Papa Johns’ same-store sales fell 3% last quarter, the latest in a run of weak performances by fast-food chains amid weak consumer confidence and economic uncertainty.
Yet the company said its results improved each month in the period and into the current quarter, enough to backstop a bullish outlook for the rest of 2025, and to engender good feelings among investors, who sent Papa Johns’ shares up more than 15% Thursday.
“We’ve made a lot of progress,” CEO Todd Penegor told analysts, according to a transcript on the financial services site AlphaSense. “We’ve improved our value perception. We’re back in position on that. We continue to drive more traffic into our restaurants.”
Papa Johns same-store sales have improved so far in the current quarter to down 1%, with traffic up 1%. It also reaffirmed guidance calling for full-year same-store sales to be flat to up 2%, suggesting positive sales in the second half of the year, which is why investors pumped money into the stock.
That would be a substantial change from recent history. Papa Johns’ same-store sales have now declined for five straight quarters, as consumers opt to get delivery from other restaurants and low-income diners reduce their visits overall. The company brought in Penegor, the former Wendy’s CEO, to lead the chain.
Under Penegor, Papa Johns has shifted its marketing attention back to its pizzas after years of working on other items like Papadias. The company has marketed both premium, high-dollar pizzas such as the $13.99 Epic Stuffed Crust pizza along with its $6.99 Papa Pairings deal.
The number of pizzas the chain sold last quarter increased 4% compared with a year earlier, the company said.
Papa Johns also upgraded its Papa Rewards loyalty program, allowing customers to redeem earned points earlier. That led to a decrease in average ticket but helped lure another 1 million people into the program. There are now 37 million Papa Rewards members, and Penegor said customers are coming back more quickly now that they can redeem rewards faster.
The chain is now focused on operations. Papa Johns started a “mystery shop program” to assess the company’s performance compared with competitors. The company also started to examine oven calibration to ensure more consistent bake times and temperatures, which can improve product quality.
“Our ovens are the most important equipment in our kitchens and a key component in delivering a great customer experience and opening new innovation opportunities,” Penegor said.
Papa Johns now wants to sell some of its stores to franchisees. The company owns 539 of its restaurants and is evaluating selling select restaurants to “future-focused franchisees as they look to scale across various markets.”
Penegor expects the first refranchising deals to come this quarter or early next quarter. He said the company is focused on continuing to operate restaurants in markets where it is one of the top two players, but franchisees could acquire and expand in other markets.
“We’ve got some other great markets that could allow growth-minded franchisees to take on to scale up or bring some fresh blood into our system to really set ourselves up for long-term success,” he said.
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