Papa John’s(PZZA)2024-02-28 16:00Financial Performance - In 2023, the 512 Domestic Company-owned restaurants generated average annual unit sales of 1.2 million[25][27]. - As of December 31, 2023, there were 5,906 Papa John's restaurants operating globally, with 3,433 in North America and 2,473 internationally[32]. - As of December 31, 2023, net loans outstanding to franchisees totaled $17.5 million, primarily for restaurant purchases and development[42]. - Inflationary pressures have affected profitability, with price increases in food items and other commodities, labor, and fuel costs during 2022, which are expected to moderate in 2024[293]. Business Strategy - The company plans to increase the fixed operating margin charged by Domestic commissaries starting in 2024, while also offering new incentive-based rebates for franchisees[17]. - The company introduced a new development incentive for U.S. franchisees aimed at accelerating unit growth in 2024 and 2025, which includes a reduction in marketing fund contributions[23]. - The company is focused on international expansion, believing that demand for pizza delivery will continue to increase in international markets[59]. - The franchised model allows for resiliency of earnings and growth with less capital investment compared to traditional company-operated restaurants[22]. Technology and Operations - Approximately 85% of Domestic sales are conducted through digital channels, highlighting the company's investment in technology and data science to enhance customer experience[18]. - The company has established International regional hubs and increased technology investments as part of its International Transformation initiative[21]. - The company operates 11 QC Centers in the U.S. that produce dough and distribute key ingredients to ensure consistent food quality across its restaurants[61]. Workforce and Diversity - The company employs approximately 13,200 persons, with around 10,600 working at Company-owned restaurants[47]. - As of December 31, 2023, the total number of persons in the Papa John's system, including team members and franchisees, was approximately 107,000[48]. - The company has received several recognitions in 2023 for its diversity, equity, and inclusion efforts, including being named one of the Best Employers for Diversity by Forbes[49]. - The company aims to diversify its workforce and leadership pipeline by implementing initiatives such as unconscious bias training and annual DEI training for all team members[50]. - The company offers a Dough & Degrees program that allows team members to earn a college degree for free or at a reduced tuition, supporting their career advancement[53]. Market Environment - The U.S. Quick Service Restaurant pizza industry is highly competitive, with challenges from both large national chains and local independent operators[58]. - The company is subject to various federal, state, and local regulations affecting its operations, including health and safety regulations[62]. Risk Management - The company discusses various risk factors in detail in "Part I. Item 1A. — Risk Factors" of the Annual Report on Form 10-K[298]. - The company may update these risk factors in future reports filed with the Securities and Exchange Commission[298]. - There is no obligation for the company to publicly update any forward-looking statements unless required by law[298].