in the U.S. or international markets where we or our franchisees operate, or a slowing or stalled recovery therefrom, may have a material adverse effect on our business, financial condition or results of operations, including a reduction in the demand for our products, longer payment cycles, slower adoption of new technologies and increased price competition.
An economic downturn or recession, including deterioration in the economic conditions in the United States or international markets where we or our franchisees operate, or a slowing or stalled recovery therefrom, may have a material adverse effect on our business, financial condition or results of operations, including a reduction in the demand for our products, longer payment cycles, slower adoption of new technologies and increased price competition.
Furthermore, governments in the United States, United Kingdom, and European Union have each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia.
Furthermore, governments in the United States, UK, and European Union have each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia.
Changes in privacy or data protection laws could adversely affect our ability to market our products effectively . We rely on a variety of direct marketing techniques, including email, text messages, push notifications, social media and postal mailings.
Changes in privacy or data protection laws could adversely affect our ability to market our products effectively . We rely on a variety of direct and indirect marketing techniques, including email, text messages, push notifications, social media, behavioral advertising, and postal mailings.
Our Company-owned and franchised restaurants could also be harmed by supply chain interruptions including those caused by factors beyond our control or the control of our suppliers.
Our Company-owned and franchised restaurants could also be harmed by supply chain interruptions including those caused by factors beyond our control or the control of our suppliers, or caused by governmental actions.
Constantly changing information security threats, particularly persistent cybersecurity threats, pose risks to the security of our systems and networks, and the confidentiality, availability and integrity of our data and the availability and integrity of our critical business functions. This could include the theft of our intellectual property, trade secrets or sensitive financial information.
Constantly changing information security threats, particularly persistent cybersecurity threats, pose risks to the security of our systems and networks, and the confidentiality, availability and integrity of our data and the availability and integrity of our critical business functions. Threats could include the theft of our intellectual property, trade secrets, personally identifiable information, or sensitive financial information.
Labor shortages, increased employee turnover and health care mandates could increase our system-wide labor costs. A significant number of hourly personnel are paid at rates at or above the federal and state minimum wage requirements.
Labor shortages, increased employee turnover and health care mandates or rising health insurance premiums could increase our system-wide labor costs. A significant number of hourly personnel are paid at rates at or above the federal and state minimum wage requirements.
There also has been increased stakeholder focus, including by US and foreign governmental authorities, investors, media and non-governmental organizations, on environmental sustainability matters, such as climate change, the reduction of 21 Table of Contents greenhouse gases and water consumption.
There also has been increased stakeholder focus, including by US and foreign governmental authorities, investors, media and non-governmental organizations, on environmental sustainability matters, such as climate change, the reduction of greenhouse gases and water consumption.
In addition, we anticipate that consumers will continue to have more options to place orders digitally, both domestically and internationally. We plan to continue to invest in enhancing and improving the functionality and features of our information technology systems.
In addition, we anticipate that consumers will continue to have more options to place orders digitally, both domestically and internationally. We plan to increase investment spending to continue to invest in enhancing and improving the functionality and features of our information technology systems.
Prolonged disruption in the supply of products from or to our QC Centers due to weather, climate change, natural disasters, public health crises, crop disease, food safety incidents, regulatory compliance, labor dispute or interruption of service by carriers could increase costs, limit the availability of 18 Table of Contents ingredients critical to our restaurant operations and have a significant impact on results.
Prolonged disruption in the supply of products from or to our QC Centers due to weather, climate change, natural disasters, public health crises, crop, bird and/or livestock disease, food safety incidents, regulatory compliance, labor dispute or interruption of service by carriers could increase costs, limit the availability of ingredients critical to our restaurant operations and have a significant impact on results.
If our efforts to re-position the franchise base or improve the profitability of our Company-owned restaurants are unsuccessful, we might need to find new operators for certain unprofitable restaurants and/or close unprofitable locations in the future, which would trigger certain lease and/or loan impairments, and could adversely impact the Company’s financial condition and results of operations in the region.
If our efforts to re-position the franchise base or improve the profitability of our remaining Company-owned restaurants are unsuccessful, we might need to find new operators for certain unprofitable restaurants and/or close additional unprofitable locations in the future, which would require certain lease and/or loan impairments, and could adversely impact the Company’s financial condition and results of operations in the respective region.
Other items denominated in U.S. dollars, including product imports or loans, may also become more expensive, putting pressure on franchisees’ cash flows. Our International franchisees may also be impacted by currency restrictions imposed by governmental authorities, which could impact their ability to pay royalties in compliance with their franchise agreement.
Other items denominated in U.S. dollars, including product imports or loans, may also become more expensive, putting pressure on franchisees’ cash flows. Our International and Canadian franchisees may also be impacted by tariffs or currency restrictions imposed by governmental authorities, which could impact their ability to pay for supplies and/or royalties in compliance with their franchise agreement.
Likewise, an escalation of the conflict in Gaza could materially adversely affect our operations in Israel, Jordan, Egypt and other countries in the Middle East. Our International operations are subject to increased risks and other factors that may make it more difficult to achieve or maintain profitability or meet planned growth rates.
Likewise, an escalation of conflicts in the Middle East could materially adversely affect our franchisee operations in Israel, Jordan, Egypt and other countries in the Middle East. Our International operations and franchisees are subject to increased risks and other factors that may make it more difficult to achieve or maintain profitability or meet planned growth rates.
Our franchisees remain dependent on the availability of financing to remodel or renovate existing locations, upgrade systems and enhance technology, or construct and open new restaurants. From time to time, the Company may provide financing to certain franchisees and prospective franchisees in order to mitigate restaurant closings, allow new units to open, or complete required upgrades.
Our franchisees remain dependent on the availability of financing to remodel or renovate existing locations, upgrade systems and enhance technology, or construct and open new restaurants. The Company has provided, and may in the future, provide financing to certain franchisees and prospective franchisees in order to mitigate restaurant closings, allow new units to open, or complete required upgrades.
Such an incident could also result in litigation, regulatory actions or investigations, penalties, and other significant costs to us and have a material adverse effect on our financial results. These costs could be significant and well in excess of, or not covered by, our cyber insurance coverage.
Such an incident could also result in litigation, regulatory actions, investigations, or penalties, increased regulatory scrutiny, a delay in our ability to report financial results, and other significant costs to us and have a material adverse effect on our financial results. These costs could be significant and well in excess of, or not covered by, our cyber insurance coverage.
Increased regulatory scrutiny of food matters, online advertising, product marketing claims, mandatory fees, and increased litigation and enforcement actions may increase compliance and legal costs and create other obligations that could adversely affect our business, financial condition or operating results. Governments may also impose requirements and restrictions that impact our business.
Increased regulatory scrutiny of food matters, online advertising, product marketing claims, mandatory fees, employment-related matters, and increased litigation and enforcement actions may result in increased compliance and legal costs and create other obligations that could adversely affect our business, financial condition or operating results. Governments may also impose requirements and restrictions that impact our business and franchisees.
If our ESG-related data, processes and reporting fail to meet investor, customer, consumer, employee or other stakeholders’ evolving expectations and standards, are incomplete or inaccurate, or certain groups or customers disagree with our ESG initiatives or goals, or if we fail to achieve progress with respect to our goals within the scope of ESG on a timely basis, or at all, our reputation, brand, appeal to investors, employee retention, business, financial performance and growth could be adversely affected.
If our corporate responsibility-related data, processes and reporting fail to meet investor, customer, consumer, employee or other stakeholders’ evolving expectations and standards, are incomplete or inaccurate, or certain groups or customers disagree with our corporate 13 responsibility initiatives or goals, or if we fail to achieve progress with respect to our goals on a timely basis, or at all, our reputation, brand, appeal to investors, employee retention, business, financial performance and growth could be adversely affected.
We are also subject to ongoing risks and uncertainties associated with the United Kingdom’s withdrawal from the European Union (referred to as “Brexit”), including implications for the free flow of labor and goods in the United Kingdom and the European Union and other financial, legal, tax and trade implications.
We are also subject to ongoing risks and uncertainties associated with the UK’s withdrawal from the European Union (referred to as “Brexit”), including implications for the free flow of labor and goods in the UK and the European Union and other financial, legal, tax and trade implications.
Despite our best efforts relating to ESG policies, initiatives and reporting, media reports and social media campaigns can create a negative opinion or perception of the company’s efforts. 14 Table of Contents Such media reports and negative publicity could impact customer or investor perception of our Company or industry and can have a material adverse effect on our financial results.
Despite our best efforts relating to corporate responsibility policies, initiatives and reporting, media reports and social media campaigns can create a negative opinion or perception of the Company’s efforts. Such media reports and negative publicity could impact customer or investor perception of our Company or industry and can have a material adverse effect on our financial results.
During 2022 and 2023, our business in the United Kingdom was subject to adverse macroeconomic conditions, including inflation, elevated interest rates, the energy crisis, slowing economic growth, and volatile exchange rates, which resulted in negative comparable sales and a challenging operating environment for our franchisees. These challenges also impacted the financial condition of our UK franchisees.
During the last three years, our business in the UK was subject to adverse macroeconomic conditions, including inflation, elevated interest rates, the energy crisis, slowing economic growth, and volatile exchange rates, which resulted in negative comparable sales and a challenging operating environment for our franchisees. These challenges also impacted the financial condition of our UK franchisees.
Our business, financial condition and results of operations have been and could continue to be adversely affected by depressed economic and business conditions in the United Kingdom. There are approximately 500 Papa John’s restaurants located in the United Kingdom, and we also operate an International QC Center in the United Kingdom.
Our business, financial condition and results of operations have been and could continue to be adversely affected by business conditions in the United Kingdom. There are approximately 450 Papa Johns restaurants located in the UK, and we also operate an International QC Center in the UK.
Our information technology systems and databases, and those provided by our third-party vendors, including international vendors, have been and will continue to be subject to computer viruses, malware attacks, unauthorized user attempts, phishing and denial of service and other malicious cyber-attacks.
Our information technology systems and databases, and those provided by our third-party vendors, including international vendors, have been and will continue to be subject to computer viruses, malware attacks, unauthorized user attempts, social engineering (e.g. phishing) and denial of service and other unintentional intrusions or malicious cyber-attacks.
The Company also has franchise locations in Israel and a significant franchise presence in the Middle East. In connection with the ongoing conflict in Gaza, some of our franchisees in the Middle East have experienced boycotts resulting in decreased development prospects, sales and profitability.
The Company also has franchise locations in Israel and a significant franchise presence in the Middle East. As a result of the conflict in Gaza, some of our franchisees in the Middle East have experienced boycotts 10 resulting in decreased development prospects, sales and profitability.
You should carefully consider the following risk factors together with all other information included in this Form 10-K and our other publicly filed documents. 10 Table of Contents Industry and Macroeconomic Risks Economic conditions in the U.S. and international markets could adversely affect our business and financial results.
You should carefully consider the following risk factors together with all other information included in this Form 10-K and our other publicly filed documents. 9 Industry and Macroeconomic Risks Economic conditions in the United State and international markets could adversely affect our business and financial results.
The Indenture and the Credit Agreement allow us to incur additional indebtedness, including secured debt. Such additional indebtedness may be substantial.
The indenture governing our Notes (the “Indenture”) and the Credit Agreement allow us to incur additional indebtedness, including secured debt. Such additional indebtedness may be substantial.
Significant costs could be required to investigate security incidents, remedy cybersecurity problems, recover lost data, prevent future incidents and adapt systems and practices to react to the changing cyber environment. These include costs associated with notifying affected individuals and other agencies, additional security technologies, training, personnel, and experts.
Significant costs could be required to 21 investigate security incidents, remedy cybersecurity issues, recover lost data, prevent future cybersecurity incidents and adapt systems and practices to react to the changing cyber environment. These may include costs associated with notifying affected individuals and regulators, assessing and implementing additional security technologies, training, personnel, and experts.
We have instituted controls, including cybersecurity governance controls that are intended to protect our information systems, our point-of-sale systems, our information technology systems and networks, we adhere to payment card industry data security standards and we limit third party access for vendors that require access to our restaurant networks. However, we cannot control or prevent every cybersecurity risk.
We have instituted controls, including cybersecurity governance controls that are intended to protect our information systems, our point-of-sale systems, our information technology systems and networks. We have designed our cybersecurity program to adhere to payment card industry data security standards and we limit third party access for vendors that require access to our restaurant networks.
We have recently experienced significant inflation in commodities prices, including food ingredients, which has significantly increased our operating expenses. Cheese, representing our largest food cost, and other commodities and ingredients can be subject to significant cost fluctuations due to inflation, weather, availability, global demand and other factors that are beyond our control.
We have experienced in the past several years, and may continue to experience, increasing commodities prices, including food ingredients, which has significantly increased our operating expenses. Cheese, representing our largest food cost, and other commodities and ingredients can be subject to significant cost fluctuations due to inflation, weather, availability, tariffs, global demand and other factors that are beyond our control.
Our outstanding debt as of December 31, 2023 was $764.0 million, which was comprised of $400.0 million outstanding under our 3.875% senior notes due 2029 (the “Notes”) and $364.0 million under our revolving credit facility (the “PJI Revolving Facility”) that forms part of our amended and restated credit agreement (the “Credit Agreement”).
Our outstanding debt as of December 29, 2024 was $746.7 million, which was comprised of $400.0 million outstanding under our 3.875% senior notes due 2029 (the “Notes”) and $346.7 million under our revolving credit facility (the “PJI Revolving Facility”) that forms part of our amended and restated credit agreement (the “Credit Agreement”).
We are also subject to the risk of negative publicity associated with various shareholder proposals, campaigns, and activism, including publicity related to the environment, animal welfare, diversity, responsible sourcing, and other Environmental, Social and Governance (“ESG”) topics.
We are also subject to the risk of negative publicity associated with shareholder proposals, campaigns, and activism, including publicity related to the environment, animal welfare, responsible sourcing, and other corporate responsibility topics.
Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy caused by the ongoing conflict between Russia and Ukraine, and other actual and potential conflicts. The global economy has been negatively impacted by the military conflict in Ukraine.
Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy caused by actual and potential geopolitical conflicts. The global economy could be and has been negatively impacted by geopolitical and regional conflicts around the world, including the ongoing conflict in Ukraine.
In addition, the Company has provided financial support to certain franchisees in the United Kingdom, including in the form of marketing support and loans.
In addition, the Company previously provided financial support to certain franchisees in the UK, including in the form of marketing support and loans.
The dissemination of proprietary Company or negative information, whether or not accurate, by customers, employees, social media influencers, and others via social media could harm our business, brand, reputation, marketing partners, financial condition, and results of operations, regardless of the information’s accuracy. In addition, we frequently use social media to communicate with consumers and the public in general.
The dissemination of proprietary Company or negative information, whether or not accurate, by customers, employees, social media influencers, and others via social media could harm our business, brand, reputation, marketing partners, financial condition, and results of operations, regardless of the information’s accuracy.
Although our Domestic franchisees currently purchase substantially all food products from our QC Centers, the only required QC Center purchases by franchisees are pizza sauce, dough and other items we may designate as proprietary or integral to our system.
Changes in purchasing practices by our Domestic franchisees, or prolonged disruptions in our QC Center operations, could harm our commissary business. Although our Domestic franchisees currently purchase substantially all food products from our QC Centers, the only required QC Center purchases by franchisees are pizza sauce, dough and other items we may designate as proprietary or integral to our system.
Failure to use social media effectively could negatively impact brand value and revenue. Other risks associated with the use of social media include improper disclosure of proprietary information, negative comments about our brand, exposure of personally identifiable information, fraud, hoaxes or malicious dissemination of false information.
Other risks associated with the use of social media include improper disclosure of proprietary information, negative comments about our brand, exposure of personally identifiable information, fraud, hoaxes or malicious dissemination of false information.
The Company is unable to predict the duration or the extent of the macroeconomic deterioration in the United Kingdom or the extent to which our corporate and franchised restaurants will be impacted.
The Company is unable to predict the duration or the extent of the macroeconomic environment in the UK or the extent to which our remaining corporate and franchised restaurants will continue to be impacted.
Disruptions to our critical business or information technology systems could harm our ability to compete and conduct our business. Our critical business and information technology systems have in the past and could in the future be damaged or interrupted by power loss, various technological failures, user errors, cyber-attacks, ransomware sabotage or acts of God.
Our critical business and information technology systems have in the past and could in the future be damaged or interrupted by events, including power loss, various technological failures, user errors, cyber-attacks, ransomware sabotage, infrastructure transformation efforts, or acts of God.
We expect some of these conditions to continue in 2024. As we navigate this challenging economic environment, we are investing in capabilities to improve our operations and working to re-position the franchise base to further strengthen our business in the United Kingdom by exiting poorly performing franchisees and permanently closing certain restaurants.
As we continue to navigate this challenging economic environment, we are investing in capabilities to improve our operations and have worked to re-position the franchise base to further strengthen our business in the UK by exiting poorly performing franchisees and permanently closing certain restaurants.
These risks also include the increased pressure to make commitments, set targets, or establish additional goals to take actions to meet them, which could expose us and our franchisees to market, operational, execution and reputational costs or risks.
These risks also include the increased pressure to make or eliminate 20 commitments or additional goals which could expose us and our franchisees to market, operational, execution and reputational costs or risks.
Part of our technology infrastructure, such as our Domestic point-of-sale system, is specifically designed for us and our operational systems, which could cause unexpected costs, delays or inefficiencies when infrastructure upgrades are needed or prolonged and widespread technological difficulties occur.
Part of our technology infrastructure, such as our Domestic point-of-sale system, is specifically designed for us and our operational systems. Infrastructure upgrades or prolonged and widespread technological difficulties related to our technology infrastructure may occur and may result in unexpected costs, delays or efficiencies.
In particular, adverse weather or crop disease affecting the California tomato crop could disrupt the supply of pizza sauce to our and our franchisees’ restaurants. Insolvency of key suppliers could also cause similar business interruptions and negatively impact our business.
In particular, adverse weather or crop disease affecting the California tomato crop could disrupt the supply of pizza sauce to our and our franchisees’ restaurants.
Higher inflation, and a related increase in costs, including elevated interest rates, as well as currency restrictions and changes in foreign exchange rates, have impacted our franchisees and their ability to pay royalties, open new restaurants or operate existing restaurants profitably.
Inflationary pressures, and related increases in costs, including interest rates, commodity and labor expenses, as well as currency restrictions and changes in foreign exchange rates, have impacted and may continue to impact our franchisees their ability to pay royalties, open new restaurants or operate existing restaurants profitably.
In addition, we could be criticized for the scope or nature of our ESG initiatives or goals, or for any revisions to these goals.
In addition, we could be criticized for the scope or nature of our corporate responsibility initiatives or goals, or for any revisions to these goals, which could lead to consumer boycotts or shareholder activism.
Media or other reports of existing or perceived security vulnerabilities in our systems or those of our third-party vendors can also adversely impact our brand and reputation and materially impact our business.
Media or other reports of existing or perceived security vulnerabilities in our systems or those of our third-party vendors can also adversely impact our brand and reputation and materially impact our business. The interpretation and application of cybersecurity and data protection laws and regulations are often uncertain and evolving.
These costs, which could be material, could adversely impact our results of operations in the period in which they are incurred, including by interfering with the pursuit of other important business strategies and initiatives, and may not meaningfully limit the success of future attempts to breach our information technology systems.
These costs, which could be material, could adversely impact our results of operations in the period in which they are incurred, including by requiring significant attention from management or the Board or interfering with the pursuit of other important business strategies and initiatives, and may not meaningfully limit the success of future cyber-attacks or cybersecurity incidents.
Additionally, we may fail to attract new qualified franchisees or existing franchisees may close underperforming locations. Planned growth targets and the ability to operate new and existing restaurants profitably are affected by economic, regulatory and competitive conditions and consumer buying habits.
Planned growth targets and the ability to operate new and existing restaurants profitably are affected by economic, regulatory and competitive conditions and consumer buying habits.
The failure to prevent fraud or security incidents or to adequately invest in data 22 Table of Contents security could harm our business and revenues due to the reputational damage to our brand.
However, we cannot control or prevent every cybersecurity risk. The failure to prevent fraud or cybersecurity incidents or to adequately invest in data security could harm our business and revenues due to the reputational damage to our brand.
Our sales may be particularly impacted as competitors increasingly emphasize lower-cost menu options. Changes in consumer preferences or discretionary consumer spending could adversely impact our results.
Customers may also not believe or understand the nature of our quality differentiator in comparison with our competitors, which could impact our sales. Our sales may be particularly impacted as competitors increasingly emphasize lower-cost menu options. Changes in consumer preferences or discretionary consumer spending could adversely impact our results.
We may be required to expend additional funds to effectively improve consumer sentiment and sales, and we may also be required to engage in additional activities to retain customers or attract new customers to the brand.
We may be required to expend additional funds to effectively improve consumer sentiment and sales, and we may also be required to engage in additional activities to retain customers or attract new customers to the brand. Such marketing expenses and promotional activities, which could include discounting our products, could adversely impact our results.
We had approximately $236.0 million of remaining availability under the PJI Revolving Facility as of December 31, 2023.
We had approximately $253.3 million of remaining availability under the PJI Revolving Facility as of December 29, 2024.
Impairment charges are possible due to the nature and timing of decisions we make about underperforming assets or markets, or if previously opened or acquired restaurants perform below our expectations.
We have taken impairment charges in the past and further impairment charges are possible due to the nature and timing of decisions we make about underperforming assets or markets, or if previously opened or acquired restaurants perform below our expectations. This could result in a decrease in our reported asset value and reduction in our net income.
We rely on third parties for certain business processes and services, and failure or inability of such third-party vendors to perform subjects us to risks, including business disruption and increased costs. We depend on the performance of suppliers, aggregators and other third parties in our business operations.
Insolvency of key suppliers could also cause similar business interruptions and negatively impact our business. 17 We rely on third parties for certain business processes and services, and failure or inability of such third-party vendors to perform subjects us to risks, including business disruption and increased costs.
These changing rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations.
The changing political environment, rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such expectations. Disruptions to our critical business or information technology systems could harm our ability to compete and conduct our business.
We remain subject to risks related to epidemic and pandemic outbreaks, such as the global COVID-19 pandemic, which has had, and may continue to have, adverse impacts on economic and market conditions and our business. COVID-19 created significant volatility, uncertainty and economic disruption in the regions in which we operate.
We are subject to risks related to epidemic and pandemic outbreaks, such as the global COVID-19 pandemic, which had adverse impacts on global economic and market conditions, franchisees, and our business.
Competition is based on price, service, location, food quality, convenience, brand recognition and loyalty, product innovation, effectiveness of marketing and promotional activity, use of technology, and the ability to identify and satisfy consumer preferences. We may need to reduce the prices for some of our products to respond to competitive and customer pressures, which may adversely affect our profitability.
Competition is based on price, value, service, location, food quality, convenience, brand recognition and loyalty, product innovation, effectiveness of marketing and promotional activity, use of technology, and the ability to identify and satisfy consumer preferences.
This could result in a decrease in our reported asset value and reduction in our net income. 23 Table of Contents We operate globally and changes in tax laws could adversely affect our results. We operate globally and changes in tax laws could adversely affect our results. We have international operations and generate substantial revenues and profits in foreign jurisdictions.
We operate globally and changes in tax laws could adversely affect our results. We operate globally and changes in tax laws could adversely affect our results. We have international operations and generate substantial revenues and profits in foreign jurisdictions.
Our results depend upon our ability to differentiate our brand and our reputation for quality. Damage to our brand or reputation could negatively impact our business and financial results . Our brand has been highly rated in past U.S. surveys, and we strive to build the value of our brand as we develop international markets.
Our brand has been highly rated in past U.S. surveys, and we strive to build the value of our brand as we develop international markets.

… 43 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

18 edited+3 added−1 removed7 unchanged
Biggest changeAfter the cybersecurity incident is contained, our focus shifts to remediation, eradication, and recovery, with such efforts dependent upon on the nature of the cybersecurity incident. We have relationships with a number of well-established third-party service providers to assist with cybersecurity incident response, containment and remediation efforts.
Biggest changeWe have relationships with a number of well-established third-party service providers to assist with cybersecurity incident response, containment and remediation efforts. We also maintain cybersecurity insurance providing coverage for certain costs related to cybersecurity incidents that impact our own systems, networks, and technology.
Although we make efforts to maintain the security and integrity of our information technology systems, these systems and the proprietary, confidential internal and customer information that resides on or is transmitted through them, are subject to the risk of a cybersecurity incident or disruption, and there can be no assurance that our security efforts and measures, and those of our third party providers, will prevent breakdowns or incidents affecting our or our third party providers’ databases or systems that could adversely affect our business.
Although we make efforts to maintain the security and integrity of our information technology systems, these systems and the proprietary, confidential internal and customer information that resides on or is transmitted through them, 24 are subject to the risk of a cybersecurity incident or disruption, and there can be no assurance that our security efforts and measures, and those of our third party providers, will prevent breakdowns or incidents affecting our or our third party providers’ databases or systems that could adversely affect our business.
The preparatory and protective measures we have in place include, without limitation, password protection, multi-factor authentication, internal and external penetration testing, cybersecurity assessments, industry benchmarking, and annual cybersecurity awareness trainings for our employees as well as social engineering awareness simulations.
The preparatory and protective measures we have in place include, without limitation, password protection, multi-factor authentication, internal and external penetration testing, maturity assessments, industry benchmarking, and annual cybersecurity awareness trainings for our employees as well as social engineering awareness simulations.
In the event of a cybersecurity incident, the IRP provides a framework to coordinate the response. The IRP also addresses escalation protocols to senior management responsibility with respect to disclosure determinations related to a cybersecurity incident and provides for Audit Committee and Board briefings as appropriate.
In the event of a cybersecurity incident, the IRP provides a framework to coordinate the response. The IRP also addresses escalation protocols to senior management responsibility with respect to disclosure determinations and provides for Audit Committee and Board briefings as appropriate.
For a discussion of these risks, see “Item 1A—Risk Factors—Information Technology and Cybersecurity Risks—Disruptions of our critical business or information technology systems could harm our ability to compete and conduct our business” and “—Failure to maintain the integrity of internal or customer data could result in damage to our reputation, loss of sales, and/or subject us to litigation, penalties or significant costs.” 25 Table of Contents
For a discussion of these risks, see “Item 1A—Risk Factors—Information Technology and Cybersecurity Risks—Disruptions of our critical business or information technology systems could harm our ability to compete and conduct our business” and “—Failure to maintain the integrity of internal or customer data could result in damage to our reputation, loss of sales, and/or subject us to litigation, penalties or significant costs.”
The Audit Committee is also apprised of cybersecurity incidents consistent with the provisions of our cybersecurity incident response plan (“IRP”) pertaining to escalation of more significant incidents.
The Audit Committee is also apprised of cybersecurity incidents consistent with the provisions of our recently enhanced cybersecurity incident response plan (“IRP”) pertaining to escalation of more significant cybersecurity incidents.
Our CITO and VP, Information Security and Compliance are responsible for the day-to-day management of the cybersecurity program, including the prevention, detection, investigation, and response to cybersecurity threats and incidents and are regularly engaged to help ensure the cybersecurity program functions effectively in the face of evolving cybersecurity threats.
Our CDTO and VP, Information Security and Compliance are responsible for the day-to-day management of the cybersecurity program, including the prevention, detection, investigation, and response to cybersecurity threats and 23 incidents and are regularly engaged to help ensure the cybersecurity program functions effectively in the face of evolving cybersecurity threats.
The Internal Audit team meets monthly with the VP, Information Security and Compliance officer along with key IT leadership to discuss open cyber or data security risks. This effort is to ensure items of risk are addressed and resolved in a timely manner.
The Internal Audit team also meets periodically with the VP, Information Security and Compliance officer along with key IT leadership to discuss open cyber or data security risks. This effort is to help ensure items of risk are addressed and resolved in a timely manner.
Members of our Cyber Oversight Group also include our Chief Executive Officer, Chief Legal and Risk Officer, Senior Director of Internal Audit and technology and data privacy in-house counsel.
Members of our Cyber Oversight Group also include our Chief Executive Officer, Chief Financial Officer, Chief Legal and Risk Officer, Senior Director of Internal Audit, VP of International Technology, and technology and data privacy in-house counsel.
Processes for Assessing, Identifying and Managing Material Risks from Cybersecurity Threats Our Cyber Oversight Group utilizes the IRP to: (1) prepare for and protect against cybersecurity incidents; (2) identify and analyze cybersecurity incidents; and (3) contain, eradicate, and help ensure appropriate reporting of cybersecurity events.
Processes for Assessing, Identifying and Managing Material Risks from Cybersecurity Threats Our Cyber Oversight Group utilizes the IRP to: (1) prepare for and protect against cybersecurity incidents; (2) identify and analyze cybersecurity incidents; and (3) contain, eradicate, and help ensure appropriate reporting of cybersecurity events in accordance with our regulatory obligations.
The Cyber Oversight Group is also tasked with reporting to the Audit Committee on cybersecurity risk management strategies, as well as any significant 24 Table of Contents cybersecurity incidents that may occur.
The Cyber Oversight Group is also tasked with reporting to the Audit Committee on cybersecurity risk management strategies, as well as any significant cybersecurity incidents that may occur.
The Audit Committee receives updates from the Company’s Chief Insights and Technology Officer (“CITO”), VP, Information Security and Compliance, and/or members of our executive leadership team. Management also reports to the full Board at least annually regarding a comprehensive overview and status of the Company’s information security program.
The Audit Committee receives updates from the Company’s recently appointed Chief Digital and Technology Officer (“CDTO”), VP, Information Security and Compliance, and/or members of our executive leadership team. Management also reports to the full Board at least annually regarding a comprehensive overview and status of the Company’s information security program.
The Audit Committee oversees our information security program, which includes oversight of our cybersecurity program and cybersecurity risks. As part of its oversight responsibility, and pursuant to its charter, the Audit Committee reviews with management and reports to the full Board with respect to significant information security matters and risks and management’s actions to monitor and address identified issues.
As part of its oversight responsibility, and pursuant to its charter, the Audit Committee reviews with management and reports to the full Board with respect to significant cybersecurity matters and risks and management’s actions to monitor and address identified issues.
Management Governance The controls and processes employed to assess, identify and manage material risks from cybersecurity threats are implemented and overseen by our Cyber Oversight Group, led by our CITO and VP, Information Security and Compliance. Our CITO leverages his decades of experience as an IT professional with significant expertise in enterprise architecture, engineering, analytics and digital technology.
Management Governance The controls and processes employed to assess, identify and manage material risks from cybersecurity threats are implemented and overseen by our Cyber Oversight Group, led by our CDTO and VP, Information Security and Compliance. Our CDTO has decades of experience as Chief Technology Officer with multiple companies, and significant expertise in enterprise architecture, engineering, analytics and digital technology.
We also maintain cybersecurity insurance providing coverage for certain costs related to cybersecurity incidents that impact our own systems, networks, and technology. While we maintain a robust cybersecurity program, the techniques used to infiltrate information technology systems continue to evolve. Accordingly, we may not be able to timely detect threats or anticipate and implement adequate security measures.
While we maintain a robust cybersecurity program, the techniques used to attack or impact information technology systems continue to evolve. Accordingly, we may not be able to timely detect threats or anticipate and implement adequate security measures.
We employ a variety of measures to prepare for and protect against, detect, and contain and eradicate cybersecurity incidents and threats.
Vulnerabilities and risks identified for our third-party vendors are handled through ongoing scanning and reviews. We employ a variety of measures to prepare for and protect against, detect, and contain and eradicate cybersecurity incidents and threats.
Our program leverages industry frameworks, including the Payment Card Industry Standards (PCI) and the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF).
Our program leverages industry frameworks, including the Payment Card Industry (PCI) Standards and the Center for Internet Security (CIS) security framework.
We also manage threats to our systems originating or associated with third party service providers by integrating cybersecurity requirements and other provisions into various contracts. Vulnerabilities and risks identified for our third-party vendors are handled through ongoing scanning and reviews.
We also manage threats to our systems originating or associated with third party service providers by integrating cybersecurity requirements and other related obligations into various contracts. We also utilize vendor intake evaluations, ongoing cyber risk monitoring of our critical technology vendors, and and other risk management strategies to evaluate and help mitigate risk associated with our third party service providers.
Removed
To detect and analyze cybersecurity incidents, our cybersecurity program uses automated event-detection technology monitored by our cyber defense team, notifications from employees, vendors or service providers, and other tools. Once a potential cybersecurity incident is detected, our IRP sets forth the process we follow to investigate the potential incident and contain it.
Added
The Audit Committee provides oversight of our cybersecurity program, which includes annual and periodic reviews of our cybersecurity program and cybersecurity risks.
Added
The security operations program includes an outsourced managed security detection and response service, augmenting the internal security staff with additional third-party dedicated staff and an expert security advisor.
Added
Our IRP sets forth the process we follow to investigate a potential or confirmed cybersecurity incident and contain it as well as to assess disclosure obligations and address remediation, eradication, and recovery, with such efforts dependent upon on the nature of the cybersecurity incident.

Item 2. Properties

Properties — owned and leased real estate

8 edited+1 added−1 removed1 unchanged
Biggest changeThere were 98 such restaurants at December 31, 2023 (59 in Maryland, 26 in Virginia, and 13 in G eorgia). 27 Table of Contents International Restaurants: Company Franchised Total Azerbaijan — 15 15 Bahrain — 23 23 Bolivia — 5 5 Cambodia — 7 7 Chile — 154 154 China — 317 317 Colombia — 60 60 Costa Rica — 56 56 Cyprus — 10 10 Dominican Republic — 21 21 Ecuador — 31 31 Egypt — 78 78 El Salvador — 41 41 Germany — 14 14 Guam — 2 2 Guatemala — 35 35 Honduras — 15 15 Iraq — 1 1 Ireland — 80 80 Israel — 29 29 Jordan — 7 7 Kazakhstan — 11 11 Kenya — 1 1 Kuwait — 35 35 Kyrgyzstan — 3 3 Mexico — 50 50 Morocco — 7 7 Netherlands — 17 17 Nicaragua — 4 4 Oman — 28 28 Pakistan — 28 28 Panama — 34 34 Peru — 60 60 Philippines — 15 15 Poland — 11 11 Portugal — 3 3 Puerto Rico — 26 26 Qatar — 55 55 Saudi Arabia — 24 24 South Korea — 254 254 Spain — 90 90 Trinidad — 9 9 Tunisia — 14 14 Turkey — 55 55 United Arab Emirates — 92 92 United Kingdom 117 407 524 Uzbekistan — 3 3 Venezuela — 19 19 Total International Papa John’s Restaurants 117 2,356 2,473 Most Papa John’s Company-owned restaurants are located in leased space.
Biggest changeThere were 98 such restaurants at December 29, 2024 (59 in Maryland, 26 in Virginia, and 13 in G eorgia). 26 International Restaurants: Company Franchised Total Azerbaijan — 18 18 Bahrain — 22 22 Bolivia — 5 5 Bulgaria — 2 2 Cambodia — 7 7 Chile — 158 158 China — 320 320 Colombia — 61 61 Costa Rica — 63 63 Cyprus — 12 12 Dominican Republic — 23 23 Ecuador — 31 31 Egypt — 73 73 El Salvador — 43 43 Germany — 14 14 Guam — 2 2 Guatemala — 40 40 Guyana — 1 1 Honduras — 16 16 Ireland — 91 91 Israel — 38 38 Jordan — 5 5 Kazakhstan — 16 16 Kenya — 7 7 Kuwait — 41 41 Kyrgyzstan — 3 3 Mexico — 47 47 Morocco — 9 9 Netherlands — 16 16 Nicaragua — 4 4 Oman — 29 29 Pakistan — 29 29 Panama — 35 35 Peru — 70 70 Philippines — 7 7 Poland — 13 13 Portugal — 5 5 Puerto Rico — 26 26 Qatar — 54 54 Saudi Arabia — 42 42 South Korea — 266 266 Spain — 95 95 Trinidad — 9 9 Tunisia — 13 13 Turkey — 54 54 United Arab Emirates — 92 92 United Kingdom 13 444 457 Uzbekistan — 16 16 Venezuela — 16 16 Total International Papa John’s Restaurants 13 2,503 2,516 Most Papa John’s Company-owned restaurants are located in leased space.
The initial term of most Domestic restaurant leases is five years with most leases providing for one or more options to renew for at least one additional term. Generally, the leases are triple net leases, which require us to pay all or a portion of the cost of insurance, taxes and utilities.
The initial term of most Domestic restaurant leases is five years with most leases providing for one or more options to renew for at least one additional term. Generally, 27 the leases are triple net leases, which require us to pay all or a portion of the cost of insurance, taxes and utilities.
The initial lease terms on the franchised sites in the UK are generally 15 years. The Company has the option to negotiate an extension toward the end of the lease term at the landlord’s discretion. The initial lease terms of the franchisee subleases are generally five to ten years. See “Note 3.
The initial lease terms on the franchised sites in the UK are generally 15 years, many of which have an early break-lease provision. The Company has the option to negotiate an extension toward the end of the lease term at the landlord’s discretion. The initial lease terms of the franchisee subleases are generally five to ten years. See “Note 3.
As a 28 Table of Contents result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are also contingently liable for payment of approximately 48 Domestic leases. Our corporate office in Atlanta, Georgia, is located in a leased space.
As a result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are also contingently liable for payment of approximately 81 Domestic leases.
We define “North America” as the United States and Canada and “Domestic” as the contiguous United States. 26 Table of Contents North America Restaurants: Company (a) Franchised Total Alabama 3 89 92 Alaska — 10 10 Arizona — 67 67 Arkansas — 28 28 California — 165 165 Colorado — 48 48 Connecticut — 5 5 Delaware — 17 17 District of Columbia — 9 9 Florida 41 260 301 Georgia 91 104 195 Hawaii — 19 19 Idaho — 13 13 Illinois 8 73 81 Indiana 46 95 141 Iowa — 25 25 Kansas 16 21 37 Kentucky 37 68 105 Louisiana — 59 59 Maine — 4 4 Maryland 59 42 101 Massachusetts — 7 7 Michigan — 31 31 Minnesota — 37 37 Mississippi — 33 33 Missouri 41 27 68 Montana — 9 9 Nebraska — 13 13 Nevada — 24 24 New Hampshire — 3 3 New Jersey — 57 57 New Mexico — 17 17 New York — 86 86 North Carolina 104 81 185 North Dakota — 10 10 Ohio — 165 165 Oklahoma — 36 36 Oregon — 14 14 Pennsylvania — 88 88 Rhode Island — 2 2 South Carolina 9 77 86 South Dakota — 11 11 Tennessee 39 79 118 Texas — 310 310 Utah — 32 32 Virginia 26 119 145 Washington — 49 49 West Virginia — 24 24 Wisconsin 11 17 28 Wyoming — 10 10 Total U.S.
We define “North America” as the United States and Canada and “Domestic” as the contiguous United States. 25 North America Restaurants: Company (a) Franchised Total Alabama 3 90 93 Alaska — 10 10 Arizona — 66 66 Arkansas — 28 28 California — 170 170 Colorado — 49 49 Connecticut — 5 5 Delaware — 15 15 District of Columbia — 10 10 Florida 45 264 309 Georgia 97 108 205 Hawaii — 18 18 Idaho — 13 13 Illinois 8 78 86 Indiana 48 91 139 Iowa — 25 25 Kansas 17 21 38 Kentucky 39 71 110 Louisiana — 59 59 Maine — 4 4 Maryland 59 41 100 Massachusetts — 8 8 Michigan — 31 31 Minnesota — 38 38 Mississippi — 33 33 Missouri 44 28 72 Montana — 9 9 Nebraska — 14 14 Nevada — 24 24 New Hampshire — 3 3 New Jersey — 58 58 New Mexico — 17 17 New York — 92 92 North Carolina 105 82 187 North Dakota — 10 10 Ohio — 170 170 Oklahoma — 37 37 Oregon — 15 15 Pennsylvania — 93 93 Rhode Island — 3 3 South Carolina 9 75 84 South Dakota — 11 11 Tennessee 39 79 118 Texas — 313 313 Utah — 32 32 Virginia 26 121 147 Washington — 49 49 West Virginia — 24 24 Wisconsin — 36 36 Wyoming — 11 11 Total U.S.
Item 2. Properties As of December 31, 2023, there were 5,906 Papa John’s restaurants worldwide. The following tables provide the locations of our restaurants.
Item 2. Properties As of December 29, 2024, there were 6,030 Papa Johns restaurants worldwide. The following tables provide the locations of our restaurants.
Papa John’s Restaurants 531 2,689 3,220 Canada — 213 213 Total North America Papa John’s Restaurants 531 2,902 3,433 ______________________________ (a) Company-owned Papa John’s restaurants include re staurants owned by majority-owned subsidiaries.
Papa John’s Restaurants 539 2,752 3,291 Canada — 223 223 Total North America Papa John’s Restaurants 539 2,975 3,514 ______________________________ (a) Company-owned Papa John’s restaurants include re staurants owned by majority-owned subsidiaries.
Nine of our 12 North America QC Centers are located in leased spaces, with the remaining three QC Centers located in buildings we own. Our corporate office located in Louisville, Kentucky is in a building owned by us. We also maintain a Company-owned office and a full-service QC Center outside of London, UK, where our International operations are managed.
Our restaurant support center in Atlanta, Georgia, is located in a leased space. 11 of our 12 North America QC Centers are located in leased spaces, with the remaining QC Center located in a building we own. Our restaurant support center located in Louisville, Kentucky is in a building owned by us.
Removed
As of the fourth quarter of 2023, we leased the building of our previously-owned printing operations located in Louisville to a third-party. S ee “Note 22. Divestitures” of “ Notes to Consolidated Financial Statements ” for additional information. At December 31, 2023, we leased and subleased approximately 322 Papa John’s restaurant sites to franchisees in the UK.
Added
We also maintain a Company-owned office and a full-service QC Center outside of London, UK, where our International operations are managed. At December 29, 2024, we leased and subleased approximately 350 Papa John’s restaurant sites to franchisees in the UK.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. Legal Proceedings 29 Item 4. Mine Safety Disclosures 30 Information About Our Executive Officers 30 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31 Item 6. [Reserved] 32 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A.
Biggest changeItem 3. Legal Proceedings 28 Item 4. Mine Safety Disclosures 28 Information About Our Executive Officers 29 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 30 Item 6. [Reserved] 31 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32 Item 7A.
Quantitative and Qualitative Disclosures About Market Risk 52 Item 8. Financial Statements and Supplementary Data 54
Quantitative and Qualitative Disclosures About Market Risk 50 Item 8. Financial Statements and Supplementary Data 52

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

6 edited+7 added−6 removed1 unchanged
Biggest changeOyler served as Senior Vice President, Legal Affairs from November 2012 to May 2014 and as Vice President and Senior Counsel since joining the Company’s legal department in 1999. She also served as interim head of Human Resources from December 2008 to September 2009. Prior to joining Papa Johns, Ms.
Biggest changeShe also served as interim head of Human Resources from December 2008 to September 2009. Prior to joining Papa Johns, Ms. Oyler practiced law with the firm Wyatt, Tarrant and Combs LLP. Joe Sieve was appointed Chief Restaurant and Development Officer in September 2024 after serving as the Company’s Chief Restaurant Officer since May 2022. Mr.
During his seven years at Nike, Inc., Mr. Thanawala also served as the Global VP and CFO of the Converse brand, which included working within a franchise model that comprised most of the brand’s international business.
Thanawala also served as the Global VP and CFO of the Converse brand, which included working within a franchise model that comprised most of the brand’s international business.
He served in the finance leadership role for LOFT; led ANN INC’s Asia operations, global logistics and international trade based in Hong Kong; and eventually became CFO of the ANN INC. business, a subsidiary of Ascena Retail Group, Inc.
He served in the finance leadership role for LOFT; led ANN INC’s Asia operations, global logistics and international trade based in Hong Kong; and eventually became CFO of the ANN INC. business, a subsidiary of Ascena Retail Group, Inc. Caroline M. Oyler was appointed Corporate Secretary in July 2020 and Chief Legal & Risk Officer in October 2018. Ms.
Oyler was appointed Corporate Secretary in July 2020 and Chief Legal & Risk Officer in October 2018. Ms. Oyler previously served as Senior Vice President, Chief Legal Officer from May 2018 to October 2018 and Senior Vice President, General Counsel from May 2014 to May 2018. Additionally, Ms.
Oyler previously served as Senior Vice President, Chief Legal Officer from May 2018 to October 2018 and Senior Vice President, General Counsel from May 2014 to May 2018. Additionally, Ms. Oyler served as Senior Vice President, Legal Affairs from November 2012 to May 2014 and as Vice President and Senior Counsel since joining the Company’s legal department in 1999.
Item 4. Mine Safety Disclosures None. 29 Table of Contents Information About Our Executive Officers Set forth below are the current executive officers of Papa John’s: Name Age 1 Position First Elected Executive Officer Robert M.
Item 4. Mine Safety Disclosures None. 28 Information About Our Executive Officers Set forth below are the current executive officers of Papa John’s: Name Age 1 Position First Elected Executive Officer Todd A. Penegor 59 President and Chief Executive Officer 2024 Ravi Thanawala 40 Chief Financial Officer and EVP, International 2023 Caroline M.
Lynch has more than 20 years combined experience in the QSR and consumer packaged goods industries, and also held senior roles at HJ Heinz Company and Procter & Gamble. Ravi Thanawala was appointed Chief Financial Officer in July 2023. He joined Papa Johns from Nike, Inc., where he most recently served as Chief Financial Officer of Nike North America.
Ravi Thanawala was appointed Chief Financial Officer in July 2023 and served as the Company’s interim Chief Executive Officer, in addition to his role as Chief Financial Officer, from March 2024 to August 2024. He joined Papa Johns from Nike, Inc., where he served as Chief Financial Officer of Nike North America. During his seven years at Nike, Inc., Mr.
Removed
Lynch 47 President and Chief Executive Officer 2019 Ravi Thanawala 39 Chief Financial Officer 2023 Amanda Clark 2 44 Chief International Officer 2020 Caroline M. Oyler 58 Chief Legal and Risk Officer and Corporate Secretary 2018 Robert M. Lynch was appointed as President and Chief Executive Officer in August 2019. Mr.
Added
Oyler 59 Chief Legal and Risk Officer and Corporate Secretary 2018 Joseph Sieve 51 Chief Restaurant and Development Officer 2024 Todd A. Penegor was appointed as President and Chief Executive Officer in August 2024 with 20 years of experience in the restaurant and consumer goods industries. He was also appointed to the Board of Directors. Mr.
Removed
Lynch joined Papa John’s after serving as President of Arby’s Restaurant Group since August 2017, and served as Brand President and Chief Marketing Officer from August 2013 to August 2017. Prior to Arby’s, he served as Vice President of Marketing at Taco Bell. Mr.
Added
Penegor joined Papa Johns from The Wendy’s Company, where he served as President and CEO from May 2016 to February 2024 and Chief Financial Officer from September 2013 to May 2016, among other executive leadership roles.
Removed
Amanda Clark was appointed Chief Operating Officer, International in September 2023 after previously serving as Chief International and Development Officer since May 2022 and Chief Development Officer since joining Papa Johns in February 2020. Ms. Clark joined Papa Johns from Taco Bell where she served as Executive Vice President of Restaurant Experience from February 2019 to February 2020.
Added
During his tenure as President and CEO of Wendy’s, the company achieved substantial growth in sales, earnings and new restaurant counts, including the expansion of Wendy’s footprint to more than 7,000 restaurants worldwide and the 12th consecutive year of same-restaurant sales growth. Prior to Wendy’s, Mr.
Removed
She also served as Senior Vice President, North America Development from May 2017 to February 2019. In addition, Ms. Clark served as general manager for Taco Bell Canada. Prior to joining Taco Bell, she worked at Procter and Gamble for nearly 12 years on some of P&G’s biggest brands, such as Olay, Pampers and Oral-B. Caroline M.
Added
Penegor held several leadership roles at Kellogg Company, including Vice President of Kellogg and President of U.S. Snacks. Prior to Kellogg, Mr. Penegor worked at Ford Motor Company in various capacities within the Company’s finance organization supporting mergers and acquisitions, global joint ventures and treasury.
Removed
Oyler practiced law with the firm Wyatt, Tarrant and Combs LLP.
Added
Sieve joined Papa Johns from Inspire Brands where he served as Vice President of Franchise Development since June 2016. Prior to Inspire, Mr.
Removed
There are no family relationships between any of the directors or executive officers of the Company. 1 Ages are as of January 1, 2024 2 On January 23, 2024, Amanda Clark notified the Company of her intention to resign from her position with the Company, effective March 1, 2024. 30 Table of Contents PART II
Added
Sieve worked at Domino’s Pizza, Inc. first as Director of Strategic Market Growth from May 2010 to January 2014 and later as a franchise owner with a portfolio of 58 Domino’s restaurants from January 2014 to June 2016. With more than 25 years in the food service industry, Mr.
Added
Sieve began his career as a multi-unit franchisee of Goodcents Deli Fresh Subs and La Salsa Fresh Mexican Grill. There are no family relationships between any of the directors or executive officers of the Company. 1 Ages are as of January 1, 2025 29 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+3 added−4 removed3 unchanged
Biggest changeApproximately $90.2 million remained available under the Company’s share repurchase program as of February 22, 2024. The Company utilizes a written trading plan under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, from time to time to facilitate the repurchase of shares of our common stock under this share repurchase program.
Biggest changeThe Company utilizes a written trading plan under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, from time to time to facilitate the repurchase of shares of our common stock under this share repurchase program.
The graph assumes the value of hypothetical investments in the Company’s common stock and in each index was $100 on December 30, 2018, and that all dividends were reinvested on the day of issuance. The returns shown are based on historical results and are not intended to suggest future performance.
The graph assumes the value of hypothetical investments in the Company’s common stock and in each index was $100 on December 29, 2019, and that all dividends were reinvested on the day of issuance. The returns shown are based on historical results and are not intended to suggest future performance.
We anticipate continuing the payment of quarterly cash dividends. The actual amount of such dividends is subject to declaration by our Board of Directors and will depend upon future earnings, results of operations, capital requirements, our financial condition, contractual restrictions, including the terms of the agreements governing our debt and any future indebtedness we may incur and other relevant factors.
The actual amount of such dividends is subject to declaration by our Board of Directors and will depend upon future earnings, results of operations, capital requirements, our financial condition, contractual restrictions, including the terms of the agreements governing our debt and any future indebtedness we may incur and other relevant factors.
The information required by Item 5 with respect to securities authorized for issuance under equity compensation plans is incorporated herein by reference to Part III, Item 12 of this Form 10-K. 31 Table of Contents Stock Performance Graph The following performance graph compares the cumulative shareholder return of the Company’s common stock for the five-year period between December 30, 2018 and December 31, 2023 to (i) the Nasdaq U.S.
The information required by Item 5 with respect to securities authorized for issuance under equity compensation plans is incorporated herein by reference to Part III, Item 12 of this Form 10-K. 30 Stock Performance Graph The following performance graph compares the cumulative shareholder return of the Company’s common stock for the five-year period between December 29, 2019 and December 29, 2024 to (i) the Nasdaq U.S.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on The Nasdaq Global Select Market tier of The Nasdaq Stock Market under the symbol “PZZA.” As of February 22, 2024, there were 1,326 record holders of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on The Nasdaq Global Select Market tier of The Nasdaq Stock Market under the symbol “PZZA.” As of February 21, 2025, there were 1,384 record holders of our common stock.
However, there are significantly more beneficial owners of our common stock than there are record holders. On January 30, 2024, our Board of Directors declared a first quarter 2024 dividend of $0.46 per common share. The dividend was paid on February 23, 2024 to stockholders of record as of the close of business on February 12, 2024.
However, there are significantly more beneficial owners of our common stock than there are record holders. On January 24, 2025, our Board of Directors declared a first quarter 2025 dividend of $0.46 per common share. The dividend was paid on February 21, 2025 to stockholders of record as of the close of business on February 10, 2025.
Comparison of Cumulative 5-Year Total Shareholder Return Stock Price Plus Reinvested Dividends Papa Johns International, Inc. NASDAQ U.S. Benchmark TR Index NASDAQ Stocks (SIC 5800-5899 U.S. Companies) Eating and Drinking Dec. 29, 2019 Dec. 27, 2020 Dec. 26, 2021 Dec. 25, 2022 Dec. 31, 2023 Papa John’s International, Inc. $162.33 $223.01 $341.19 $219.66 $203.98 NASDAQ U.S.
Comparison of Cumulative 5-Year Total Shareholder Return Stock Price Plus Reinvested Dividends Papa Johns International, Inc. NASDAQ U.S. Benchmark TR Index NASDAQ Stocks (SIC 5800-5899 U.S. Companies) Eating and Drinking Dec. 27, 2020 Dec. 26, 2021 Dec. 25, 2022 Dec. 31, 2023 Dec. 29, 2024 Papa John’s International, Inc. $137.38 $210.18 $135.32 $125.66 $67.42 NASDAQ U.S.
Removed
In fiscal 2023, approximately 2,523,000 shares with an aggregate cost of $209.6 million and an average price of $83.10 per share were repurchased under our share repurchase program. This includes the repurchase of approximately 2.2 million shares from certain funds affiliated with, or managed by, Starboard Value LP; refer to “Note 6.
Added
We anticipate continuing the payment of a quarterly cash dividend.
Removed
Stockholders’ Deficit” of “Notes to Consolidated Financial Statements” for additional details. Funding for the share repurchase program was provided through our operating cash flows and cash provided from borrowings under our $600.0 million revolving credit facility (the “PJI Revolving Facility”).
Added
There was no share repurchase activity in fiscal 2024, and we did not repurchase any shares subsequent to December 29, 2024. Approximately $90.2 million remained available under the Company’s share repurchase program as of February 21, 2025.
Removed
The following table summarizes our repurchase activity by fiscal period during the fourth quarter ended December 31, 2023 (in thousands, except per share amounts): Fiscal Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 9/25/2023 - 10/22/2023 — $ — — $ 90,160 10/23/2023 - 11/19/2023 — — — 90,160 11/20/2023 - 12/31/2023 — — — 90,160 Total — $ — — $ 90,160 We did not repurchase any shares subsequent to year-end.
Added
Benchmark, TR Index $119.87 $151.24 $122.31 $154.55 $195.23 NASDAQ Stocks - Eating and Drinking $117.19 $132.05 $117.13 $122.37 $120.60
Removed
Benchmark, TR Index $132.65 $159.01 $200.62 $162.25 $205.01 NASDAQ Stocks - Eating and Drinking $133.61 $156.46 $176.01 $156.06 $163.78

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

107 edited+52 added−71 removed33 unchanged
Biggest changeYear Ended (In thousands, except per share amounts) December 31, 2023 December 25, 2022 Operating income $ 147,142 $ 109,030 UK repositioning and acquisition-related costs (a) 4,243 5,223 International restructuring costs (b) 2,178 — Middle East related costs (c) 868 — Refranchising and impairment losses (d) — 26,702 Legal settlements (e) 577 15,000 Other costs (f) 2,017 1,507 Adjusted operating income 157,025 157,462 Net income attributable to common shareholders $ 82,098 $ 67,362 UK repositioning and acquisition-related costs (a) 4,243 5,223 International restructuring costs (b) 2,178 — Middle East related costs (c) 868 — Refranchising and impairment losses (d) — 26,702 Legal settlements (e) 577 15,000 Other costs (f) 2,017 1,507 Tax effect of adjustments (g) (2,234) (10,897) Adjusted net income attributable to common shareholders (h) 89,747 104,897 Diluted earnings per common share $ 2.48 $ 1.89 UK repositioning and acquisition-related costs (a) 0.13 0.15 International restructuring costs (b) 0.07 — Middle East related costs (c) 0.02 — Refranchising and impairment losses (d) — 0.75 Legal settlements (e) 0.02 0.42 Other costs (f) 0.06 0.04 Tax effect of adjustments (g) (0.07) (0.31) Adjusted diluted earnings per common share (h) $ 2.71 $ 2.94 46 Table of Contents (a) Represents costs associated with repositioning the UK portfolio as well as transaction costs related to the acquisition of restaurants from franchisees.
Biggest changeYear Ended (In thousands, except per share amounts) December 29, 2024 December 31, 2023 Operating income $ 156,704 $ 147,142 Gain on sale of QC Center properties (a) (41,289) — International restructuring costs (b) 27,273 2,178 UK repositioning and acquisition-related costs (c) — 4,243 Other costs (d) 5,495 3,462 Adjusted operating income 148,183 157,025 Net income attributable to common shareholders $ 83,320 $ 82,098 Gain on sale of QC Center properties (a) (41,289) — International restructuring costs (b) 27,273 2,178 UK repositioning and acquisition-related costs (c) — 4,243 Other costs (d) 5,495 3,462 Tax effect of adjustments (e) 1,934 (2,234) Adjusted net income attributable to common shareholders (f) 76,733 89,747 Diluted earnings per common share $ 2.54 $ 2.48 Gain on sale of QC Center properties (a) (1.25) — International restructuring costs (b) 0.82 0.07 UK repositioning and acquisition-related costs (c) — 0.13 Other costs (d) 0.17 0.10 Tax effect of adjustments (e) 0.06 (0.07) Adjusted diluted earnings per common share (f) $ 2.34 $ 2.71 (a) Represents pre-tax gain on sale, net of transaction costs, realized upon the August 2, 2024 completion of the sale of our Texas and Florida QC Center properties.
We are also offering a three-year waiver of PJMF contributions for new restaurants opened in 2025. This new incentive is intended to improve profitability for franchisees, add scale in key markets and attract growth-driven franchisees.
We are also offering a three-year waiver of PJMF contributions for new restaurants opened in 2025. This incentive is intended to improve profitability for franchisees, add scale in key markets and attract growth-driven franchisees.
Presentation of Financial Results Critical Accounting Policies and Estimates The results of operations are based on our Consolidated Financial Statements, which were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The preparation of Consolidated Financial Statements requires management to make estimates and judgments that affect the amounts reported in the Consolidated Financial Statements.
Critical Accounting Policies and Estimates The results of operations are based on our Consolidated Financial Statements, which were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The preparation of Consolidated Financial Statements requires management to make estimates and judgments that affect the amounts reported in the Consolidated Financial Statements.
GAAP measures to adjusted operating income, adjusted net income attributable to common shareholders and adjusted diluted earnings per common share are operating income, net income attributable to common shareholders and diluted earnings per common share, respectively. These non-GAAP measures should not be construed as a substitute for or a better indicator of the Company’s performance than the Company’s U.S.
GAAP measures to adjusted operating income, adjusted net income attributable to common shareholders and adjusted diluted earnings per common share are operating income, net income attributable to common shareholders and diluted earnings per common share, respectively. These non-GAAP measures should not be construed as a substitute for or a better indicator of the 44 Company’s performance than the Company’s U.S.
Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse.
Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are 35 measured using enacted tax rates and laws that are expected to be in effect when the differences reverse.
Our fiscal year ends on the last Sunday in December of each year. All fiscal years presented consist of 52 weeks except for the 2023 fiscal year, which consists of 53 weeks. Papa John’s International, Inc. (referred to as the “Company,” “Papa John’s,” “Papa Johns” or in the first-person notations of “we,” “us” and “our”) began operations in 1984.
Our fiscal year ends on the last Sunday in December of each year. All fiscal years presented consist of 52 weeks except for the 2023 fiscal year, which consisted of 53 weeks. Papa John’s International, Inc. (referred to as the “Company,” “Papa John’s,” “Papa Johns” or in the first-person notations of “we,” “us” and “our”) began operations in 1984.
We estimate that our capital expenditures during 2024 will be approximately $75.0 million to $85.0 million. This estimate includes development of Company-owned restaurants and technology enhancements. We intend to fund our capital expenditures with cash generated by operations and borrowings under the PJI Revolving Facility, as necessary.
We estimate that our capital expenditures during 2025 will be approximately $75.0 million to $85.0 million. This estimate includes development of Company-owned restaurants and technology enhancements. We intend to fund our capital expenditures with cash generated by operations and borrowings under the PJI Revolving Facility, as necessary.
Our capital priorities are: • investing for growth • maintaining a strong balance sheet, and • returning capital to shareholders The Company believes that its balances of cash and cash equivalents and borrowing capacity, along with cash generated by operations, will be sufficient to satisfy its cash requirements, cash dividends, interest payments and share repurchases over the next twelve months and beyond.
Our capital priorities are: • investing for growth • maintaining a strong balance sheet, and • returning capital to shareholders The Company believes that its balances of cash and cash equivalents and borrowing capacity, along with cash generated by operations and from asset sales, will be sufficient to satisfy its cash requirements, cash dividends, interest payments and share repurchases over the next twelve months and beyond.
The Company is also subject to certain financial covenants, as shown in the following table, that could restrict or impose constraints on the liquidity of our business: Permitted Ratio Actual Ratio for the Year Ended December 31, 2023 Leverage ratio Not to exceed 5.25 to 1.0 3.2 to 1.0 Interest coverage ratio Not less than 2.00 to 1.0 3.3 to 1.0 Our leverage ratio is defined as outstanding debt divided by Consolidated EBITDA (as defined in the Credit Agreement), for the most recent four fiscal quarters.
The Company is also subject to certain financial covenants, as shown in the following table, that could restrict or impose constraints on the liquidity of our business: Permitted Ratio Actual Ratio for the Year Ended December 29, 2024 Leverage ratio Not to exceed 5.25 to 1.0 3.2 to 1.0 Interest coverage ratio Not less than 2.00 to 1.0 3.2 to 1.0 Our leverage ratio is defined as outstanding debt divided by Consolidated EBITDA (as defined in the Credit Agreement), for the most recent four fiscal quarters.
Therefore, the 36 Table of Contents Company considers the fair value of the underlying collateral rights (e.g., underlying franchisee business, property and equipment) and any guarantees when assessing the allowance for credit losses (which may require third-party valuations of fair value). Notes receivable balances are charged off against the allowance after recovery efforts have ceased.
Therefore, the Company considers the fair value of the underlying collateral rights (e.g., underlying franchisee business, property and equipment) and any guarantees when assessing the allowance for credit losses (which may require third-party valuations of fair value). Notes receivable balances are charged off against the allowance after recovery efforts have ceased.
If indicators of impairment are present, calculating projected undiscounted cash flows requires management to make assumptions and estimates for factors that include future comparable sales growth and gross margin based on internal projections as well as the historical performance of the market and whether that is an indicator of future performance.
If indicators of impairment are present, calculating projected undiscounted cash flows requires management to make assumptions and estimates for factors that include future comparable sales growth and gross margin based on internal projections as well as the historical performance of the market or individual restaurant and whether that is an indicator of future performance.
The risks, uncertainties and assumptions that are involved in our forward-looking statements include, but are not limited to: • the ability of the Company to manage challenging macroeconomic conditions in the United States and internationally, including the United Kingdom; • the ability of the Company to manage staffing and labor shortages at Company and/or franchised restaurants and our Quality Control Centers; • increases in labor costs, food costs or sustained higher other operating costs, including as a result of supply chain disruption, inflation or climate change; 51 Table of Contents • the potential for delayed new restaurant openings, both domestically and internationally; • the increased risk of phishing, ransomware and other cyber-attacks; • risks to the global economy and our business related to the conflicts in Ukraine and the Middle East and other international conflicts; • increased costs for branding initiatives and launching new advertising and marketing campaigns and promotions to boost consumer sentiment and sales trends, and the risk that such initiatives will not be effective; • risks related to a possible economic slowdown that could, among other things, reduce consumer spending or demand and result in changing consumer practices; • risks related to social media, including publicity adversely and rapidly impacting our brand and reputation; • aggressive changes in pricing or other marketing or promotional strategies by competitors, which may adversely affect sales and profitability; and new product and concept developments by food industry competitors; • changes in consumer preferences or consumer buying habits, including the growing popularity of delivery aggregators, as well as changes in general economic conditions or other factors that may affect consumer confidence and discretionary spending, including higher unemployment; • the adverse impact on the Company or our results caused by global health concerns, product recalls, food quality or safety issues, incidences of foodborne illness, food contamination and other general public health concerns about our Company-owned or franchised restaurants or others in the restaurant industry; • the effectiveness of our technology investments and changes in unit-level operations; • the ability of the Company and its franchisees to meet planned growth targets and operate new and existing restaurants profitably, including difficulties finding qualified franchisees, restaurant level employees or suitable sites; • increases in insurance claims and related costs for programs funded by the Company up to certain retention limits, including medical, owned and non-owned vehicles, workers’ compensation, general liability and property; • disruption of our supply chain or commissary operations which could be caused by our sole source of supply of mozzarella cheese, desserts, garlic cups or limited source of suppliers for other key ingredients or more generally due to weather, natural disasters including drought, disease, or geopolitical or other disruptions beyond our control; • increased risks associated with our International operations, including economic and political conditions and risks associated with the withdrawal of the UK from the European Union, instability or uncertainty in our international markets, especially emerging markets, fluctuations in currency exchange rates, difficulty in meeting planned sales targets and new restaurant growth; • the impact of current or future claims and litigation and our ability to comply with current, proposed or future legislation that could impact our business including compliance with the European Union General Data Protection Regulation; • risks related to our indebtedness and borrowing costs, including prolonged higher interest rates, and the current state of the credit markets; • the Company’s ability to continue to pay dividends to stockholders based upon profitability, cash flows and capital adequacy if restaurant sales and operating results decline; • our ability to effectively operate and improve the performance of International Company-owned restaurants; • disruption of critical business or information technology systems, or those of our suppliers, and risks associated with systems failures and data privacy and cybersecurity incidents, including theft of confidential Company, employee and customer information, including payment cards; and • changes in Federal or state income, general and other tax laws, rules and regulations and changes in generally accepted accounting principles.
The risks, uncertainties and assumptions that are involved in our forward-looking statements include, but are not limited to: • the ability of the Company to manage challenging macroeconomic conditions in the United States and internationally; • the ability of the Company to retain key management and manage staffing and labor shortages at Company and/or franchised restaurants and our Quality Control Centers; • increases in labor costs, food costs or sustained higher other operating costs, including as a result of supply chain disruption, inflation and related impacts, increased tariffs or other trade barriers, immigration policies, or climate change; • the potential for delayed new restaurant openings, both domestically and internationally; • the increased risk of phishing, ransomware and other cyber-attacks; • risks to the global economy and our business related to geopolitical conflicts, including those in Ukraine and the Middle East; • increased costs for branding initiatives and launching new advertising and marketing campaigns and promotions to boost consumer sentiment and sales trends, and the risk that such initiatives will not be effective; 49 • risks related to a possible economic slowdown that could, among other things, reduce consumer spending or demand and result in changing consumer practices; • risks related to social media, including publicity adversely and rapidly impacting our brand and reputation; • aggressive changes in pricing or other marketing or promotional strategies by competitors, which may adversely affect sales and profitability; and new product and concept developments by food industry competitors; • changes in consumer preferences or consumer buying habits, including the growing popularity of delivery aggregators, as well as changes in general economic conditions or other factors that may affect consumer confidence and discretionary spending, including higher unemployment; • the adverse impact on the Company or our results caused by global health concerns, product recalls, food quality or safety issues, incidences of foodborne illness, food contamination and other general public health concerns about our Company-owned or franchised restaurants or others in the restaurant industry; • the effectiveness of our technology investments and changes in unit-level operations; • the ability of the Company and its franchisees to meet planned growth targets and operate new and existing restaurants profitably, including difficulties finding qualified franchisees, restaurant level employees or suitable sites; • increases in insurance claims and related costs for programs funded by the Company up to certain retention limits, including medical, owned and non-owned vehicles, workers’ compensation, general liability and property; • disruption of our supply chain or commissary operations which could be caused by our sole source of supply of mozzarella cheese, desserts, garlic cups or limited source of suppliers for other key ingredients or more generally due to weather, natural disasters including drought, disease, or geopolitical or other disruptions beyond our control; • increased risks associated with our International operations, including economic and political conditions, instability or uncertainty in our international markets, especially emerging markets, fluctuations in currency exchange rates, difficulty in meeting planned sales targets, regulatory changes, increased tariffs and other trade barriers, and new restaurant growth; • the impact of current or future claims and litigation and our ability to comply with current, proposed or future legislation that could impact our business; • risks related to our indebtedness and borrowing costs, including prolonged higher interest rates, and the current state of the credit markets; • the Company’s ability to continue to pay dividends to stockholders based upon profitability, cash flows and capital adequacy if restaurant sales and operating results decline; • our ability to effectively operate and improve the performance of International Company-owned restaurants; • disruption of critical business or information technology systems, or those of our suppliers, and risks associated with systems failures and data privacy and cybersecurity incidents, including theft of confidential Company, employee and customer information, including payment cards; and • changes in Federal or state income, general and other tax laws, rules and regulations and changes in generally accepted accounting principles.
We guarantee leases for certain Papa Johns North American franchisees who have purchased restaurants that were previously Company-owned. We are contingently liable on these leases. The leases have varying terms, the latest of which expires in 2036.
We guarantee leases for certain Papa Johns North American franchisees who have purchased restaurants that were previously Company-owned. We are contingently liable on these leases. The leases have varying terms, the latest of which 48 expires in 2034.
Discussion of 2021 items and year-to-year comparisons between the years ended December 25, 2022 and December 26, 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2022.
Discussion of 2022 items and year-to-year comparisons between the years ended December 31, 2023 and December 25, 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Concurrently with the issuance of the Notes, the Company entered into an amended and restated credit agreement (the “Credit Agreement”) replacing the Company’s previous credit agreement.
Concurrent with the issuance of the Notes, the Company entered into an amended and restated credit agreement (the “Credit Agreement”) replacing the Company’s previous credit agreement.
Approximately $90.2 million remained available under the Company’s share repurchase program as of February 22, 2024. The Company utilizes a written trading plan under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, from time to time to facilitate the repurchase of shares of our common stock under this share repurchase program.
Approximately $90.2 million remained available under the Company’s share repurchase program as of February 21, 2025. The Company utilizes a written trading plan under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, from time to time to facilitate the repurchase of shares of our common stock under this share repurchase program.
We believe North America, International and global restaurant and comparable sales growth (decline) and Global system-wide restaurant sales information is useful in analyzing our results since our franchisees pay royalties and marketing fund contributions that are based on a percentage of franchise sales.
We believe Domestic Company-owned, North America franchised, and International comparable sales and comparable sales growth (decline) and Global system-wide restaurant sales and sales growth information is useful in analyzing our results since our franchisees pay royalties and marketing fund contributions that are based on a percentage of franchise sales.
GAAP measure. 47 Table of Contents Liquidity and Capital Resources Our primary sources of liquidity and capital resources are cash flows from operations and borrowings under the PJI Revolving Facility. Our principal uses of cash are operating expenses, capital expenditures, and returning value to our shareholders in the form of cash dividends and share repurchases.
GAAP measure. 45 Liquidity and Capital Resources Our primary sources of liquidity and capital resources are cash flows from operations and borrowings under the PJI Revolving Facility. Our principal uses of cash are operating expenses, capital expenditures, and returning value to our shareholders in the form of cash dividends and share repurchases.
Debt” of “Notes to Consolidated Financial Statements” for further information on our obligations and the timing of expected payments. 50 Table of Contents • Operating and Finance Leases : Refer to “Note 3 Leases” of “Notes to Consolidated Financial Statements” for further information on our obligations and the timing of expected payments.
Debt” of “Notes to Consolidated Financial Statements” for further information on our obligations and the timing of expected payments. • Operating and Finance Leases : Refer to “Note 3 Leases” of “Notes to Consolidated Financial Statements” for further information on our obligations and the timing of expected payments.
Our interest coverage ratio is defined as the sum of Consolidated EBITDA and consolidated rental expense for the most recent four fiscal quarters divided by the sum of consolidated interest expense and consolidated rental expense for the most recent four fiscal quarters. We were in compliance with all financial covenants as of December 31, 2023.
Our interest coverage ratio is defined as the sum of Consolidated EBITDA and consolidated rental expense for the most recent four fiscal quarters divided by the sum of consolidated interest expense and consolidated rental expense for the most recent four fiscal quarters. We were in compliance with all financial covenants as of December 29, 2024.
Such forward-looking statements include or may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, earnings per share, share repurchases, the current economic environment, commodity and labor costs, currency fluctuations, profit margins, supply chain operating margin, net unit growth, unit level performance, capital expenditures, restaurant and franchise development, restaurant acquisitions, restaurant closures, labor shortages, labor cost increases, inflation, royalty relief, franchisee support and incentives, the effectiveness of our menu innovations and other business initiatives, investments in product and digital innovation, marketing efforts and investments, liquidity, compliance with debt covenants, impairments, strategic decisions and actions, changes to our national marketing fund, changes to our commissary model, dividends, effective tax rates, regulatory changes and impacts, investments and repositioning of the UK market, International restructuring, International consumer demand, adoption of new accounting standards, and other financial and operational measures.
Such forward-looking statements include or may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, earnings per share, share repurchases, depreciation and amortization, interest expenses, tax rates, system-wide sales, the current economic environment, commodity and labor costs, currency fluctuations, profit margins, supply chain operating margin, net unit growth, unit level performance, capital expenditures, restaurant and franchise development, restaurant acquisitions, restaurant closures, labor shortages, labor cost increases, changes in management, inflation, royalty relief, franchisee support and incentives, the effectiveness of our menu innovations and other business initiatives, investments in product and digital innovation, marketing efforts and investments, liquidity, compliance with debt covenants, impairments, strategic decisions and actions, changes to our national marketing fund, changes to our commissary model, dividends, effective tax rates, regulatory changes and impacts, repositioning of the UK market, International restructuring plans, including timing of completion, expected benefits and costs, International consumer demand, adoption of new accounting standards, and other financial and operational measures.
Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the respective lease, including the first renewal period (generally five to ten years). Depreciation expense was $54.3 million in 2023, $45.6 million in 2022 and $43.0 million in 2021.
Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the respective lease, including the first renewal period (generally five to ten years). Depreciation expense was $59.6 million in 2024, $54.3 million in 2023 and $45.6 million in 2022.
Year Ended Amounts below exclude the impact of foreign currency December 31, 2023 December 25, 2022 Comparable sales growth (decline) (a) : Domestic Company-owned restaurants 3.4 % (1.0) % North America franchised restaurants 0.1 % 1.2 % North America restaurants 0.8 % 0.7 % International restaurants (3.1) % (5.3) % Total comparable sales growth (decline) (0.1) % (0.8) % System-wide restaurant sales growth (b) : Domestic Company-owned restaurants 6.7 % 1.3 % North America franchised restaurants 3.6 % 2.5 % North America restaurants 4.1 % 2.3 % International restaurants (c) 7.7 % 4.8 % Total global system-wide restaurant sales growth (c) 5.0 % 2.9 % ______________________________ (a) Comparable sales growth (decline) in fiscal year 2023 includes a 52-week comparison to fiscal year 2022.
Year Ended Amounts below exclude the impact of foreign currency December 29, 2024 December 31, 2023 Comparable sales growth (decline) (a) : Domestic Company-owned restaurants (4.9) % 3.4 % North America franchised restaurants (3.5) % 0.1 % North America restaurants (3.8) % 0.8 % International restaurants (0.8) % (3.1) % Total comparable sales growth (decline) (3.1) % (0.1) % System-wide restaurant sales growth (decline) (b) : Domestic Company-owned restaurants (4.7) % 6.7 % North America franchised restaurants (4.1) % 3.6 % North America restaurants (4.2) % 4.1 % International restaurants 0.4 % 7.7 % Total global system-wide restaurant sales growth (decline) (3.1) % 5.0 % ______________________________ (a) Comparable sales growth (decline) includes a 52 week comparison for fiscal year 2024 to fiscal year 2023.
The PJMF Revolving Facility matures on September 30, 2024, but is subject to annual amendments. The borrowings under the PJMF Revolving Facility accrue interest at a variable rate of the one-month SOFR plu s 1.975% . There was no debt outstanding under the PJMF Revolving Facility as of December 31, 2023 or December 25, 2022.
The PJMF Revolving Facility matures on September 30, 2025, but is subject to annual renewals. The borrowings under the PJMF Revolving Facility accrue interest at a variable rate of a one month SOFR plu s 1.975% . There was no debt outstanding under the PJMF Revolving Facility as of December 29, 2024 or December 31, 2023.
This section of this Annual Report on Form 10-K generally discusses fiscal 2023 and 2022 items and year-to-year comparisons between the years ended December 31, 2023 and December 25, 2022.
This section of this Annual Report on Form 10-K generally discusses fiscal 2024 and 2023 items and year-to-year comparisons between the years ended December 29, 2024 and December 31, 2023.
We record the liability for losses based upon undiscounted estimates of the liability for claims incurred and for events that have occurred but have not been reported using certain third-party actuarial projections and our historical claims loss experience. As of December 31, 2023, our insurance reserves were $56.8 million compared to $67.3 million at December 25, 2022.
We record the liability for losses based upon undiscounted estimates of the liability for claims incurred and for events that have occurred but have not been reported using certain third-party actuarial projections and our historical claims loss experience. As of December 29, 2024, our insurance reserves were $65.7 million compared to $56.8 million at December 31, 2023.
With our insurance programs, we are party to surety bonds with off-balance sheet risk for a total of $20.7 million as of December 31, 2023. The surety bond arrangements expire within one year but have automatic renewal clauses. See “Note 12. Debt” and “Note 19.
With our insurance programs, we are party to surety bonds with off-balance sheet risk for a total of $19.3 million as of December 29, 2024. The surety bond arrangements expire within one year but have automatic renewal clauses. See “Note 12. Debt” and “Note 19.
Management believes the presentation of franchise restaurant sales growth, excluding the impact of foreign currency, provides investors with useful information regarding underlying sales 37 Table of Contents trends and the impact of new unit growth without being impacted by swings in the external factor of foreign currency. Franchise restaurant sales are not included in the Company’s revenues.
Management believes the presentation of Global system-wide restaurant sales growth, excluding the impact of foreign currency, provides investors with useful information regarding underlying sales trends and 36 the impact of new unit growth without being impacted by swings in the external factor of foreign currency. Franchise restaurant sales are not included in the Company’s revenues.
Significant Accounting Policies” of “Notes to Consolidated Financial Statements.” 35 Table of Contents We believe that our most critical accounting estimates are: Insurance Reserves Our insurance programs for workers’ compensation, owned and non-owned automobiles, general liability and property insurance coverage are funded by the Company up to certain retention levels. Retention limits range up to $0.5 million.
Significant Accounting Policies” of “Notes to Consolidated Financial Statements.” We believe that our most critical accounting estimates are: Insurance Reserves Our insurance programs for workers’ compensation, owned and non-owned automobiles, general liability and property insurance coverage are funded by the Company up to certain retention levels ranging up to $0.8 million.
There can be no assurance that we will repurchase shares of our common stock either through a Rule 10b5-1 trading plan or otherwise. Dividends The Company paid aggregate cash dividends to common stockholders of $58.5 million ($1.76 per share) and $54.8 million ($1.54 per share) for the years ended December 31, 2023 and December 25, 2022, respectively.
There can be no assurance that we will repurchase shares of our common stock either through a Rule 10b5-1 trading plan or otherwise. Dividends The Company paid aggregate cash dividends to common stockholders of $60.6 million ($1.84 per share) and $58.5 million ($1.76 per share) for the years ended December 29, 2024 and December 31, 2023, respectively.
The Company’s significant accounting policies, including recently issued accounting pronouncements, are more fully described in “Note 2.
The Company’s significant accounting policies, including recently issued accounting pronouncements, are also described in “Note 2.
As of December 31, 2023, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was approximately $7.3 million. We have certain other commercial commitments where payment is contingent upon the occurrence of certain events.
As of December 29, 2024, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was approximately $10.4 million. We have certain other commercial commitments where payment is contingent upon the occurrence of certain events.
Adjusted diluted earnings per common share, a non-GAAP measure, was $2.71 for the year ended December 31, 2023 compared to $2.94 for the year ended December 25, 2022, representing a decrease of $0.23. See “Non-GAAP Measures” for additional information. These changes were driven by the same factors impacting operating income and adjusted operating income as discussed above.
Adjusted diluted earnings per common share, a non-GAAP measure, was $2.34 for the year ended December 29, 2024 compared to $2.71 for the year ended December 31, 2023, representing a decrease of $0.37. See “Non-GAAP Measures” for additional information. These changes were driven by the same factors impacting operating income, adjusted operating income, and income tax expense as discussed above.
To pursue the significant opportunities we have identified in the U.S. and accelerate development in 2024 and beyond, we have designed a new development incentive intended to deliver higher restaurant-level profit margins for new restaurants opened in 2024 through a waiver of PJMF contributions during the first five years of operations.
To pursue the opportunities we have identified in the United States and accelerate development, we introduced a new development incentive intended to deliver higher restaurant-level profit margins for new restaurants opened in 2024 through a waiver of PJMF contributions during the first five years of operations.
The following table summarizes our repurchase activity for the years ended December 31, 2023 and December 25, 2022: (In thousands, except average price per share) Year Ended Total Number of Shares Purchased Average Price Paid per Share Aggregate Cost of Shares Purchased Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs December 31, 2023 2,523 $ 83.10 $ 209,640 $ 90,160 December 25, 2022 1,343 $ 93.07 $ 125,000 $ 299,800 We did not repurchase any shares subsequent to December 31, 2023.
The following table summarizes our repurchase activity for the years ended December 29, 2024 and December 31, 2023: 47 (In thousands, except average price per share) Year Ended Total Number of Shares Purchased Average Price Paid per Share Aggregate Cost of Shares Purchased Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs December 29, 2024 — $ — $ — $ 90,160 December 31, 2023 2,523 $ 83.10 $ 209,640 $ 90,160 We did not repurchase any shares subsequent to December 29, 2024.
Franchise restaurant and comparable sales growth information is also useful for comparison to industry trends and evaluating the strength of our brand.
Comparable sales growth (decline) and Global system-wide restaurant sales information is also useful for comparison to industry trends and evaluating the strength of our brand.
Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts we expect to realize and were $37.6 million and $32.1 million as of December 31, 2023 and December 25, 2022, respectively.
Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts we expect to realize and were $44.5 million and $37.6 million as of December 29, 2024 and December 31, 2023, respectively.
We perform these assessments at the operating market level, as this represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
We perform these assessments at the operating market level for Domestic restaurants and at the restaurant level for our UK Company-owned restaurants, as this represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
(“PJMF”) which is our national marketing fund, printing and promotional items and information systems equipment, and software and related services. We believe that in addition to supporting both Company and franchised profitability and growth, these activities contribute to product quality and consistency throughout the Papa John’s system.
(“PJMF”) which is our national marketing fund, and fees related to the use of information systems equipment as well as software and related services. We believe that in addition to supporting both Company and franchised profitability and growth, these activities contribute to product quality and consistency throughout the Papa Johns system.
“Global system-wide restaurant sales” represents total restaurant sales for all Company-owned and franchised restaurants open during the comparable periods, and “Global system-wide restaurant sales growth (decline)” represents the change in total system restaurant sales year-over-year. Global system-wide restaurant sales and global system-wide sales growth (decline) exclude franchisees for which we suspended corporate support.
“Comparable sales growth (decline)” represents the change in year-over-year comparable sales. “Global system-wide restaurant sales” represents total restaurant sales for all Company-owned and franchised restaurants open during the comparable periods, and “Global system-wide restaurant sales growth (decline)” represents the change in global system-wide restaurant sales year-over-year.
The Company establishes an allowance for credit losses on franchisee notes receivables based on management’s estimate of the lifetime expected loss on the notes. The allowance for credit losses on notes receivable is judgmental and subjective based on management’s evaluation of historical collection experience and external market data and other factors, including those related to current market conditions and events.
The allowance for credit losses on notes receivable is judgmental and subjective based on management’s evaluation of historical collection experience and external market data and other factors, including those related to current market conditions and events.
GAAP, we provide certain non-GAAP measures, which present results on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance with U.S. GAAP and include the following: adjusted operating income, adjusted net income attributable to common shareholders and adjusted diluted earnings per common share.
These are supplemental measures of performance that are not required by or presented in accordance with U.S. GAAP and include the following: adjusted operating income, adjusted net income attributable to common shareholders and adjusted diluted earnings per common share.
(Dollars in thousands) Year Ended December 31, 2023 December 25, 2022 Income before income taxes $ 103,673 $ 83,769 Income tax expense $ 20,874 $ 14,420 Effective tax rate 20.1 % 17.2 % See “Note 17. Income Taxes” of “Notes to Consolidated Financial Statements,” for additional information. Net Income Attributable to Noncontrolling Interests - see “Note 9.
(Dollars in thousands) Year Ended December 29, 2024 December 31, 2023 Income before income taxes $ 114,126 $ 103,673 Income tax expense $ 29,929 $ 20,874 Effective tax rate 26.2 % 20.1 % See “Note 17. Income Taxes” of “Notes to Consolidated Financial Statements,” for additional information. Net Income Attributable to Noncontrolling Interests - see “Note 9.
Noncontrolling Interests” of “Notes to Consolidated Financial Statements,” for information. Diluted Earnings Per Share Diluted earnings per common share was $2.48 for the year ended December 31, 2023 compared to $1.89 for the year ended December 25, 2022, representing an increase of $0.59.
Noncontrolling Interests” of “Notes to Consolidated Financial Statements,” for information. Diluted Earnings Per Share Diluted earnings per common share was $2.54 for the year ended December 29, 2024 compared to $2.48 for the year ended December 31, 2023, representing an increase of $0.06.
The Company’s free cash flow for the last two years was as follows (in thousands): Year Ended December 31, 2023 December 25, 2022 Net cash provided by operating activities $ 193,055 $ 117,808 Purchases of property and equipment (76,620) (78,391) Free cash flow $ 116,435 $ 39,417 Contractual Obligations The Company’s cash requirements greater than twelve months from contractual obligations and commitments include: • Debt Obligations and Interest Payments : Refer to “Note 12.
The Company’s free cash flow for the last two years was as follows (in thousands): Year Ended December 29, 2024 December 31, 2023 Net cash provided by operating activities $ 106,632 $ 193,055 Purchases of property and equipment (72,484) (76,620) Free cash flow $ 34,148 $ 116,435 Contractual Obligations The Company’s cash requirements greater than twelve months from contractual obligations and commitments include: • Debt Obligations and Interest Payments : Refer to “Note 12.
Franchisee notes receivable was $33.6 million with an allowance for credit losses of $16.1 million as of December 31, 2023 compared to $42.6 million with an allowance for credit losses of $14.5 million as of December 25, 2022. See “Note 10. Allowance for Credit Losses” of “Notes to Consolidated Financial Statements” for further information.
Franchisee notes receivable was $29.0 million with an allowance for credit losses of $15.2 million as of December 29, 2024 compared to $33.6 million with an allowance for credit losses of $16.1 million as of December 31, 2023. See “Note 10. Allowance for Credit Losses” of “Notes to Consolidated Financial Statements” for further information.
On January 30, 2024, our Board of Directors declared a first quarter 2024 dividend of $0.46 per common share, representing a $15.1 million aggregate dividend that was paid on February 23, 2024 to stockholders of record as of the close of business on February 12, 2024.
On January 24, 2025, our Board of Directors declared a first quarter 2025 dividend of $0.46 per common share, representing a $15.2 million aggregate dividend that was paid on February 21, 2025 to stockholders of record as of the close of business on February 10, 2025.
Our insurance reserves primarily relate to auto liability and workers’ compensation claims and include the gross up of claims above our retention levels, with a corresponding receivable recorded in Prepaid expenses and other current assets and Other assets on the Consolidated Balance Sheets.
Our insurance reserves primarily relate to auto liability and workers’ compensation claims and include the gross up of claims above our retention levels, with a corresponding receivable of $45.2 million and $34.5 million as of December 29, 2024 and December 31, 2023, respectively, recorded in Prepaid expenses and other current assets and Other assets on the Consolidated Balance Sheets.
At December 31, 2023, there were 5,906 Papa John’s restaurants in operation, consisting of 648 Company-owned and 5,258 franchised restaurants. Our revenues are derived from retail sales of pizza and other food and beverage products to the general public by Company-owned restaurants, franchise royalties, and sales of franchise and development rights.
At December 29, 2024, there were 6,030 Papa Johns restaurants in operation, consisting of 552 Company-owned and 5,478 franchised restaurants. Our revenues are derived from retail sales of pizza and other food and beverage products to the general public by Company-owned restaurants, franchise royalties and sales of franchise and development rights.
Additionally, approximately 50% of our North America revenues in each of the last two fiscal years were derived from sales to franchisees of various items including food and paper products from our Domestic Quality Control Centers (“QC Centers”), operation of our International QC Center in the United Kingdom, contributions received by Papa John’s Marketing Fund, Inc.
Additionally, we generate revenue from sales to franchisees of various items including food and paper products from our North America Quality Control Centers (“QC Centers”) and operation of our International QC Center in the United Kingdom, contributions received by Papa John’s Marketing Fund, Inc.
(g) The tax effect on non-GAAP adjustments was calculated by applying the marginal tax rate of 22.6% and 22.5% for the years ended December 31, 2023 and December 25, 2022, respectively. (h) Amounts shown exclude the impact of allocation of undistributed earnings to participating securities. In addition, we present free cash flow in this report, which is a non-GAAP measure.
(e) The tax effect on non-GAAP adjustments was calculated by applying the marginal tax rate of 22.7% and 22.6% for the years ended December 29, 2024 and December 31, 2023, respectively. (f) Amounts shown include the impact of dividends paid to participating securities. In addition, we present free cash flow in this report, which is a non-GAAP measure.
Cash Flows The table below summarizes our cash flows for each of the last two fiscal years (in thousands): 2023 2022 Total cash provided by (used in): Operating activities $ 193,055 $ 117,808 Investing activities (75,123) (62,793) Financing activities (124,076) (76,240) Effect of exchange rate changes on cash and cash equivalents (642) (2,012) Change in cash and cash equivalents $ (6,786) $ (23,237) Operating Activities Total cash provided by operating activities was $193.1 million for the year ended December 31, 2023 compared to $117.8 million for the prior year.
Cash Flows The table below summarizes our cash flows for each of the last two fiscal years (in thousands): 2024 2023 Total cash provided by (used in): Operating activities $ 106,632 $ 193,055 Investing activities (17,348) (75,123) Financing activities (91,672) (124,076) Effect of exchange rate changes on cash and cash equivalents (244) (642) Change in cash and cash equivalents $ (2,632) $ (6,786) Operating Activities Total cash provided by operating activities was $106.6 million for the year ended December 29, 2024 compared to $193.1 million for the prior year.
The 53rd week of operations in 2023 increased interest expense by approximately $0.5 million. 44 Table of Contents Income Tax Expense The effective income tax rate was 20.1% for 2023 and 17.2% for 2022.
The 53rd week of operations in 2023 also increased prior year interest expense by approximately $0.5 million. 43 Income Tax Expense The effective income tax rate was 26.2% for 2024 and 20.1% for 2023.
The 53rd week contributed approximately $8 million to operating income in 2023. The changes in adjusted operating income compared to the prior year were primarily due to the following: • Domestic Company-owned restaurants increased $9.1 million for the year ended December 31, 2023. The 53rd week of operations contributed approximately $4 million to operating income in 2023.
The 53rd week contributed approximately $8 million to operating and adjusted operating income in 2023. The changes in operating income and adjusted operating income compared to the prior year were primarily due to the following: • Domestic Company-owned restaurants operating income decreased $14.3 million for the year ended December 29, 2024.
The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Credit Agreement. See “Note 12.
The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Credit Agreement. See “Note 12. Debt” of “Notes to Consolidated Financial Statements” for additional information.
Litigation, Commitments and Contingencies” of “Notes to Consolidated Financial Statements” for additional information related to contractual and other commitments. Impact of Inflation We experienced price increases in food items and other commodities, labor and benefits, and fuel and other energy costs during 2022, which began to gradually ease throughout 2023 and which we expect to continue to moderate during 2024.
Litigation, Commitments and Contingencies” of “Notes to Consolidated Financial Statements” for additional information related to contractual and other commitments. Impact of Inflation In recent years, we have experienced price increases in food items and other commodities, labor and benefits, and fuel and other energy costs.
We estimate that a one percent change in the effective income tax rate would impact the 2023 income tax expense by $1.0 million . See “Note 17. Income Taxes” of “Notes to Consolidated Financial Statements” for additional information.
We estimate that a one percent change in the effective income tax rate would impact the 2024 income tax expense by $1.1 million . See “Note 17. Income Taxes” of “Notes to Consolidated Financial Statements” for additional information. Global Restaurant Sales and Unit Information “Comparable sales” represents sales for the same base of restaurants for the same fiscal periods.
The 53rd week of operations contributed approximately $3 million to operating income in 2023. The impact of the 2022 refranchising increased the segment’s operating income by $1.4 million in 2023.
The 53rd week of operations contributed approximately $4 million to operating income in 2023.
Our outstanding debt as of December 31, 2023 was $764.0 million, which was comprised of $400.0 million outstanding under the Notes and $364.0 million outstanding under the PJI Revolving Facility. Remaining availability under the PJI Revolving Facility was $236.0 million as of December 31, 2023.
Our outstanding debt as of December 29, 2024 was $746.7 million, which was comprised of $400.0 million outstanding under the Notes and $346.7 million outstanding under the PJI Revolving Facility. Remaining availability under the PJI Revolving Facility was $253.3 million as of December 29, 2024.
In 2023, we expanded our global footprint by 3.7%, with 208 net new units comprised of 57 net unit openings in North America and 151 net unit openings in International markets.
In 2024, we expanded our global footprint by 2.1%, with 124 net new units comprised of 81 net unit openings in North America and 43 net unit openings in International markets.
In 2022, outflows included $125.0 million in share repurchases as well as dividends paid to common shareholders of $54.8 million, partially offset by $115.0 million in net borrowings from the PJI Revolving Facility. 48 Table of Contents Debt On September 14, 2021, the Company issued $400.0 million of 3.875% senior notes (the “Notes”) which will mature on September 15, 2029.
In 2023, the principal financing outflows included $210.3 million in share repurchases as well as dividend payments of $58.5 million, partially offset by $159.0 million in net borrowings from the PJI Revolving Facility. 46 Debt On September 14, 2021, the Company issued $400.0 million of 3.875% senior notes (the “Notes”) which will mature on September 15, 2029.
Depreciation and Amortization Depreciation and amortization expense was $64.1 million, or 3.0% of revenues in 2023, as compared to $52.0 million, or 2.5% of revenues for the prior year, primarily due to an increase in capital expenditures for our technology platforms and new restaurants.
Depreciation and amortization expense was $69.4 million, or 3.4% of revenues in 2024, as compared to $64.1 million, or 3.0% of revenues for the prior year, primarily due to higher depreciation expense related to our investments in technology platforms.
Excluding the impact of the UK franchisee acquisitions, the previously disclosed franchisee suspended restaurants, and foreign currency fluctuations, International franchise restaurant sales increased $88.3 million or 7.9% for the year ended December 31, 2023. International franchise restaurant sales are not included in Company revenues; however, our International royalty revenue is derived from these sales.
Excluding the impact of the UK franchisee acquisitions, the additional week, and foreign currency fluctuations, International franchise restaurant sales increased $41.4 million or 3.6% for the year ended December 29, 2024. International franchise restaurant sales are not included in Company revenues; however, our franchise royalties and fees are derived from these sales.
Investing Activities Total cash used in investing activities was $75.1 million in 2023 compared to $62.8 million in 2022, an increase of $12.3 million.
Investing Activities Total cash used in investing activities was $17.3 million in 2024 compared to $75.1 million in 2023, a decrease of $57.8 million.
“Equivalent units” represents the number of restaurants open at the beginning of a given period, adjusted for restaurants opened, closed, acquired or sold during the period on a weighted average basis.
Comparable sales, Comparable sales growth (decline), Global system-wide restaurant sales and Global system-wide sales growth (decline) exclude franchisees for which we suspended corporate support. “Equivalent units” represents the number of restaurants open at the beginning of a given period, adjusted for restaurants opened, closed, acquired or sold during the period on a weighted average basis.
The 53rd week of operations contributed approximately $1 million to operating income in 2023. The impact of the 2022 refranchising decreased the segment’s operating income by $0.3 million in 2023.
The 53rd week of operations contributed approximately 42 $1 million to operating income in 2023.
These regional hubs will be led by experienced General Managers and their teams who will partner with franchisees to create a holistic strategy to boost performance in their markets.
These regional hubs are led by experienced General Managers and their teams that partner with franchisees to drive franchisee performance in their markets.
Our asset useful lives are generally five to ten years for restaurant, commissary, and other equipment, twenty to forty years for buildings and improvements, and five years for technology, communication assets, and capitalized software.
The useful lives are estimated based on historical experience with similar assets as well as other information regarding condition and utility of the assets. Our asset useful lives are generally five to ten years for restaurant, commissary, and other equipment, twenty to forty years for buildings and improvements, and five years for technology and capitalized software.
GAAP measure. Operating income was $147.1 million for the year ended December 31, 2023 compared to $109.0 million for the prior year, an increase of $38.1 million. Adjusted operating income was $157.0 million for the year ended December 31, 2023 compared to $157.5 million for the prior year, a decrease of $0.5 million, or 0.3%.
GAAP measure. Operating income was $156.7 million for the year ended December 29, 2024 compared to $147.1 million for the prior year, an increase of $9.6 million. Adjusted operating income was $148.2 million for the year ended December 29, 2024 compared to $157.0 million for the prior year, a decrease of $8.8 million.
Beginning in 2024, we will increase the fixed operating margin that Domestic QC Centers charge by 100 basis points in each of the next four years, moving from 4% in 2023 to 8% in 2027. In total, this change should equate to approximately 100 basis points of cost at the restaurant level.
Effective in the first quarter of 2024, we increased the fixed operating margin that Domestic QC Centers charge by 100 basis points, and we will continue to increase the margin by the same increment in each of the next three years, moving from 4% in 2023 to 8% in 2027.
On October 28, 2021, our Board of Directors approved a share repurchase program with an indefinite duration for up to $425.0 million of the Company’s common stock.
Share Repurchases As part of our long-term growth and capital allocation strategy, we are committed to investing in share repurchases to provide ongoing value and enhanced returns to our shareholders. On October 28, 2021, our Board of Directors approved a share repurchase program with an indefinite duration for up to $425.0 million of the Company’s common stock.
General and Administrative Expenses General and administrative (“G&A”) expenses were $210.4 million, or 9.8% of total revenues for 2023 compared to $217.4 million, or 10.3% of total revenues for the prior year.
General and administrative expenses (“G&A expenses”) were $190.5 million, or 9.3% of total revenues for 2024 compared to $208.1 million, or 9.7% of total revenues for the prior year.
Excluding the impact of the 2022 refranchising and the 53rd week, North America commissary revenue decreased approximately $44 million, or a decline of 5.0% for the year ended December 31, 2023. The decline in North America commissary revenues was primarily a result of lower commodity prices, primarily poultry, cheese and wheat, in addition to lower volumes.
Excluding the impact of the additional week in 2023, Commissary revenues decreased approximately $5 million for the year ended December 29, 2024. The decline in Commissary revenues was primarily a result of lower volumes.
PJMF, our national marketing fund, has a $30.0 million revolving line of credit (the “PJMF Revolving Facility”) pursuant to a Revolving Loan Agreement, dated September 30, 2015 with U.S. Bank National Association, as lender.
PJMF, our national marketing fund, has a $30.0 million revolving line of credit (the “PJMF Revolving Facility”) pursuant to a Revolving Loan Agreement, dated September 30, 2015, that was most recently amended on September 30, 2024. The PJMF Revolving Facility is secured by substantially all assets of PJMF.
Items Below Operating Income The following table sets forth the various items below Operating income from the Consolidated Statements of Operations: (In thousands, except per share amounts) Year Ended December 31, 2023 December 25, 2022 Change Operating income $ 147,142 $ 109,030 $ 38,112 Net interest expense (43,469) (25,261) (18,208) Income before income taxes 103,673 83,769 19,904 Income tax expense 20,874 14,420 6,454 Net income before attribution to noncontrolling interests 82,799 69,349 13,450 Net income attributable to noncontrolling interests (701) (1,577) 876 Net income attributable to the Company $ 82,098 $ 67,772 $ 14,326 Calculation of net income for earnings per share: Net income attributable to the Company $ 82,098 $ 67,772 $ 14,326 Dividends paid to participating securities — (306) 306 Net income attributable to participating securities — (104) 104 Net income attributable to common shareholders $ 82,098 $ 67,362 $ 14,736 — Basic earnings per common share $ 2.49 $ 1.90 $ 0.59 Diluted earnings per common share $ 2.48 $ 1.89 $ 0.59 Net Interest Expense Interest expense increased approximately $18.2 million for the year ended December 31, 2023 compared to the prior year, primarily due to higher average outstanding debt on our senior secured revolving credit facility (the “PJI Revolving Facility”) as well as an increase in borrowing rates in 2023.
Items Below Operating Income The following table sets forth the various items below Operating income from the Consolidated Statements of Operations: (In thousands, except per share amounts) Year Ended December 29, 2024 December 31, 2023 Change Operating income $ 156,704 $ 147,142 $ 9,562 Net interest expense (42,578) (43,469) 891 Income before income taxes 114,126 103,673 10,453 Income tax expense 29,929 20,874 9,055 Net income 84,197 82,799 1,398 Net income attributable to noncontrolling interests (711) (701) (10) Net income attributable to the Company $ 83,486 $ 82,098 $ 1,388 Net income attributable to common shareholders $ 83,320 $ 82,098 $ 1,222 Basic earnings per common share $ 2.55 $ 2.49 $ 0.06 Diluted earnings per common share $ 2.54 $ 2.48 $ 0.06 Net Interest Expense Interest expense decreased approximately $0.9 million for the year ended December 29, 2024 compared to the prior year primarily due to lower average outstanding debt on our senior secured revolving credit facility (the “PJI Revolving Facility”), primarily offset by slightly higher rates during 2024.
Domestic Company-owned restaurant sales increased $18.0 million, or 2.5% for the year ended December 31, 2023 compared to the prior year. The benefit of the 53rd week of operations in 2023 was approximately $14 million, and 2022 included revenues of $27.3 million from the restaurants that were part of the 2022 refranchising.
Company-owned restaurant sales, which include sales from both Domestic and International Company-owned restaurants, decreased $36.2 million, or 4.8% for the year ended December 29, 2024 compared to the prior year. The benefit of the 53rd week of operations in 2023 was approximately $15 million.
Additionally, we expect the incremental volume driven by increased marketing and additional development will reduce the shared supply chain costs across the system.
Franchisees who increase case-volume purchases at the highest volume growth could realize target market rates lower than the prior 4% rate. Additionally, we expect the incremental volume driven by increased marketing and additional development will reduce the shared supply chain costs across the system over time.
Property and equipment are depreciated on a straight-line basis over their useful lives, which are based on management’s estimates of the period over which the assets provide a benefit to the Company. The useful lives are estimated based on historical experience with similar assets as well as other information regarding condition and utility of the assets.
Purchases of property and equipment were $72.5 million in 2024, $76.6 million in 2023, and $78.4 million in 2022. Property and equipment are depreciated on a straight-line basis over their useful lives, which are based on management’s estimates of the period over which the assets provide a benefit to the Company.
Property and Equipment, Net and Impairment of Long-Lived Assets We record property and equipment at its historical cost, which includes all costs necessarily incurred to bring the asset to the condition and location necessary for its intended use. Purchases of property and equipment were $76.6 million in 2023, $78.4 million in 2022, and $68.6 million in 2021.
The determination of the recorded insurance reserves is complex due to the actuarial valuation methods utilized in determining the reserve and the assumptions related to the loss development factors and loss trends. 34 Property and Equipment, Net and Impairment of Long-Lived Assets We record property and equipment at its historical cost, which includes all costs necessarily incurred to bring the asset to the condition and location necessary for its intended use.
(In thousands) Year Ended December 31, 2023 Year Ended December 25, 2022 Reported (a) Adjustments Adjusted Reported (a) Adjustments Adjusted Reported Increase (Decrease) Adjusted Increase (Decrease) Domestic Company-owned restaurants $ 33,470 $ — $ 33,470 $ 15,966 $ 8,412 $ 24,378 $ 17,504 $ 9,092 North America franchising 133,800 — 133,800 127,882 — 127,882 5,918 5,918 North America commissaries 43,316 — 43,316 42,531 — 42,531 785 785 International 11,766 7,289 19,055 17,891 9,644 27,535 (6,125) (8,480) All others 10,116 — 10,116 10,084 — 10,084 32 32 Unallocated corporate expenses (85,353) 2,594 (82,759) (104,419) 30,376 (74,043) 19,066 (8,716) Elimination of intersegment loss/(profit) 27 — 27 (905) — (905) 932 932 Total $ 147,142 $ 9,883 $ 157,025 $ 109,030 $ 48,432 $ 157,462 $ 38,112 $ (437) ______________________________ (a) See “Non-GAAP Measures” below for a detail of the adjustments in each year and for a reconciliation to the most comparable U.S.
(In thousands) Year Ended December 29, 2024 Year Ended December 31, 2023 US GAAP (a) Adjustments Adjusted US GAAP (a) Adjustments Adjusted US GAAP Increase (Decrease) Adjusted Increase (Decrease) Domestic Company-owned restaurants $ 19,174 $ 5,495 $ 24,669 $ 33,470 $ — $ 33,470 $ (14,296) $ (8,801) North America franchising 108,177 — 108,177 133,800 — 133,800 (25,623) (25,623) North America commissaries 89,847 (41,289) 48,558 43,316 — 43,316 46,531 5,242 International (13,505) 27,273 13,768 11,766 7,289 19,055 (25,271) (5,287) All other 4,065 — 4,065 10,116 — 10,116 (6,051) (6,051) Unallocated corporate expenses (51,054) — (51,054) (85,353) 2,594 (82,759) 34,299 31,705 Elimination of intersegment loss/(profit) — — — 27 — 27 (27) (27) Total $ 156,704 $ (8,521) $ 148,183 $ 147,142 $ 9,883 $ 157,025 $ 9,562 $ (8,842) ______________________________ (a) See “Non-GAAP Measures” below for a detail of the adjustments in each year and for a reconciliation to the most comparable U.S.

… 150 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed5 unchanged
Biggest changeForeign currency exchange rate fluctuations had a favorable impact of approximately $1.7 million on our total revenues in 2023, compared to an unfavorable impact of approximately $13.3 million in 2022 and a favorable impact of approximately $8.1 million in 2021.
Biggest changeForeign currency exchange rate fluctuations had a favorable impact of approximately $2.2 million on our total revenues in 2024 compared to a favorable impact of $1.7 million in 2023 and an unfavorable impact of approximately $13.3 million in 2022.
Our International operations principally consist of distribution sales to franchised Papa John’s restaurants located in the UK, operation of Company-owned restaurants in the UK, and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our International franchisees.
Our International operations principally consist of distribution 50 sales to franchised Papa John’s restaurants located in the UK, operation of Company-owned restaurants in the UK, and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our International franchisees.
We do not enter into contracts for trading 52 Table of Contents purposes and do not use leveraged instruments. See “Note 12. Debt” of “Notes to Consolidated Financial Statements” for additional information on our debt obligations and derivative instruments.
We do not enter into contracts for trading purposes and do not use leveraged instruments. See “Note 12. Debt” of “Notes to Consolidated Financial Statements” for additional information on our debt obligations and derivative instruments.
Approximately 7.4% of our 2023 revenues, 6.2% of our 2022 revenues and 7.3% of our 2021 revenues were derived from these International operations. We have not historically hedged our exposure to foreign currency fluctuations.
Approximately 8.5% of our 2024 revenues, 7.4% of our 2023 revenues and 6.2% of our 2022 revenues were derived from these International operations. We have not historically hedged our exposure to foreign currency fluctuations.
Foreign currency exchange rate fluctuations had an unfavorable impact of $0.9 million on our operating income in 2023 compared to an unfavorable impact of $2.0 million in 2022 and a favorable impact of $1.4 million in 2021.
Foreign currency exchange rate fluctuations had an unfavorable impact of $2.1 million on our operating income in 2024 compared to an unfavorable impact of $0.9 million in 2023 and an unfavorable impact of $2.0 million in 2022.
We have not historically entered into other financial instruments that would be accounted for as hedging instruments to manage this risk. 53 Table of Contents
We have not historically entered into other financial instruments that would be accounted for as hedging instruments to manage this risk. 51
A 10% adverse change in the foreign currency rates for our International markets would result in a negative impact on annual revenue and operating income of approximately $14.1 million and $1.9 million, respectively, based on annual revenue and operating income for the year ended December 31, 2023.
A 10% adverse change in the foreign currency rates for our International markets would result in a negative impact on annual revenue and operating income of approximately $13.4 million and $0.6 million, respectively, based on annual revenue and operating income for the year ended December 29, 2024.

Other PZZA 10-K year-over-year comparisons