Sales of comparable stores decline for Papa John’s franchisees.
Following a 1.4% fall in comparable-store sales in North America during the second quarter that concluded on June 25, Papa Johns will offer guidance to its franchisees. Comparable sales declined 2.3% in North American franchise restaurants but rose 2.2% in domestic company-owned restaurants.
The president and chief executive officer, Robert M. Lynch, stated, “A gap remained during the second quarter between the performance of our company restaurants and that of our franchisees.” “In an attempt to maintain profits during this extremely inflationary time, our franchisees have been raising their prices more quickly than our company-owned restaurants during the past year. They have thus seen a greater decrease in transactions compared to our company-owned restaurants during the most recent quarter.
“We’ve been conducting regular business evaluations with every franchisee, identifying opportunities to optimize their pricing and promotional strategies and leveraging cross-functional teams to improve their business operations. Systemwide, this surgical approach is producing greater customer satisfaction ratings and incremental improvements in transactions.
Even though foreign comparable-store sales increased 5% from the first quarter, they were down 1% overall, mostly due to inflation in the United Kingdom.
Compared to $25.2 million, or 71¢ per share, at the same time last year, net income attributable to common shareholders decreased by 30% to $17.8 million, or 55¢ per share, on the common stock during the quarter. Due to drops in commodity prices, the North American commissary division had a 2% reduction in revenue, to $514 million from $523 million.
The Louisville-based Papa Johns planned to open 1,400 to 1,800 new locations between 2022 and 2025, according to Mr. Lynch. This meant that there would be an annual net new unit growth of between 6% and 8% globally in the fiscal years 2023, 2024, and 2025.
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Since we set these goals, a number of unanticipated events have occurred, he said. These include, but are not limited to, an extended conflict in Ukraine, global material inflation, delays in North American construction and permitting, and increased financing costs as a result of rising interest rates.Consequently, the business reset its objective to an annual range.
Net income attributable to common shareholders for the first half of the fiscal year was $40.1 million, or $1.21 per share on the common stock, a 12% increase over $35.7 million, or $1 per share, during the same period the previous year. From $1.07 billion to $1.04 billion, total revenues decreased by.