Papa John’s has announced it is to close 50 underperforming sites in the UK as part of a process to reposition and optimise its UK business model.
QSR Magazine reports the 50 restaurants are corporate-owned and account for two-thirds of the brand’s operating loss in the UK during Q4 2023.
The pizza chain, which has more than 500 sites across the UK, reported its Q4 and full year earnings yesterday (29 February), with president and CEO Rob Lynch saying the business is making progress on its international transformation initiatives.
He described the 50 underperforming stores as sites that would not benefit from better operations, are located in obsolete trade zones, and face other challenges to profitability, according to QSR magazine.
Lynch emphasises the UK has dealt with significantly higher rates of inflation compared to the US as well as a challenging labour market.
He said some company units may be refranchised as part of the optimisation process, also indicating franchise closures may come in the future.
Earlier this year, MCA reported that Papa John’s closed multiple “low-performing, non-viable” franchised restaurants in the UK in the fourth quarter of 2023, with more closures planned in 2024.
In his statement accompanying the update, Lynch added: “We continue to see sequential improvement in our UK sales, with UK franchisees reporting their second consecutive quarter of positive comparable sales in the fourth quarter. We are building on the progress in this important market as we continue to take strategic actions that will drive improved profitability and further strengthen our franchisee base.”
Papa John’s acquired 118 UK restaurants from franchisees in 2023, resulting in a $12m increase from international revenues in Q4 2023.
Costs associated with acquisition and repositioning of the UK portfolio affected growth in adjusted operating income for the year, with a c$9m year-on-year impact when taking into consideration Q3 and Q4 operating losses.
International same-store sales declined 5.5% in Q4 and 3.1% over the full year, partly due to a sales dip in the UK.
