In the trailing four quarters (leading up to the most recent period), Papa John’s opened a net of 176 restaurants to get to 5,523 systemwide, including 3,309 in North America.
Current operators, Lynch says, are discussing development again. That was hardly the case two years ago and it took 18 months for Papa John’s to shift the narrative.
At the same time, new operators are taking notice. The best example of which arrived in late September when Sun Holdings struck a deal with Papa John’s to open 100 units across Texas through 2029—the largest domestic development agreement in company history.
Lynch calls the move “the tip of the spear” for Papa John’s.
“But man, it is a big tip of a big spear,” he says.
Sun Holdings was founded in 1997 by Guillermo Perales with a single Golden Corral. It’s since scaled past 1,000 locations in 12 states, including Burger King, Arby's, McAlister's, IHOP, Popeyes, T-Mobile, GNC, and a number of airport restaurant locations.
Perales entered the Arby’s system around the same time Lynch did. He was the chain’s developer of the year three of the six years Lynch spent with the brand. “He was building them and launching them successfully, faster than anybody else,” Lynch says.
There are some similarities in the brand stories as well. Lynch helped Arby’s transform into a “Fast-Crafted” chain as it posted 16 consecutive quarters of comps growth and produced record sales and profits in 2018.
Just as Perales was attracted to Arby’s comeback then, Lynch says, the same goes for Papa John’s. “This is a fantastic outcome for us,” Lynch says. “Getting somebody like Guillermo to come in and do a 100-unit deal, we probably would have let him in for 20 units because he’s such a great operator. But he wanted to sign up. He believes in what’s happening here. When we talked after we had been in discussions for a couple of months, he was like, ‘these unit economics are very compelling.’ Those were his words.”
Already, Lynch says, Perales and Sun Holdings are submitting sites “like nobody’s business.” He wouldn’t be surprised if the 100-unit deal came to market faster than announced. Or if the figure ends up higher.
“That really is kind of the culmination of all the work that we’ve been putting in for the last couple of years—to get where something that like that could actually happen,” Lynch says.
Papa John’s growth story has international legs, too. Lynch has pointed out in recent quarterly reports how the brand operates in 50 or so counties. Its competitors are in 100-plus.
There are 200 Papa John’s in China. Lynch believes there could be 1,000. Fifteen percent of Pizza Hut’s system sales this past quarter came from China. “We have an opportunity both to open up new countries and completely new whitespace, and also to work with our current franchisees in markets that we already have an operation but haven’t scaled to the point where we think it can go,” Lynch says.
More broadly, he believes Papa John’s is simply a different organization today, inside and out. It’s gotten to the point Lynch isn’t telling people what to do anymore, he says. He’s offering guidance and making decisions. “But we’ve got a whole company full of really talented, amazing people who can contribute at a really high level and so we’ve kind of pulled the reins off,” he says.
It’s why Papa John’s added 10–12 million new loyalty customers in the last 18 months and why product launches continue to arrive at a constant clip. All of those deterrents before, including growth related, “all of those reasons have gone away,” Lynch says.
“People believe in the future and are focused on what we can do, not what we haven’t done. Or wouldn’t do,” he says. “And so, I think that kind of culture—that’s the kind of place I want to work. That’s the kind of company I want to be a part of and I think that’s what’s really helping us outpace a lot of our peer group right now.”