Papa Johns has initiated the closure of dozens of its locations across 17 states as part of a broader plan to shutter approximately 300 underperforming North American stores by the end of 2027 [1]. In the first quarter, 44 stores were closed, with the highest concentrations in Texas, California, Florida, and Arizona, and additional closures in Michigan, North Carolina, and Virginia [1]. These closures primarily affect franchise-owned restaurants that are more than a decade old and generate less than $600,000 in annual sales volumes (AUVs) [1].
The company’s Chief Financial Officer, Ravi Thanawala, stated that these closures are intended to strengthen the overall system by increasing AUVs by at least 3% and improving franchisee health, allowing resources to be reallocated towards operational excellence and expansion in priority markets [1]. Thanawala emphasized that most Papa Johns restaurants have performed well historically, and that closing underperforming units is a key action to improve profitability and fleet health [1].
Despite these strategic moves, Papa Johns International shares have declined approximately 21% year to date through Wednesday's close, and have fallen more than 69% over the past five years [1]. In addition to store closures, the company laid off 7% of its corporate workforce in the first quarter [1].
The closures come amid broader industry challenges, including inflation, supply chain expenses, and labor costs, as well as increased competition. A recent report found that pizza restaurants are now outnumbered by Mexican restaurants and coffee shops nationwide [1]. Competitors such as Pizza Hut have also closed hundreds of locations, and its parent company, Yum! Brands, is reportedly considering a potential sale of the chain [1].
CONCLUSION
Papa Johns' decision to close dozens of underperforming stores and lay off corporate staff reflects ongoing challenges in the fast-food sector, including rising costs and intensifying competition. While management expects these actions to improve profitability and franchisee health, the company's shares have experienced significant declines, highlighting investor concerns about the brand's near-term outlook.