Papa Johns is set to close approximately 300 underperforming locations across North America by the end of 2027. About 200 of these closures are planned for this year as part of the company’s response to declining sales and shifting consumer spending habits.
The pizza chain cited poor performance, failure to meet brand expectations, and the potential to transfer sales to nearby locations as key factors driving these closures. Ravi Thanawala, the CFO and president of North America operations, emphasized the goal of focusing resources on stores with sustainable financial prospects.
At the end of the previous year, Papa Johns operated around 3,500 restaurants in North America. The exact locations facing closure have not been disclosed yet, leaving some uncertainty for franchise owners and customers in affected areas.
In addition to store closures, the company has reduced its corporate workforce by roughly 7%, cutting around 49 positions from its approximately 700-employee team. This move is part of broader cost-containment efforts amid a challenging market environment.
The decision follows a difficult fourth quarter where same-store sales in North America declined 5.4%. CEO Todd Penegor attributed the results to weak consumer demand and a highly competitive promotional landscape.
In an effort to turn the brand around, Penegor has focused on improving the menu and customer experience. This includes recalibrating ovens for better pizza cooking and launching new offerings such as a pan pizza aimed at attracting more customers.
Papa Johns is not alone in scaling back its physical footprint. Rival Pizza Hut announced plans to close about 250 locations in the first half of this year. Yum! Brands, Pizza Hut’s parent company, is currently conducting a strategic review to address the brand’s struggles.
Meanwhile, Domino’s Pizza continues to outperform competitors in the fast-food pizza segment. The chain recently reported a 3.7% increase in same-store sales for the fourth quarter, driven by value promotions and a successful brand campaign.
Key points regarding Papa Johns closures and operational changes:
1. Closing 300 underperforming North American locations through 2027
2. Approximately 200 closures scheduled for this year
3. Corporate workforce cut by about 7%
4. Fourth quarter sales declined by 5.4%
5. Menu and product improvements underway to boost appeal
Papa Johns’ plan to consolidate locations and restructure operations reflects broader challenges in the quick-service pizza industry. The company aims to focus on more profitable outlets while adjusting its strategy to meet evolving consumer preferences and a tough economic backdrop.
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