One of America’s most loved pizza brands is gradually vanishing from various neighborhoods nationwide.
Papa John’s has plans to shut down around 300 locations across North America, with many closures already happening in the first quarter, particularly in key Sunbelt states.
A recent assessment of the company’s financial documents by Fast Company revealed that 44 stores have closed across 17 states, with the majority of these closures occurring in Texas, California, Florida, and Arizona.
Additional store closures have also been verified in states like Michigan, North Carolina, and Virginia.
In February, Papa John’s initially announced that it would be closing numerous underperforming locations by the end of 2027. The company noted that these outlets are primarily franchise-owned, over a decade old, and generate annual sales of less than $600,000.
Papa John’s CFO, Ravi Tanawala, stated, “We believe these closures will bolster our system, potentially raising our annual sales volume by at least 3%. This will enhance the overall health of our franchisees by reallocating resources to improve operations at our remaining restaurants and allowing for new openings in priority markets.”
He also emphasized that most of the company’s restaurants worldwide have historically performed well, benefiting both corporate and franchise owners. He asserted that strategically closing unprofitable restaurants is crucial for enhancing restaurant profitability and maintaining store health.
However, it’s worth noting that Papa John’s International stock had dropped roughly 21% since the start of the year by the close of trading on Wednesday. Over the past five years, the company’s stock has plummeted more than 69%.
Alongside the store closures in the first quarter, Papa John’s also laid off about 7% of its workforce, as indicated in recent filings.
Franchisees in the fast-food sector are battling significant challenges due to rising inflation, supply chain issues, and labor costs. Moreover, pizza establishments are facing intense competition. A recent report from the Wall Street Journal noted that the number of pizza outlets now surpasses that of Mexican restaurants or coffee shops.
Other pizza chain rivals have taken similar measures amid dropping demand, with Pizza Hut shutting hundreds of its locations and its parent company, Yum!, reportedly contemplating the sale of the chain.
