Key Highlights
- First quarter adjusted EPS reached $0.32, falling short of analyst projections of $0.37 by $0.05
- Total revenue declined 7.7% compared to the previous year, reaching $478.6 million versus expectations of $485 million
- Domestic comparable sales decreased 6.4% while overseas markets grew 3.6%
- CEO Todd Penegor attributed weakness to value-seeking customers choosing smaller menu items and fewer add-ons
- Shares declined approximately 4.7% to $32.21 during Thursday trading, compounding a roughly 20% year-to-date loss
Papa John’s delivered disappointing financial results Thursday morning, triggering a sharp selloff in shares.
$PZZA earnings:
Papa John’s Turnaround Gains Traction as NA Comps Turn Positive, But Investments Continue to Squeeze Profits
This was an encouraging quarter for Papa John’s, showing the first tangible signs that its turnaround strategy is working. The bull case is… pic.twitter.com/LZ1OEwh6vV
— Finsee (@Finsee_main) August 7, 2025
PZZA shares declined approximately 4.7% to $32.21 following the market open, continuing a downward trend that has seen the stock lose nearly 20% since the start of the year.
The pizza chain reported adjusted first quarter earnings of $0.32 per share for Q1 2026, falling short of the Street consensus estimate of $0.37. Total revenue reached $478.6 million, representing a 7.7% year-over-year decrease and trailing analyst forecasts of approximately $485 million.
Papa John’s International, Inc., PZZA
Net income totaled $7 million compared to $9 million in the year-ago period. Adjusted EBITDA registered $48 million, down from $50 million reported during the corresponding quarter last year.
CEO Todd Penegor attributed the weakness to inflation-conscious consumers modifying purchasing behavior. Diners are selecting smaller pizza sizes while eliminating side items and desserts from their orders, creating downward pressure on average transaction values.
Domestic Market Faces Headwinds While Overseas Growth Continues
Comparable sales in North America dropped 6.4% during the quarter. Penegor indicated this figure aligned with the company’s internal projections.
Overseas operations demonstrated stronger performance. International comparable sales increased 3.6% during the period, representing the sixth consecutive quarter of positive comparable sales expansion in markets outside North America.
Global system-wide restaurant sales totaled $1.20 billion, reflecting a 3% year-over-year decrease.
The chain added 28 new restaurant locations during the quarter — 8 across North America and 20 in international territories.
Domestic revenue faced additional pressure from strategic refranchising activity. Papa John’s completed the refranchising of 85 locations during Q4 2025, resulting in approximately $25 million being removed from company-owned restaurant revenue streams.
Strategic Transformation Underway
Papa John’s continues executing a comprehensive business transformation initiative. The strategy encompasses closing hundreds of underperforming domestic locations, streamlining menu offerings, and reducing corporate workforce levels.
Penegor emphasized ongoing efforts to enhance value positioning and accelerate innovation designed to attract new customers and increase supplementary purchases.
Recent menu additions — featuring pan pizza varieties and oven-toasted sandwich options — have demonstrated promising initial performance during the current year.
The organization continues pursuing additional expense reductions through supply-chain optimization and operational efficiency enhancements.
Regarding full-year 2026 guidance, Papa John’s maintained its existing outlook. Management anticipates global system-wide restaurant sales will remain flat to declining in the low single-digit percentage range.
North America comparable sales are forecast to decrease 2% to 4%, while international comparable sales are projected to increase 2% to 4%.
Adjusted EBITDA guidance remains unchanged at $200 million to $210 million, centered around a midpoint of $205 million.
The pizza category faces widespread industry challenges. Pizzerias, previously ranking as the second-most prevalent restaurant format across the United States, now trail behind coffee shops and Mexican restaurant chains in total locations.
Domino’s reduced its domestic same-store sales forecast last month following March weakness, highlighting the competitive and price-conscious consumer environment affecting the segment.
Papa John’s adjusted EPS of $0.32 fell below the $0.37 consensus estimate compiled by FactSet.
