Updates Fiscal 2026 Outlook
Global System-wide Restaurant Sales Decreased 4.8%(a) and Global Comparable Sales Decreased 5.7%
North America Comparable Sales Decreased 8.3% and International Comparable Sales Increased 1.5%
Diluted EPS of $0.24 and Adjusted Diluted EPS(b) of $0.46
Company Shifts Capital Allocation to Accelerate Transformation Strategy; Suspends Dividend
LOUISVILLE, Ky.--(BUSINESS WIRE)-- Papa John’s International, Inc. (Nasdaq: PZZA) (“Papa Johns®”) (the “Company”) today announced financial results for the second quarter ended June 28, 2026.
Highlights
(a) Growth rate excludes the impact of foreign currency.
(b) Represents a Non-GAAP financial measure. See “Non-GAAP Financial Measures” for a reconciliation to the most comparable U.S. GAAP measures.
CEO Commentary and Dividend
“Second quarter results reflected continued momentum in our International business, where we delivered our seventh consecutive quarter of positive comparable sales, and ongoing headwinds in North America driven by the softer consumer environment, lower order volumes, and a highly promotional QSR marketplace,” said Todd Penegor, President and CEO.
“While our transformation is taking longer than anticipated, we continue to execute our strategy with discipline and focus and are seeing encouraging progress, including a growing and highly engaged Papa Rewards membership, supply chain savings, and AI-driven improvements to the customer ordering experience. By accelerating investments to strengthen our competitive position, improve restaurant economics, and attract new customers, we can build an even stronger foundation to gain market share and drive sustainable long-term growth. Accordingly, the Board has decided to suspend the Company’s quarterly dividend beginning with the third quarter of 2026 so that we have greater flexibility to make these investments and maintain our strong balance sheet,” continued Penegor.
“As we look ahead, we are confident that we have the right operating and capital allocation strategy in place to improve performance and create value for our shareholders, customers and franchisees,” Penegor concluded.
Second Quarter 2026 Financial Highlights
Results for the three and six months ended June 28, 2026 are not directly comparable with the prior year period as comparisons are impacted by a restaurant refranchising transaction that occurred in the fourth quarter of 2025.
Revenue: The revenue commentary that follows includes a discussion of the Company’s segment results. Total revenues of $482.4 million in the second quarter of 2026 decreased $46.8 million, or 8.8%, compared with the prior year period, reflecting lower performance in North America, slightly offset by improved performance internationally. The decrease in revenues was mostly attributable to a $37 million decline at our Domestic Company-owned restaurants primarily related to: 1) approximately $25 million of lower revenues compared with the comparable prior period related to 85 Domestic Company-owned restaurants that were refranchised in the fourth quarter of 2025 and 2) 8.9% lower comparable sales. North America Commissary revenues decreased $12 million, primarily due to lower volumes, partially offset by higher pricing. North America Franchising revenues decreased $3 million due to lower comparable sales at franchised restaurants. Revenues from All Other business units decreased $8 million, primarily reflecting lower advertising funds revenue and lower digital fees. These declines were partially offset by a $1 million increase in International revenues driven by improved performance.
System-wide sales: Global system-wide restaurant sales were $1.20 billion, down 4.8%(b) compared with the prior year second quarter, as higher International comparable sales was more than offset by lower comparable sales in North America and a decline in global net restaurants on a trailing twelve month basis. North America system-wide sales decreased 8%(b) to $850.7 million and International system-wide sales increased 5%(b) to $347.2 million in the second quarter of 2026, both as compared with the prior year period.
Net income: Second quarter Net income was $8.7 million, a $1.0 million decrease compared with the prior year second quarter. The decrease was primarily related to lower sales partially offset by lower cost of sales and lower G&A expenses. Cost of sales declined in part due to the fourth quarter 2025 refranchising transaction and lower transaction volumes at our Domestic Company-owned restaurants along with lower volumes and commodity deflation at our North America commissaries. G&A expenses decreased compared with the prior year second quarter primarily due to lower supplemental advertising and lower management and other compensation costs. Net income also reflects lower interest expense driven by lower average interest rates during the quarter and higher tax expense due to a shift in income between jurisdictions and lower projected tax credits compared with the second quarter of 2025.
Adjusted EBITDA: Adjusted EBITDA(a) was $52.7 million, a $0.1 million increase from the prior year second quarter. The increase was primarily attributable to the aforementioned declines in cost of sales and G&A expenses and improved performance in our International markets, mostly offset by lower sales and volumes in North America, as compared with the second quarter of 2025.
Earnings per share: Diluted earnings per common share was $0.24 for the second quarter of 2026 compared with $0.28 in the second quarter of 2025. Adjusted diluted earnings per common share(a) was $0.46 for the second quarter of 2026 compared with $0.41 in the second quarter of 2025. These changes were due to the same factors impacting Net income and adjusted EBITDA(a) discussed above.
Refer to the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Quarterly Report on Form 10-Q filed with the SEC for additional information concerning our operating results for the three and six months ended June 28, 2026.
Free cash flow, a non-GAAP financial measure which the Company defines as net cash provided by operating activities (from the Condensed Consolidated Statements of Cash Flows) less the purchases of property and equipment, excluding purchases of property and equipment related to damages from natural disasters, was $9.5 million for the six months ended June 28, 2026, compared with $36.5 million in the comparable prior year period. The year-over-year change primarily reflects timing of collections and marketing spend within our advertising fund, the impact of compensation payments within the period, inclusive of the Company’s Enterprise Transformation Plan, and lower Net income during 2026.
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We view free cash flow as an important financial measure because it is one factor that management uses in determining the amount of cash available for discretionary investment. Free cash flow is not a term defined by GAAP, and as a result, our measure of free cash flow might not be comparable to similarly titled measures used by other companies. Free cash flow should not be construed as a substitute for or a better indicator of the Company’s performance than the Company’s GAAP measures.
The Company’s capital allocation priorities are guided by a framework that prioritizes investment in the business, maintaining a strong balance sheet, and returning capital to shareholders through share repurchases and dividends. Leveraging this framework and the Company’s commitment to allocating capital to the highest return opportunities, the Papa John’s Board of Directors voted to suspend the quarterly dividend, beginning with the third quarter 2026 dividend. This action will allow the Company to accelerate investment in its transformation strategy to grow share and deliver the greatest value for shareholders, including: franchise financial incentives tied to operational excellence and restaurant image improvements; new customer acquisition through a sharper aggregator strategy, addressable market expansion, product innovation, and core menu improvement; technology, such as the deployment of the new point-of-sale system; supply chain optimization to improve cost leverage and 4-wall EBITDA in restaurants; and investment to build on momentum in the International business.
As the Company realizes the benefits from its transformation, the Board of Directors intends to revisit how to most effectively return capital to shareholders through share repurchases and dividends.
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Global restaurant and comparable sales information for the three and six months ended June 28, 2026, compared with the three and six months ended June 29, 2025 are as follows (See “Supplemental Information and Financial Statements” below for related definitions):
Global Restaurants
As of June 28, 2026, there were 5,978 Papa Johns restaurants operating in 51 countries and territories, as follows:
2026 Outlook
The Company is updating its 2026 annual guidance for the following metrics:
Adjusted EBITDA represents Net income before Net interest expense, Income tax expense, Depreciation and amortization, Stock-based compensation expense, and other adjustments that vary from period to period in accordance with the Company’s Non-GAAP policy. The Company believes adjusted EBITDA is a meaningful measure as it is widely used by analysts and investors to value the Company and its restaurants on a consistent basis. Adjusted EBITDA is not a term defined by GAAP, and is not intended to be a substitute for operating income, net income, or cash flows from operating activities, as defined under generally accepted accounting principles. As a result, our measure of adjusted EBITDA might not be comparable to similarly titled measures used by other companies.
Adjusted depreciation and amortization represents depreciation and amortization expense excluding incremental depreciation expense related to the shortened useful life of legacy capitalized software assets due to the ongoing development and deployment of our new omnichannel platforms and other technology improvements.
This release includes forward-looking projections for certain non-GAAP financial measures, including adjusted EBITDA and adjusted depreciation and amortization. The Company excludes certain expenses and benefits from adjusted EBITDA and adjusted depreciation and amortization that, due to the uncertainty and variability of the nature and amount of those expenses and benefits, the Company is unable to, without unreasonable effort or expense, provide a reconciliation to Net income or GAAP depreciation and amortization of those projected measures, respectively.
Papa Johns will host a call with analysts today, August 6, 2026, at 8:00 a.m. Eastern Time. To access the conference call or webcast, please register online at: ir.papajohns.com/events-presentations. A replay of the webcast will be available two hours after the call and archived on the same web page.
Papa John’s International, Inc. (Nasdaq: PZZA) opened its doors in 1984 with one goal in mind: BETTER INGREDIENTS. BETTER PIZZA.® Papa Johns believes that using high-quality ingredients leads to superior quality pizzas. Its original dough is made of only six ingredients and is fresh, never frozen. Papa Johns tops its pizzas with real cheese made from mozzarella, pizza sauce made with vine-ripened tomatoes that go from vine to can in the same day and meat free of fillers. It was the first national pizza delivery chain to announce the removal of artificial flavors and synthetic colors from its entire food menu. Papa Johns is co-headquartered in Atlanta, Ga. and Louisville, Ky. and is the world’s third-largest pizza delivery company with approximately 6,000 restaurants in approximately 50 countries and territories. For more information about the Company or to order pizza online, visit www.papajohns.com or download the Papa Johns mobile app for iOS or Android.
Certain matters discussed in this press release and other Company communications that are not statements of historical fact constitute forward-looking statements within the meaning of the federal securities laws. Generally, the use of words such as “expect,” “intend,” “estimate,” “believe,” “anticipate,” “will,” “forecast,” “outlook”, “plan,” “project,” or similar words identify forward-looking statements that we intend to be included within the safe harbor protections provided by the federal securities laws. Such forward-looking statements include or may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, earnings per share, depreciation and amortization, interest expenses, tax rates, system-wide sales, transformation plans, growth initiatives, restaurant portfolio optimization, restaurant operational improvements, supply chain and other cost savings initiatives, adjusted EBITDA, 4-wall adjusted EBITDA, the current economic environment, industry trends, consumer behavior and preferences, commodity and labor costs, currency fluctuations, profit margins, supply chain operating margin, net unit growth, unit level performance, capital expenditures, restaurant and franchise development, franchisee profitability, 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, investments in digital, artificial intelligence and technology 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, capital allocation, dividends and changes thereto, share repurchases, effective tax rates, regulatory changes and impacts, impacts of tariffs, insurance recoveries for damages related to natural disasters, restructuring plans, including timing of completion, expected benefits and costs, adoption of new accounting standards, and other financial and operational measures. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements.
Our forward-looking statements are based on our assumptions which are based on currently available information. Actual outcomes and results may differ materially from those matters expressed or implied in our forward-looking statements as a result of various factors, including but not limited to risks related to: deteriorating economic conditions and softening consumer sentiment in U.S. and international markets; aggressive pricing or other marketing or promotional strategies by competitors; changes in consumer preferences or consumer buying habits, including the growing popularity of delivery aggregators; increases in labor costs (or labor shortages), changes in commodity costs, supply chain incentive-based rebates, or sustained higher other operating costs, including as a result of supply chain disruption, inflation, increased tariffs, trade barriers, immigration policies, or climate change; the effectiveness of new branding initiatives, advertising and marketing campaigns, and promotions, including alignment with and execution by our franchisees; the potential for delayed new restaurant openings, both domestically and internationally, or lower net unit development due to changing circumstances outside of our control; our franchise business model, including our reliance on the financial success and cooperation of our franchisees; the increased risk of phishing, ransomware and other cyber-attacks; risks and disruptions to the U.S. and global economy and our business related to geopolitical conflicts including conflicts in Ukraine and the Middle East, and risks related to a possible economic recession or downturn or prolonged U.S. government shutdown that could reduce consumer spending or demand.
These and other risks, uncertainties and assumptions that are involved in our forward-looking statements are discussed in detail in “Part I. Item 1A. – Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 28, 2025. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise, except as required by law.
For more information about the Company, please visit www.papajohns.com.
Definitions
“Comparable sales” represents sales for the same base of restaurants for the same fiscal periods. “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. 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.
We believe Domestic Company-owned, North America franchised, and International 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. Comparable sales and Global system-wide restaurant sales results for restaurants operating outside of the United States are reported on a constant dollar basis, which excludes the impact of foreign currency translation. Franchise sales also generate commissary revenue in the United States and in certain international markets. 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. Management believes the presentation of Global system-wide restaurant sales growth (decline), excluding the impact of foreign currency, provides investors with useful information regarding underlying sales 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.
In addition to the results provided in accordance with U.S. 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 EBITDA, 4-wall EBITDA, 4-wall EBITDA margin, adjusted net income attributable to common shareholders, and adjusted diluted earnings per common share. We believe that our non-GAAP financial measures enable investors to assess the operating performance of our business relative to our performance based on U.S. GAAP results and relative to other companies. We believe that the disclosure of these non-GAAP measures is useful to investors as they reflect metrics that our management team and Board utilize to evaluate our operating performance, allocate resources and administer employee incentive plans. The most directly comparable U.S. GAAP measures to adjusted EBITDA, 4-wall EBITDA, adjusted net income attributable to common shareholders, and adjusted diluted earnings per common share, are net income, segment adjusted EBITDA, net income attributable to common shareholders, and diluted earnings per common share, respectively. 4-wall EBITDA is defined as Domestic Company-owned restaurants segment revenue less total Domestic Company-owned restaurants segment cost of sales. 4-wall EBITDA margin is defined as 4-wall EBITDA divided by segment revenue for our Domestic Company-owned restaurants segment. 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 results.
Papa John’s International, Inc. and Subsidiaries
Segment Information
The following tables present the operating results of our segments. We have four reportable segments: Domestic Company-owned restaurants, North America franchising, North America commissaries, and International. Under ASC 280, Segment Reporting, our segment performance is evaluated based on segment adjusted EBITDA. See the Company’s Form 10-Q for the quarter ended June 28, 2026 for further information on segments, including reconciliations of segment measures to consolidated measures for the quarter ended June 28, 2026.
Source: Papa John’s International, Inc.
Headquartered in Louisville, Kentucky, Papa Johns International, Inc. (NASDAQ: PZZA) is a pizza delivery company.