Papa John’s International Inc. reported a 6.7-percent in North American same-store sales for 2014, its best performance in 15 years, the company said on Wednesday.
Same-store sales rose 4.1 percent in the fourth quarter ended Dec. 28, as the operator said its marketing and technology efforts lured customers.
“2014 was an excellent year for Papa John’s,” company founder and CEO John Schnatter said during a call Wednesday discussing earnings. “These are clear indications that consumers continue to prefer better quality Papa John’s pizza.”
Pizza chains have been performing well lately. The pizza segment’s overall fourth-quarter same-store sales have increased an average 5.4 percent, based on company reports and Nation’s Restaurant News research. That includes flat same-store sales at category leader Pizza Hut.
No single factor drove Papa John’s sales increase last year, but company executives said Pizza Hut’s rebranding starting in November resulted in a sales slowdown in the fourth quarter.
Technology is a major factor driving sales. More than half of Papa John’s sales are received via its website or mobile app. Schnatter also credited the company’s marketing. An ad campaign has used Schnatter as its face, along with athletes such as Peyton Manning.
“We continue to attract new customers and create excitement about the Papa John’s brand,” Schnatter said.
On a two-year basis, the company’s North American same-store sales rose 13 percent in the fourth quarter, Schnatter noted. Comparing same-store sales over a two-year period can remove the impact of difficult comparisons, or easier ones.
Internationally, Papa John’s sales have surged despite weakness in China. The company’s international same-store sales rose 8.9 percent in the fourth quarter, and increased 15 percent on a two-year basis.
But China “remains a work in progress,” said Steve Ritchie, Papa John’s chief operating officer. Executives have spent time in China, assessing the market, and the company is testing efforts to improve sales there. “We believe this will become a strong market for us,” he added.
Western brands have struggled in China over the past six months amid a food safety scandal, and operators like Yum! Brands Inc. and McDonald’s Corp., which have a major presence there, have reported steeply declining sales in the region.
“China is a different market than any other market in the world,” Schnatter said. “You just have to approach it differently.”
Papa John’s revenue in the fourth quarter rose 9.7 percent, to $425.5 million, from $387.9 million a year earlier. Net income rose 12.8 percent, to $21.2 million, or 52 cents per share, from $18.8 million, or 41 cents the previous year.
For the year, revenue rose 11.1 percent, to $1.6 billion, while net income rose 6.4 percent, to $72.9 million, or $1.75 per share, from $68.5 million, or $1.55 per share the previous year.
Papa John’s added 235 new restaurants in 2014, 181 of which are in international markets. The company now has 4,663 restaurants worldwide, including 3,340 units in North America.
The company has added a new point-of-sale system called FOCUS in 75 percent of its domestic restaurants. The installation should be complete by the end of the first quarter.
Contact Jonathan Maze at [email protected].
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