Cautious consumers and rivals' promotions hit Papa Johns' sales

North american sales decline

Papa Johns caught a tailwind from its international business in the first quarter, as global same-store sales rose 3.6%. It wasn’t enough, however, to offset continued weakness in North America, where same-store sales decreased 6.4%.

The total system’s same-store sales were down 4%, while systemwide sales decreased 3%. Net income was $7 million, versus $9 million in Q1 2025, while adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $48 million versus $50 million.

The quarter lapped -3% from Q1 2025. The pizza chain has registered declines in its North American system for eight out of the past nine quarters.

Despite the drag, CEO Todd Penegor said the performance was in line with expectations as the company “navigates the cautious consumer environment and promotional QSR marketplace.”

That said, the company’s transformation plan, put into shortly after Penegor came on board in August 2024, continues, including a “disciplined approach that extends beyond price” to build the business for the long-term. This, he added, is a different approach to “certain competitors” who have “outlined their strategy to compress restaurant margins in the sector”— a reference to the intensifying value environment in pizza that Domino’s CEO Russell Weiner also acknowledged during his company’s earnings call in late April.

Transformation plan progress

For Papa Johns, that transformation work is progressing, Penegor said, with more customers ordering more pizzas and a strong loyalty base of nearly 42 million customers who order more frequently and spend more per order. During the quarter, Papa Johns added nearly 1 million new members, and they now make up approximately 30% of the entire customer base.

Still, the chain’s performance was pressured by a lower number of new customers. Penegor said the two biggest opportunities to change that trend include improving its value perception, which it has done through offerings such as $9.99 three-topping pizzas and Papa Pairings, and rebuilding its innovation pipeline.

“Newness is critical to winning new customers. We (are rebuilding) our pipeline to deliver more frequent, compelling new product launches, and in the first three months of 2026 alone, we introduced two new menu platforms — pan pizza and oven-toasted sandwiches. These launches elevate our pizza mix and expand our total addressable market,” Penegor said.

The sandwiches, launched in March, have been integrated into the Papa Pairings value deal and the company is “encouraged by early results,” including sales expansion across the lunch and dinner dayparts. The 2026 pipeline includes more side offerings to “encourage customers to look beyond the center of the plate and drive higher ticket increase sales and improve four-wall margins.”

Papa Johns introduced cheesy garlic bread in April, for instance, which was designed to increase check.

The chain is also dipping into the retail channel this summer, launching its signature garlic sauce across 7,500 distribution points at Walmart, Kroger, Albertson, Safeway and more.

“This launch builds awareness by extending our brand beyond our restaurants and gives customers a convenient way to add Papa John's signature flavor to their everyday meals,” Penegor said.

Local marketing shift

Aside from the menu, Papa Johns’ transformation plan includes a shift toward local marketing following the reinstatement of advertising co-ops last year. Fifty percent of the U.S. system is now supported by local co-ops across more than 50 markets.

“With our reestablished co-ops and sharpened value proposition, our local operators are aligning around a unified market strategy, accelerating our ability to win at the local level, and driving benefits that will build throughout the year,” Penegor said.

Additionally, Papa Johns' system optimization included the closure of 44 underperforming locations in the first quarter. The company plans to close about 300 total to strengthen the overall system, and CFO Ravi Thanawala said early results have been encouraging.

“We have observed a strong transfer of sales to neighboring restaurants,” he said.

With these initiatives in place and based on continuing uncertainties in the macroenvironment, Papa Johns has reiterated its 2026 guidance, including a same-store sales decrease of -2% to -4% in North America, and global systemwide sales of flat to down low-single-digits.

“As we look ahead, we are focused on advancing our transformation strategy, including through an expanded range of value options and leaning aggressively into innovation. Execution in these areas will enable us to meet customers where they are and unlock more layers of growth,” Penegor said. “We are taking a disciplined approach to managing the near-term market dynamics, while building for the future as the best pizza makers in the business.”