LOUISVILLE, KY. – Papa John’s International, Inc. achieved comparable store sales growth of 24% in North America in the third quarter ended Sept. 27 as the Papadias line continued to succeed and expand. Internationally, comparable store sales grew 21%.
”Papa John's is on a growth trajectory, having now achieved positive North America and international comp sales for five and six consecutive quarters, respectively, and so far, in 2020, we have delivered record results and outperformed the overall pizza delivery market every quarter this year,” said Robert M. Lynch, president and chief executive officer, in a Nov. 5 conference call.
Papa John’s has added over 8 million new customers this year, he said.
“That's a huge number for our business, and what we're finding is that a lot of them are coming in through our loyalty channels and a lot of them have higher frequency and higher ticket averages than the customers prior to the pandemic,” he said.
Louisville-based Papa John’s reported net income of $15.71 million, or 35¢ per share on the common stock, in the quarter, which compared to net income of $385,000 in the previous year’s third quarter. Shareholders had a loss in per-share price in the previous year’s third quarter because of $3.47 million in dividends paid to participating securities and accretion. Revenues in the third quarter increased 17% to $472.94 million from $403.71 million.
Papa John’s stock on the Nasdaq closed at $82.28 per share on Nov. 5, up more than 8% from a close of $76.11 per share on Nov. 4.
“The pandemic definitely provided a tailwind and supported all the initiatives that we had put in place prior to the pandemic,” Mr. Lynch said. “And so looking forward, as long as we're in this environment, we'll continue to benefit as the industry continues to benefit, but coming out of this situation, we're hoping, like everyone, for this to end as soon as possible.”
Papa John’s launched Buffalo Chicken Papadias in late August.
“This new flavor was received enthusiastically and quickly became our No. 2 Papadia,” Mr. Lynch said. “Given its strong results, we expect Buffalo Chicken will become a permanent menu item, expanding the Papadias line from four to five items. Papadias continued to be a major component of the growth we're seeing in our ticket size. Particularly they drive incremental value in sales as additions to orders without cannibalizing our pizza sales.”
Double Cheeseburger Papadias was another third-quarter launch.
“While we had to adjust our innovation calendar at the onset of the pandemic, we were able to accelerate the launch of new products in Q3,” Mr. Lynch said. “We've successfully done so while carefully managing our operations and supply chain despite big increases in demand and an unprecedented new operating environment.”
Papa John’s sold over 3 million Shaq-a-Roni pizzas to raise more than $3 million for communities to support causes such as COVID-19 relief, the fight against racial injustice, the Boys & Girls Clubs of America and the United Negro College Fund.
In other Papa John’s news, the board of directors on Nov. 4 approved a new share repurchase program for up to $75 million of the company’s common stock, effective through Dec. 31, 2021.
Papa John’s in September announced plans to open a new headquarters in Atlanta. Certain corporate functions will relocate to Atlanta. They include menu innovation, marketing, digital customer experience, human resources, diversity, equity and inclusion, communications, operations, and development. Functions that will continue to operate in the Louisville headquarters include information technology, finance, supply chain and legal teams.
Papa John’s expects to complete the opening of the Atlanta location and related organizational changes by the summer of 2021. The company has offered a separation package for affected employees who do not relocate, and the company thus expects to incur certain one-time corporate reorganization costs of about $15 million to $20 million related to employee severance and transition, recruitment and relocation, and other third-party costs through 2021.
Papa John’s also has an international headquarters in Milton Keynes, United Kingdom, near London.
For the nine months ended Sept. 27, Papa John’s reported net income of $44.77 million, or $1.00 per share on the common stock, which was more than six times higher than $7.01 million in the same time of the previous year. Shareholders last year had a loss in first nine months of the per-share price because of $9.03 million in dividends paid to participating securities and accretion. Nine-month total revenues this year were $1.34 billion, up 12% from $1.20 billion.