A report from Semafor late last week sent Papa Johns’ stock climbing on possible news of a takeover of the country’s fourth-largest pizza chain. The publication alleged an investment fund backed by a member of Qatar’s royal family—Irth Capital Management—had spoken with advisers about presenting a private bid for Papa Johns and its market cap of roughly $1.6 billion, according to sources.
Irth, founded by Matthew Bradshaw and Sheikh Mohamed “Moe” al Thani, a member of the Qatari royal family, disclosed a 4.99 percent stake in Papa Johns last year—just beneath the threshold needed to disclose plans. That accounted to 1.6 million shares worth about $70 million.
Bradshaw has experience in this arena. He cofounded Durational Capital before Irth. Durational is the firm that took Bojangles private in 2018 alongside The Jordan Company, L.P. for $593.7 million. The all-cash acquisition closed on January 28, 2019, after shareholders approved it two weeks earlier. Durational also brought mattress company Casper private in 2021.
According to Semafor, Irth’s investment strategy involves taking small stakes in public companies with an eye toward full takeovers. Or as it states in an investor brochure, it “creates many of its own opportunities.” It manages roughly $200 million, per regulatory filings.
Papa Johns’ stock climbed as high as $53.74 on Thursday but closed the week at $49.04. It was trading for $38.43 on February 10. The brand has shed significant value in the past 12 months; the price was $73.03 on February 16, 2024.
Papa Johns was rumored as a takeover target in 2018 as well, with reports surfacing Nelson Peltz’s Trian Partners debated a move. Activist Starboard Value made a $200 million investment in the brand in 2019. Papa Johns agreed to repurchase Starboard’s shares in March 2023.
Papa Johns remains in turnaround mode, as it has since former Wendy’s head Todd Penegor began his CEO tenure in August.
Q4 North America comps (preliminary; Papa Johns reports officially on February 27) 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.
Management noted on quarterly calls it’s going to take some time to reroute trends. It spent Q4 resetting its loyalty approach to promote a repeat visit model that gets diners to their second and third purchases quicker. Papa Johns also turned to more store-level marketing after previous leadership increased national advertising and made local optional (part of a Back to Better 2.0 plan unveiled in early 2024). When it did so, Papa Johns’ co-ops went away. Penegor said at the ICR Conference in January this created a “big mess” for a regional business that couldn’t bring its franchisee community together.
Overall, Papa Johns has touted a six-part approach— focus on core product and innovation; amplify marketing (with a focus on returning to a strong presence in key regional and local markets with operators); transform international; invest in technology; evolve the franchisee base; and differentiate customer experience.
The brand is working to simplify products, operations, and processes, while moving toward an omnichannel experience “with product team mentality,” it said at ICR. That includes investing in data integrity and a tech stack, as well as prioritizing cross-functional work on data analysis to support order growth and margin improvement.
There is also movement toward refranchising in an effort to get stores in the hands of growth-minded operators who want to expand and reimage assets. More on that here.
Papa Johns had 3,454 North America locations as of September 29 (end of Q3). Of those, 2,917 were franchised and 537 company run. Internationally, Papa Johns tallied 2,454 locations—split 2,441 franchised and 13 corporate, thanks to U.K. market efforts.
The company grew by a total net of 122 stores in Q4. North America lifted by 60 driven by 63 new openings, and international 62 with 83 new openings. For the year, North America appreciated net expansion of 81 on 112 openings and international 43 on 198 openings (all alongside respective closures).
Domino’s had 6,639 U.S. franchised locations as of September 8 next to 291 company stores. Pizza Hut counted 6,537 locations at the end of Q3, all but seven of which were franchised restaurants. Little Caesars, at about 4,200 total units, is the third-largest pizza chain in the U.S.
