Summary of Papa John's International FY Conference (June 10, 2025) Company Overview - **Company**: Papa John's International (PZZA) - **Key Executives**: Todd Penegor (CEO), Ravi Thanawala (CFO), Heather Hollander (SVP Strategy and Investor Relations) [1][2] Core Points and Arguments Strategic Shifts and Management Changes - The new management team is focused on improving traffic and enabling profitable growth through a strategic plan [2] - Todd Penegor emphasizes the importance of a strong team and consumer-focused insights to drive brand loyalty and frequency [5][7] Marketing and Brand Positioning - The company is returning to its core messaging of "better ingredients, better pizza" after a previous campaign that did not yield expected results [8] - The "Meet the Makers" campaign highlights pizza craftsmanship and the use of simple, high-quality ingredients [8][21] - A new loyalty program has been introduced, offering $2 off purchases of $15, which has improved customer engagement and frequency [10][12] Sales and Performance Metrics - Pie sales increased by 4% in Q1, indicating positive momentum in the business [14] - The company is seeing improvements in brand health metrics, particularly in value perception and customer satisfaction [17][21] - The loyalty program has grown to 37 million members, with a significant increase in engagement [12][40] Financial Outlook and Growth Strategy - The company expects same-store sales for 2025 to be flat to a 2% increase in North America, with positive traffic trends anticipated [30] - EBITDA guidance for 2025 is set between $200 million to $220 million, including $25 million in incremental marketing investments [36] - The focus on innovation and new product offerings, such as Cheddar Crust Pizza, is expected to drive future sales [27][19] Supply Chain and Operational Efficiency - The company is optimizing its supply chain to improve cost efficiency and service quality for franchisees [54][55] - Expected cost savings from supply chain optimizations are projected to impact the P&L positively in 2026 [56][59] Refranchising and Unit Growth - The company plans to refranchise select units to enhance its financial model and attract growth-oriented franchisees [69][71] - Global unit growth is projected at around 2%, with a focus on deliberate and strategic development [60][64] Additional Important Insights - The company is leveraging data analytics and partnerships (e.g., with Google Cloud) to enhance customer engagement and personalize marketing efforts [40][42] - The management is confident in the brand's ability to compete effectively in the delivery market, which currently represents about 17% of sales [46][48] - The focus on quality and innovation is seen as key to capturing market share in a competitive landscape [39][49] This summary encapsulates the key points discussed during the conference, highlighting the strategic direction, performance metrics, and future outlook for Papa John's International.

Financial Data and Key Metrics Changes - Global system-wide restaurant sales for Q1 2025 were $1.22 billion, up 1% compared to the prior year in constant currency [20] - North America comparable sales decreased by 2.7% in Q1 2025 compared to the prior year, but showed sequential improvement [21] - First quarter consolidated adjusted EBITDA was approximately $50 million, down from $61 million a year ago [24] Business Line Data and Key Metrics Changes - North America transaction comps were down less than 1% compared to the prior year, with improvements noted in key occasions like the Super Bowl and Valentine's Day [21] - International comparable sales increased by 3% year over year in Q1 2025, reflecting the benefits of international transformation initiatives [23] Market Data and Key Metrics Changes - The company experienced a decline in company-owned restaurant revenue by $17 million in Q1 2025, primarily due to refranchising efforts [23] - The advertising fund revenues increased by $7 million to support higher levels of national marketing compared to last year [24] Company Strategy and Development Direction - The company is focused on five key priorities: core product and innovation, amplifying marketing messages, investing in technology infrastructure, differentiating customer experience, and evolving the franchisee base [6][7] - A long-term partnership with Google Cloud was announced to enhance ordering and delivery experiences through AI [14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding consumer confidence amid economic volatility, noting improvements in value perception and traffic [40][41] - The company anticipates system-wide sales to increase by 25% in 2025, with North America comparable sales expected to be flat to up 2% [28][29] Other Important Information - The company plans to invest an additional $25 million in marketing this year to build on early successes [12] - The loyalty program saw significant growth, adding approximately 1 million new members in Q1 2025, bringing total membership to over 37 million [15] Q&A Session Summary Question: How is the consumer environment viewed from Papa John's perspective? - Management noted that consumer confidence remains challenged but highlighted improvements in value perception and traffic [40][41] Question: Can you elaborate on the impact of incremental advertising on demand? - Management reported positive early results from $7 million in incremental media spend, with significant gains in consumer awareness and value perception [44][45] Question: Where has the company made the most progress in its initiatives? - Management highlighted progress in technology transformation and storytelling around pizza craftsmanship as key areas of success [50][51] Question: What are the drivers of international sales growth? - Management indicated that focused countries are experiencing mid to double-digit growth, with successful innovation and quality execution [56][58] Question: How significant is the opportunity to improve supply chain costs for franchisees? - Management acknowledged early stages of supply chain optimization, with meaningful savings expected to enhance franchisee margins [61][62] Question: What is the outlook for refranchising company-owned restaurants? - Management indicated that refranchising could begin in Q2 or early Q3, focusing on core markets for growth-oriented franchisees [65][66]

Financial Data and Key Metrics Changes - Global system-wide restaurant sales for Q1 2025 were $1.22 billion, up 1% compared to the prior year in constant currency [19] - North America comparable sales decreased by 2.7% in Q1 2025 compared to the prior year, but showed sequential improvement [20] - First quarter consolidated adjusted EBITDA was approximately $50 million, down from $61 million a year ago, primarily due to higher G&A expenses and investments [24][29] Business Line Data and Key Metrics Changes - North America transaction comps were down less than 1% compared to the prior year, with improvements noted in key occasions like the Super Bowl and NCAA tournaments [20] - International comparable sales increased by 3% year over year in Q1 2025, reflecting the benefits of international transformation initiatives [23] - Company-owned restaurant revenue decreased by $17 million, primarily due to declines in international and domestic locations [23] Market Data and Key Metrics Changes - The company saw a continued shift in fulfillment channel mix, driven by reduced delivery fees, which impacted average ticket prices [22] - The loyalty program saw significant growth, adding approximately 1 million new members in Q1, bringing total membership to over 37 million [15] Company Strategy and Development Direction - The company is focused on five key priorities: core product and innovation, amplifying marketing, investing in technology, differentiating customer experience, and evolving the franchisee base [5][6] - A long-term partnership with Google Cloud aims to enhance ordering and delivery experiences through AI [14] - The company plans to accelerate product innovation in the second half of the year, including new pizza formats and crust flavors [27][29] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding consumer confidence amid economic volatility, noting improvements in value perception and transaction share gains [38][40] - The company anticipates system-wide sales to increase by 25% in 2025, with North America comparable sales expected to be flat to up 2% [27][28] - Management highlighted the importance of quality ingredients and customer experience as key differentiators in a competitive market [70] Other Important Information - The company has refinanced its revolving credit facility and secured a new $200 million term loan for financial flexibility [26] - The loyalty program's adjustments have led to a significant increase in member engagement and redemption rates [85][87] Q&A Session Summary Question: How is the consumer environment impacting demand trends? - Management noted that consumer confidence remains challenged, but improvements in value perception and traffic have been observed [38][40] Question: What are the early learnings from incremental advertising spend? - The company has seen significant gains in consumer awareness and value perception from its marketing campaigns [42][43] Question: Where has the company made the most progress in its initiatives? - Management highlighted progress in technology transformation and storytelling around pizza craftsmanship as key areas of success [48][49] Question: What are the drivers of international sales growth? - The company is experiencing mid to double-digit growth in focused international markets, with a strong emphasis on quality and innovation [54][55] Question: How does the company plan to improve supply chain costs for franchisees? - Management is exploring opportunities for supply chain optimization to enhance franchisee margins while maintaining quality [58][59] Question: What is the outlook for refranchising company-owned restaurants? - The company plans to begin refranchising during Q2 or early Q3, focusing on core markets with strong growth potential [62][63] Question: How does the company plan to maintain a competitive edge with higher quality ingredients? - Management believes that quality will be a tiebreaker for consumers and plans to emphasize its unique ingredient offerings in marketing [70]