Papa Johns announced Thursday that it sold a majority stake in 90 Texas-based restaurants to Sun Holdings, building upon a historic development deal struck last year.
Sun Holdings, the second-largest restaurant franchisee in the U.S., assumed the pizza chain’s share in a joint venture with Blue and Silver Ventures.
The move comes a little more than six months after the franchisee agreed to open 100 Papa Johns restaurants through 2029, marking the chain’s biggest U.S. franchise agreement in history. The 90 refranchised locations are on top of the 100-unit total.
“Sun Holdings is a proven, well-capitalized operator who understands our ambitious goals to expand the footprint of our brand,” Chief Development Officer Amanda Clark said in a statement. “We will continue to build new corporate restaurants as well as refranchise when we can provide our franchisees strategic scale to support the brand’s long-term growth, with this deal as a great example.”
The 90 restaurants contributed $106 million in revenue last year and operating income of $8.6 million. If those stores were fully franchised in 2021, they would have brought in $34.1 million in revenue ($4.5 million royalties and fees; $29.6 million commissary revenues) and $5.7 million in operating income.
Sun Holdings, founded by Guillermo Perales in 1997, operates more than 1,300 locations in 12 states, including Taco Bueno, Burger King, Popeyes, Arby’s, Applebee’s, T-Mobile, McAlister’s, IHOP, GNC, and a number of airport locations. In the past three years, his group has developed more than 200 new stores and remodeled 200 more.
“We are excited to partner on an even larger scale with Papa Johns, an innovative brand that is well-positioned in the [quick-service restaurant] industry and has already begun to deliver a high return on our investment,” Perales said in a statement. “We look forward to growing together and are thankful to the team at Papa Johns for the trust they are placing in Sun Holdings.”
In 2021, Papa Johns earned $2.1 billion in revenue, up 14.1 percent over 2020, and opened a net of 250 restaurants—a company record—including 50 in North America and 200 across the world. In 2022, the pizza chain expects to reset its development peak with between 260 and 300 net new stores.
Earlier this year, the brand unveiled an agreement with FountainVest Partners to open more than 1,350 locations across South China by 2040, which is the chain’s franchise development deal in history.