Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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FDD Talk 2014: Our Latest Views on Papa John’s Average Gross Sales, Operating Expenses, and Cash Flows

by Franchise Chatter on November 12, 2014

in Franchise Earnings, Pizza Franchises



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In this FDD Talk post based on Item 19 of Papa John’s 2014 FDD, you will find the answers to the following questions:

  • What were the 2013 average restaurant-level sales revenues of domestic franchised and company-owned Papa John’s restaurants for the company’s fiscal year ended December 29, 2013?
  • What were the 2013 average food costs, labor costs and taxes, manager’s labor and taxes, mileage, advertising, controllables, rent and common area maintenance, other non-controllables, training costs, store bonuses, and pre-tax cash flows for company-owned Papa John’s restaurants only?
  • How did the franchisor obtain the information used in Item 19? Was this information based on actual historical costs and results?
  • What are some factors that may affect the comparability of the expense (or cash outflow) data, which is drawn solely from company-operated restaurants, to franchised restaurants and the data’s effectiveness as a guide or template for potential operating results of a franchised restaurant?
  • How many domestic Papa John’s restaurants were open and operating at the close of Papa John’s 2013 fiscal year? How many of these were company-owned, including restaurants owned by franchisees in which Papa John’s has a majority interest?
  • Were the results from non-traditional Papa John’s restaurants and restaurants that were open only part of the year included in Item 19? If not, then why not?
  • What is the total number of franchised and company-owned Papa John’s restaurants included in the data?
  • In the revenue figures, were non-recurring items, such as proceeds from the sale of used furniture or equipment, included?
  • Does the cash flow data include depreciation expense or any other non-cash items?
  • Do company-owned Papa John’s restaurants pay royalties?
  • Has Papa John’s been able to achieve certain economies of scale and operational efficiencies that may not be available to a franchisee operating one restaurant or a limited number of restaurants?
  • Where are company-owned Papa John’s restaurants typically clustered around?
  • Do sales typically “ramp up” as the restaurant and market develop? Does greater penetration (i.e. the greater the number and concentration of restaurants) in a market also affect performance?

Papa John's Pizza Photo by JillOW



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