LOUISVILLE Ky. Papa John’s International Inc. said earlier this month it would reduce the price it charges operators for cheese and explore ways to provide financial assistance during the credit freeze. —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
Papa John’s, parent of the 3,317-unit pizza chain based here, already has rolled back cheese prices for the final two months of the year. The move by the pizza segment’s third-largest player could reduce domestic franchisees’ food costs by about 1.4 percent, the company said. —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
(To view charts featured in this week's print issue, click here.) —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
The price is now based on the expected futures spot market price for cheese, plus interest, which Papa John’s said is about 28 cents per pound less than the standard cheese price the franchisor charges through its commissary. —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
In addition, the company said it would consider offering additional financial assistance to franchisees, although it did not detail those plans. —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
“Some franchisees, or prospective franchisees, are experiencing difficulty in obtaining financing from commercial banks for working capital or development purposes,” the company said in a statement. “In addition, our franchisees continue to face pressures on operating margins related to increased commodity and labor costs. In light of these conditions, we are considering various options to assist our domestic franchisees through this difficult period.” —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
The moves follow similar undertakings by rival Domino’s Pizza, which said late last month it would consider offering bridge financing or royalty cutbacks to certain franchisees that want to expand but can’t obtain financing for restaurant acquisitions. —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
Industry observers have said that franchisors, especially those reliant on franchisee expansion and health, will have to brainstorm financing alternatives to help franchisees survive an economic downturn that has raised operating costs while slowing sales. —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
In a possible indicator of what’s to come, Papa John’s separately said it has agreed to sell 37 corporate restaurants to a franchisee as part of its refranchising program. The latest deal, however, will be fully financed by Papa John’s—a rare move, as the operating results of the sold restaurants still will require inclusion in Papa John’s financial statements even though the company would have no ownership in the locations. It may also reduce corporate earnings. —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
“Given the current credit environment, we will provide 100 percent of the financing for the transaction,” Papa John’s said, “with [an] expectation that the buyer…will obtain third-party financing at a future date when the credit markets have stabilized.” —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
The corporate steps could reduce profit this year and the company’s per-share earnings outlook for next year, Papa John’s said. The company now expects full-year, per-share earnings to hit the low end of its $1.68 to $1.76 target. —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
The company added, however, that any short-term initiatives would produce long-term benefits mainly by mitigating restaurant closures. —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
For the third quarter ended Sept. 28, Papa John’s net income rose nearly 60 percent to $7.7 million, or 28 cents per share, from year-ago earnings of $4.8 million, or 16 cents per share. —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
But excluding a series of such items as restaurant sales and closures as well as the finalization of income tax issues, Papa John’s adjusted earnings fell 18 percent in the latest quarter to $7.9 million, or 28 cents per share, from year-ago adjusted results of $9.7 million, or 32 cents a share. —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
Latest-quarter revenues rose 6.6 percent to $280 million. —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
Domestic same-store sales rose 1.9 percent at corporate restaurants and 1.6 percent at franchised locations. The company said it booked negative same-store sales in September and October, however, and that full-year domestic same-store sales growth is expected to be near or below the previously issued forecast of between 1.25 percent and 2.75 percent. —Joining the growing number of restaurant franchisors looking for ways to ease economic pressures on franchisees,
