Papa John’s delivered a stronger-than-expected Q2, as evidenced by a significant positive market reaction following its results. Management credited the quarter’s performance to a return to positive same-store sales in North America, the successful rollout of new menu items like Cheddar Crust and Shaq-a-Roni, and targeted investments in loyalty and marketing. CEO Todd Penegor emphasized that “our Cheddar Crust innovation, combined with the addition of a fan favorite Shaq-a-Roni pizza as a long-term menu item plus continued strong value message... delivered an increase in both the average number of pies per order and overall pizza sales versus last year.” Strategic focus on product innovation and operational improvements enabled the company to grow transactions and customer engagement.
Is now the time to buy PZZA? Find out in our full research report (it’s free).
Papa John's (PZZA) Q2 CY2025 Highlights:
- Revenue: $529.2 million vs analyst estimates of $515.4 million (4.2% year-on-year growth, 2.7% beat)
- Adjusted EPS: $0.41 vs analyst estimates of $0.34 (20.6% beat)
- Adjusted EBITDA: $48 million vs analyst estimates of $47.25 million (9.1% margin, 1.6% beat)
- EBITDA guidance for the full year is $210 million at the midpoint, above analyst estimates of $206.1 million
- Operating Margin: 4.6%, in line with the same quarter last year
- Locations: 5,989 at quarter end, up from 5,883 in the same quarter last year
- Same-Store Sales rose 1.6% year on year (-2.7% in the same quarter last year)
- Market Capitalization: $1.56 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Papa John's’s Q2 Earnings Call
- Tyler Prause (Stephens) asked about the impact of regional marketing efforts on customer frequency. CEO Todd Penegor explained that local market tests are in early stages, with learnings to inform broader strategies in impactful markets.
- Andrew Strelzik (BMO Capital Markets) questioned where the company is gaining unexpected traction and the drivers behind confidence for the rest of the year. Penegor highlighted core menu growth and innovation, while expressing cautious optimism due to a softer start in carryout.
- Sara Senatore (Bank of America) inquired about improvements in four-wall (store-level) economics and the sufficiency for refranchising. CFO Ravi Thanawala responded by noting sequential margin improvements and the expectation that supply chain initiatives will further enhance profitability.
- Alex Slagle (Jefferies) asked about lessons from top-performing carryout markets. Penegor pointed to the importance of national messaging, local community engagement, and customer service quality in driving carryout growth.
- Christopher O’Cull (Stifel) pressed on the sustainability of increased marketing spend and the expected changes in supply chain costs. Penegor indicated that learnings from 2025 will enable more efficient use of marketing dollars in 2026, while Thanawala detailed a focus on productivity and procurement savings.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) the pace and success of new menu item introductions and their impact on customer acquisition, (2) realization of supply chain cost savings and improvements in restaurant-level profitability, and (3) the effectiveness of digital upgrades in driving loyalty engagement and repeat purchases. Execution of refranchising and international market optimization will also be closely monitored for sustainable growth.
Papa John's currently trades at $46.59, up from $40.52 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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