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FDD Talk 2017: What You Need to Know About the Papa John’s Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

by Franchise Chatter on June 25, 2017

in FDD Talk 2017: Food Franchises, Franchise Earnings, Pizza Franchises



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Papa John's Pizza Photo by JillOW

In this FDD Talk 2017 post, you’ll learn the following:

  • Section I – Background information on the Papa John’s franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Papa John’s franchise, based on Item 7 of the company’s 2017 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Papa John’s franchise, based on Items 5 and 6 of the company’s 2017 FDD
  • Section IV – Presentation and analysis of Papa John’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
  • 2016 average sales for the 648 company-owned traditional Papa John’s restaurants that were open the entire year of 2016
  • 2016 average sales for the 2,397 franchised traditional Papa John’s restaurants that were open the entire year of 2016
  • 2016 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 the 648 company-owned traditional Papa John’s restaurants that were open the entire year of 2016

Section I – Background Information

12 Things You Need to Know About the Papa John’s Franchise

New Addition to Burger-Pizza Lineup

1.  To kick off the summer season, Papa John’s introduced in late May a new addition to its burger-pizza lineup—the Bacon Cheddarburger Pizza with Wisconsin cheddar, zesty burger sauce, and pickles. The limited-time only pizza, which remained on the menu until June 25, was priced at $10. Customers could also add Bacon Cheddarsticks to an order for $6 more.

2.  To help launch the pizza, Papa John’s ran a new national television campaign featuring Indiana Pacers All-Star Paul George, and shared the same across its social media channels. The commercial shows George being distracted by the smell of the new Bacon Cheddarburger Pizza as he attempts to dunk in a game.



New Gluten-Free Crust Featuring Ancient Grains

3.  In early April, Papa John’s announced that it was testing a new gluten-free crust made with ancient grains, specifically sorghum, teff, amaranth, and quinoa, in select locations across the U.S., including Los Angeles, Phoenix, St. Louis, Houston, and Nashville.

4.  The Papa John’s research and development team spent more than a year developing the product with the goal of offering pizza fans a better tasting gluten-free pizza crust. According to Sean Muldoon, Chief Ingredient Officer at Papa John’s, customers have been asking for a tastier gluten-free crust for some time, but the company had never been satisfied with the flavor profile of available gluten-free crust options.

5.  Papa John’s wanted to create a crust with added nutritional benefits since the ancient grains are naturally gluten-free and higher in protein and fiber than other grains.

Testing Organic Vegetable Toppings

6.  Early in the year, Papa John’s announced that it would be adding freshly-sliced organic produce to its pizza topping options. The organics pilot program is currently being tested in Papa John’s locations across Lexington, Kentucky and features four freshly-sliced, organic toppings: Roma tomatoes, green peppers, yellow onions, and mushrooms.

7.  The company will be working with Green BEAN Delivery to source the fresh produce from Certified Organic family farms across the country, including those in Arizona, Florida, Pennsylvania, Kentucky, Oregon, California, and Indiana.

Significant Investments in Digital Innovation

8.  In early March, Papa John’s introduced “Papa Track,” a digital pizza tracker that allows customers to follow the pizza process from oven to delivery. According to the company, over the past year, Papa John’s has made significant investments in digital innovation, customer experience, and staffing. The company has also increased and enhanced its tech staff, including the appointment of its first Chief Information and Digital Officer (CIDO), Mike Nettles.

9.  Around that same time, Papa John’s announced the addition of PayPal as a digital payment option. The addition of PayPal to Papa John’s payment methods makes it the national pizza chain with the most payment choices.



Company History

10.  Papa John’s was founded in 1983 when “Papa” John Schnatter knocked out a broom closet in the back of his father’s tavern, Mick’s Lounge, in Jeffersonville, Indiana, and started selling pizza. Schnatter’s pizzas were so popular that he was able to open the first official Papa John’s location a year later. Papa John’s began franchising in 1986.

11.  As of 2017, Papa John’s is the third largest take-out and pizza delivery restaurant chain in the United States, with over 5,000 franchised and company-owned locations in the U.S. and internationally.

Entrepreneur’s Franchise 500

12.  Papa John’s has ranked on Entrepreneur’s annual Franchise 500 list every year in the last decade. The company’s highest rank was No. 10 in 2007 and 2009, while its lowest rank was No. 55 in 2017.

Section II – Estimated Costs

  • Please click here for detailed estimates of Papa John’s franchise costs, based on Item 7 of the company’s 2017 FDD (updated).

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Papa John’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis



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