After constructing the requisite infrastructure for sustainable unit growth, Papa John's CEO Rob Lynch told analysts in May that franchisees have "bought into our plans."
There's no better proof than Sun Holdings, which just signed a deal to open 100 stores across Texas through 2029—the largest domestic development agreement in company history.
The announcement continues Papa John's record-setting year in terms of unit expansion. In the first half of 2021, the pizza chain posted an unprecedented 123 net openings, with 68 in Q1 and 55 in Q2. In the trailing four quarters, Papa John's opened a net of 176 units. It finished Q2 with 5,523 stores systemwide, including 3,309 in North America and 2,214 internationally. Same-store sales in North America markets lifted 5.2 percent in the second quarter, or a two-year stack of more than 33 percent. Meanwhile, international comps rose 21.2 percent, or 27 percent on a two-year basis.
“Papa John’s development flywheel has started to take off,” said Amanda Clark, Papa John’s chief development officer, in a statement. “With industry leading paybacks and our key strategy of making it easy for franchisees to say yes to developing, we can attract great new partners to our brand. We’re excited to launch this milestone partnership with Guillermo and his team at Sun Holdings in Texas. Sun Holdings is a successful and well-financed operator who understands the Texas market and brings deep expertise within the [quick-service restaurant space that will benefit the entire Papa John’s system.”
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Sun Holdings, founded by Guillermo Perales in 1997, operates 1,000 locations in 12 states, including Taco Bueno, Burger King, Arby's, McAlister's, IHOP, Popeyes, T-Mobile, GNC, and a number of airport restaurant locations. The company has been awarded the MUFSO Golden Chain Award, and Perales has been named Ernst & Young’s Entrepreneur of the Year and IFA’s Entrepreneur of the Year.
READ MORE: How Guillermo Perales Reached 1,000 Locations
“Since its founding, Sun Holdings has taken a long-term, disciplined approach when making growth investments," Perales said in a statement. "Papa John’s fits our criteria perfectly. We see tremendous potential in this premium brand, backed by an innovative culture and highly attractive economics. We know Texas well and see an immense opportunity to grow Papa John’s across this dynamic region. We look forward to working with the corporate development team and our fellow franchisees to grow the system for everyone’s benefit, delivering BETTER INGREDIENTS. BETTER PIZZA. to our customers.”
Previously, Papa John's anticipated net new openings between 140–180 for 2021, but that was upgraded to 220 to 260 after its performance in the second quarter. Roughly 80 percent of growth is coming from international markets, where Lynch believes the chain has significantly more white space than its competitors. In late June, the pizza chain struck a deal with PJ Western Group to open 250 restaurants in Germany, and in August, the company inked a deal with Drake Food Service International to debut more than 220 stores, across Latin America, Spain, Portugal, and the U.K.
“We’re in 50 countries. Our competitors are in 100 countries,” Lynch said in early May. “So we have a huge amount of whitespace, and we’re entering in discussions with really sophisticated, large-scale restaurant franchisees in geographies that we don’t currently compete in to build out those countries. So we’re very bullish that that pipeline will grow over the next 12 to 18 months in a significant way.”