When Papa Johns CEO Todd Penegor began his position in August, part of his 100-day plan was to complete a franchise listening tour. He spent a lot of time in several markets with his leadership team and took a lot of questions on stage at the Papa Johns Franchise Association meeting. The entire system has his cell phone number, so he receives numerous texts, calls, and emails regularly.

From all this feedback, Penegor sees a chain that’s cautiously optimistic about the future.

“They’re feeling good about the folks that we put in place to lead the brand forward,” Penegor said at the ICR Conference in Orlando. “They know we have to go chase transactions a little harder in the near term because they know if we get more customers to show up more often we can actually drive and trade them up and drive some profitability in this business.”

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Most of the footprint feels this way. There is, however, a vocal minority that is “feeling a little heat” around their margins as the brand looks to build transactions.

Sales have seen dips. In the fourth quarter, North America comps decreased 4 percent year-over-year, with transactions and average ticket each dropping 2 percent. North America franchised restaurant same-store sales were down 4 percent while company-owned units slid 6 percent. North America comps fell 6 percent in Q3, 4 percent in Q2, and 2 percent in Q1. Although on a full-year basis, North America same-store sales were up 1 percent compared to 2023, driven by a 3 percent lift in corporate store comps.

Penegor acknowledged Papa Johns must regain some trust among its franchisees, and he gets why. The chain has had three CEOs this year alone, between Rob Lynch—who left in early 2024—CFO Ravi Thanawala, who served as interim chief executive, and then Penegor.

There are also clear problems that must be fixed. He said it was a mistake for the chain to increase national advertising and make local advertising optional. This move was part of Papa Johns’ Back to Better 2.0 plan announced at the start of 2024.

“When we made local optional, all the co-ops went away and not having the co-ops to be able to actually put the franchise community together in the communities that we serve, have the company sitting around the table, it’s a big miss in a business that is a very regional business, especially pizza being so localized,” Penegor said. “So there may be some investments that we’re going to have to front run in some company markets to stand up some of those co-ops a lot quicker.”

Another pain point is restaurants have become “really tough to operate,” Penegor said. As he visited stores and underwent training, he noticed extra schemes added over the past two years, or what he calls “rhythm breakers.” One solution is introducing innovation around the core menu, which would allow the brand to remove other products and simplify operations.

“We know we got a lot of work to do to really execute better at the restaurant level—spend a little more time getting out into our restaurants … we’re spending more time training in the restaurants,” the CEO said. “We had a Back to Better 1.0 initiative that we probably didn’t really complete the playbook, so there’s things like spinners that we put in the restaurants that we hadn’t fully trained our staffs. We’re going to go back and do all of that so we can pay off the promise with strong messaging that we have.”

CFO Ravi Thanawala explained that Papa Johns spent Q4 resetting the loyalty program to drive traffic and boost the brand’s value perception, at the cost of losing average check. Previously, Papa Rewards members had to spend $75 to earn $10 in Papa Dough. Starting November 18, every order of $15 earns $2 in Papa Dough, meaning guests can earn discounts more frequently.

In addition to that switch, Papa Johns tinkered with loyalty messaging and targeted offers to secure more repeat visits.

“What we really do is we can actually acquire a lot of folks to get into the loyalty program,” Penegor said. “We can get them to get their first purchase. Our challenge was on the second and third. Because once we got them through the second and third, the fourth and the fifth, we are on par or even better than the industry.”

Penegor and Thanawala hope for sequential improvements across each quarter in 2025. The CEO believes Papa Johns could see things turn positively by the middle of the year.

As for unit growth, the pizza giant opened a net of 122 restaurants in Q4, comprising 60 in North America and 62 internationally. Papa Johns finished the year by opening its 6,000th store in Pittsburgh. The location was opened by Yasir Hussain, who became an operator in 2019 and plans to expand into Cleveland.

In 2024, Papa Johns franchisees averaged 15 years in the system and seven restaurants each. The chain has expanded its global footprint by more than 1,000 restaurants since 2017.

Thanawala believes franchisees’ long tenure with the brand is one of the company’s biggest strengths.

“I think more broadly when we think about the franchisee community, there’s a number of long-duration franchisees that have been with the system for a long time,” Thanawala said. “They’ve seen the cycles. What they do know is this brand is highly resilient, the category is highly resilient, and when we execute well, we win consumers’ hearts and minds.”


Fast Food, Franchising, Growth, Pizza, Story, Papa Johns