Key Takeaways
- First-quarter adjusted EPS of $0.32 fell short of the anticipated $0.37 by five cents
- Total revenue declined 7.7% year-over-year, reaching $478.6 million versus expectations of $485 million
- Comparable sales in North America decreased 6.4%, while international markets grew 3.6%
- CEO Todd Penegor attributed the weakness to value-seeking customers downsizing orders and eliminating add-ons
- Shares of PZZA declined approximately 4.7% to $32.21 on Thursday, compounding a roughly 20% year-to-date loss
Papa John’s delivered underwhelming first-quarter results on Thursday, triggering a sharp selloff in shares.
Shares of PZZA fell approximately 4.7% to $32.21 in early trading, deepening the stock’s year-to-date losses to nearly 20%.
The pizza chain reported first-quarter 2026 adjusted earnings of $0.32 per share, falling short of the Street’s $0.37 consensus estimate. Total revenue registered $478.6 million, reflecting a 7.7% year-over-year decrease and trailing analyst projections of approximately $485 million.
Papa John’s International, Inc., PZZA
Net income declined to $7 million from $9 million in the year-ago quarter. Adjusted EBITDA totaled $48 million, down from $50 million in the comparable prior-year period.
CEO Todd Penegor attributed the soft performance to cost-conscious consumers grappling with persistent inflation. Diners are increasingly opting for smaller pizza sizes while cutting out extras like sides and desserts, putting downward pressure on average transaction values.
Domestic Market Weakness Contrasts with International Strength
Comparable sales in North America tumbled 6.4% during the quarter. Penegor indicated the decline aligned with the company’s internal projections.
International operations delivered a contrasting performance. Comparable sales outside North America climbed 3.6%, extending a streak of six consecutive quarters of positive international same-store sales growth.
Global system-wide restaurant sales totaled $1.20 billion, representing a 3% year-over-year contraction.
The chain added 28 new locations during the period — 8 in North America and 20 in international territories.
A portion of the domestic revenue decline stemmed from strategic refranchising efforts. Papa John’s converted 85 corporate-owned restaurants to franchisee ownership in the fourth quarter of 2025, removing approximately $25 million from domestic company-owned restaurant revenue streams.
Transformation Strategy Underway
Papa John’s continues executing a comprehensive restructuring initiative. The transformation includes shuttering hundreds of underperforming domestic locations, streamlining the menu offerings, and reducing corporate workforce levels.
Penegor emphasized that management remains focused on enhancing customer value perception while accelerating innovation efforts designed to attract new diners and boost incremental purchases.
Recently launched menu items — including pan pizza varieties and oven-toasted sandwich options — have demonstrated promising initial customer response throughout the current year.
The organization is also pursuing additional expense reductions through enhanced supply-chain optimization and improved operational effectiveness.
For the full 2026 fiscal year, Papa John’s reaffirmed its existing guidance. Management anticipates global system-wide restaurant sales will range from flat to down in the low single-digit percentage range.
North America comparable sales are forecast to decline 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, with a midpoint target of $205 million.
The broader pizza industry faces mounting headwinds. Pizza restaurants, previously the second-most prevalent restaurant format across the United States, have now been surpassed by both coffee establishments and Mexican cuisine chains.
Domino’s recently revised downward its U.S. same-store sales forecast after experiencing March weakness, highlighting intensifying competition and heightened price sensitivity among consumers.
Papa John’s adjusted earnings per share of $0.32 missed the Street consensus of $0.37, according to FactSet data.
