How Is Papa John’s Likely To Grow In The Next 2 Years?

Papa John’s (NASDAQ: PZZA) has seen reasonable growth in recent years, with an annual revenue growth rate of about 4%. 2017 was a fairly tough year for the company, however, as sales were impacted due to negative consumer sentiment, which the company partly blamed on NFL controversies. Papa John’s recently ended its sponsorship deal with the NFL, but we don’t see significant downside related to this as the company recently announced that it would be focusing on deals with specific NFL teams. Further, the company’s ongoing investments in technological advancement should help it capture some business from a younger customer base, and help boost near-term growth.

We forecast Papa John’s revenues to increase by around 2% annually over the next two years, as the aforementioned tech advancements could be partly offset by increasing competition and shifts in consumer preferences. We have created an interactive dashboard which shows our forecasts for the company’s revenues. You can modify the different revenue drivers to see how changes impact Papa John’s expected revenues.

Papa John’s Segment Revenue Growth

Domestic company-owned restaurant sales have grown at 4% annually, driven by growth in average revenue per store, whereas the company-operated restaurants have remained relatively flat. The planned improvement in technology, coupled with team-specific promo deals should provide a slight boost to the segment’s revenues.

The International business includes restaurant sales for international company-owned restaurants, international royalties and fees, and international commissary revenues. The segment’s revenue has been growing fairly rapidly, with 9% and 2% annual growth in the number of franchised restaurants and annual growth in average revenue per store, respectively. The company expects robust growth in this segment as it continues to expand its presence in international markets. This should help offset any domestic pressure.