PAPA JOHNS INTERNATIONAL INC Q4 FY2024 earnings call

• Focus on core product proposition and innovation: Launched initiatives to meet customer needs, realigned teams for consumer-centric approach, tested new products and media mixes, and had successful sales days for specific occasions.
• Amplifying marketing message: Partnering with franchisees for market tests, investing up to $25 million in marketing in 2025, including CRM and loyalty, and launching the Meet the Makers campaign.
• Differentiating customer experience: Revamped loyalty rewards program with 50% of members redeeming up from 21%, aiming to drive frequency and personalized experiences.
• Development: Opened over 300 new restaurants globally in 2024, with North America having development opportunities and International continuing to grow presence, evaluating refranchising of Company-owned Restaurants.
• Supply chain: Reviewing North American Commissary and distribution network to improve franchisee profitability.

Global system-wide restaurant sales were $1.23 billion, down approximately 8% in constant currency. Excluding the prior year benefit of the 53rd operating week, global system-wide sales were flat. North America comparable sales were down 4% in the fourth quarter, with 120 basis points sequential improvement from the third quarter. Transaction comps were down 2% year-over-year but improved 230 basis points sequentially. Ticket comps were down 2% due to loyalty threshold changes, channel mix shift, and strategic pricing. International comparable sales were up 2% year-over-year. Total revenues for the fourth quarter were $531 million, down 7% from last year, with Company-owned Restaurant revenue decreasing and Commissary and advertising funds revenue offsetting some of the decline.

• System-wide sales expected to be up between 2% and 5% in 2025 compared with 2024.
• North America comparable sales anticipated to be flat to up 2% in 2025, with sequential improvement throughout the year.
• International full year 2025 comparable sales expected to be flat to up 2%.
• Adjusted EBITDA for 2025 anticipated to be between $200 million and $220 million, compared with $227 million in 2024.
• Hosting Biannual Franchisee Conference in March with expected higher payout percentage for performance-based compensation.

• Competitive operating environment that could impact sales and market share.
• Consumer behavior changes and preferences that may require continuous adaptation of products and marketing.
• Supply chain challenges that could affect food costs and operational efficiency.
• Geopolitical and macroeconomic uncertainties in International markets that may impact growth.

Q: Jim Salera with Stephens asked about industry expectations and how it flows into guidance.

A: Todd Penegor and Ravi Thanawala discussed value-focused environment, initiatives like loyalty program and marketing investments to build business and gain share.

Q: Sarah Senatori with Bank of America inquired about International growth.

A: Todd Penegor and Ravi Thanawala talked about focus on nine key countries, consumer-centric approach, and strong performance in markets like U.K., Middle East, and Latin America.

Q: Brian Bittner with Oppenheimer asked about EBITDA guidance and investments.

A: Todd Penegor and Ravi Thanawala explained incremental marketing investments, G&A reset, and supply chain review.

Q: Lauren Silverman with Deutsche Bank asked about ticket improvement.

A: Todd Penegor and Ravi Thanawala discussed barbell approach, innovation pipeline, and consumer product mix trends.

Q: Brian Mullen with Piper Sandler asked about operations and oven time.

A: Todd Penegor talked about simplifying menu and focusing on oven time to improve pizza quality.

Q: Peter Saleh with BTIG asked about development incentives and Papa Rewards.

A: Todd Penegor and Ravi Thanawala discussed development incentives and loyalty program member growth.

Q: Eric Gonzalez with KeyBanc asked about organic delivery channel and development net openings.

A: Todd Penegor and Ravi Thanawala explained organic delivery channel improvement and refranchising activities.

Q: Todd Brooks with The Benchmark Company asked about loyalty program lapsed consumers and same-restaurant sales guidance.

A: Ravi Thanawala and Todd Penegor discussed loyalty program reactivation and same-restaurant sales components.

Q: Jim Sanderson with Northcoast Research asked about traffic trends in channels.

A: Todd Penegor explained traffic trends in carryout, aggregator, and organic delivery channels.