Papa Johns maintains 2026 outlook despite 6.4% North America sales drop

Papa John's International Inc. reported a decline in first-quarter profit and North American sales this week, as the pizza chain struggled with a cautious consumer environment and a promotional marketplace.

The company posted net income of $7 million, or 21 cents per share, for the quarter ended March 29. This compared with $9 million, or 27 cents per share, in the same period a year earlier. Excluding one-time items, adjusted earnings were 32 cents per share.

Total revenues fell 7.7% to $478.6 million. The company attributed much of the decline to the refranchising of 85 company-owned restaurants in late 2025, as well as a 5.2% drop in comparable sales at domestic company-owned locations.

North America sales drop

North America comparable sales fell 6.4% overall, reflecting a 6.7% decline at franchised restaurants. However, the company saw growth abroad, with international comparable sales rising 3.6%.

Todd Penegor, president and CEO of Papa Johns, said the results in North America were in line with company expectations.

"First quarter results reflected continued strong performance in our International markets where we delivered the sixth consecutive quarter of positive comparable sales. In North America, results were in line with our expectations as we navigate the cautious consumer environment and promotional QSR marketplace," Penegor said in a company press release.

"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. Exciting strategic partnerships such as our collaboration with Toy Story 5 ahead of the film's upcoming theatrical release on June 19, are visible examples of the progress we are making in these areas.

Digital transformation efforts

Additionally, we're elevating our digital ordering experience through the new Google Gemini Enterprise CX Food Ordering Agent.

"In sum, 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."

The brand added nearly 1 million new loyalty members in Q1.

Global sales and growth

Global system-wide restaurant sales reached $1.20 billion, a 3% decrease from the prior year when excluding the impact of foreign currency. The company opened 28 restaurants during the quarter — eight in North America and 20 in international markets — but saw a net decrease of 63 units after accounting for closures.

The company's free cash flow saw a significant swing, resulting in an outflow of $6.2 million compared with an inflow of $19.1 million a year ago. Management cited lower net income and payments related to an enterprise transformation plan for the change.

Despite the quarterly dip, Papa Johns reiterated its full-year 2026 outlook. The company expects international comparable sales to grow between 2% and 4%, while North America comparable sales are projected to decline between 2% and 4%.

The board of directors declared a second-quarter dividend of 46 cents per share, payable May 29 to stockholders of record as of May 18.