Papa John’s Rising Sales Show Pizza Demand Remains Strong
(Bloomberg) -- Papa John’s International Inc. posted second-quarter sales that beat analysts’ expectations, showing that diners are still hungry for pizza more than a year into the pandemic.
For the key metric of same-store sales, the pizza chain reported a 5.2% gain in North America -- well above analysts’ average estimate of 1.1%. International same-store sales also came in higher than Wall Street’s expectations.
Pizza delivery chains and fast-food restaurants, with their socially distant business models, have seen levels of growth that sit-down restaurants and their investors have only yearned for since the outbreak. Using a pre-pandemic comparison further illustrates how well Papa John’s has done, with total sales up 33% in North America from the same period in 2019. The results also reinforce how Chief Executive Officer Rob Lynch has helped Papa John’s move past a series of headaches related to founder John Schnatter.
In the statement, Lynch said the company’s strategy “positions us solidly for long-term growth.”
The shares rose 1.9% at 12:39 p.m. in New York. Papa John’s had risen 30% through Wednesday’s close.
The company is facing a number of obstacles, including difficulty sourcing items from meat to oil to cardboard boxes, as well as a tight labor market that’s hampering the whole industry. In an interview, Lynch said the chain is running at just 65% to 70% of the normal staffing levels.
“We would hire as many people as we can right now,” Lynch said. Current employees “are having to work a lot harder to service our business.”
The company posted a loss of $2.30 on a per-share basis -- mostly due to a one-time charge of $110 million related to the repurchase of stock.
Still, Papa John’s is seizing on higher demand by rapidly expanding. It opened 123 net new locations in the first half of the year, a record for the company, and said it’s raising its global outlook to as many as 260 net new units this year.
Papa John’s said in a separate statement Thursday that it will partner with its largest franchisee, Drake Food Service International, to open more than 220 new restaurants in Latin America, Spain, Portugal and the U.K. in the coming years. Lynch said that while the delta variant is a factor in Papa John’s plans to return to the office, it’s “not really affecting” the future of new-store openings.
“We’ve been promising it for quite some time and we feel like we are on the cusp of delivering some really out-pacing development growth,” Lynch said.
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