Papa John's International, Inc. (Papa John's (PZZA)) shares slid on Thursday after the pizza chain reported first-quarter results that missed Wall Street's expectations. The culprit? A cautious consumer and a brutal discount war in the quick-service restaurant market that's squeezing domestic sales.
The company posted adjusted earnings per share of $0.32, falling short of the $0.35 analysts were looking for. Revenue came in at $478.6 million, down 7.7% from a year ago and below the $485.7 million consensus. Global system-wide restaurant sales totaled $1.20 billion, a 3% decline from the prior year's first quarter.
The biggest drag was North America, where comparable sales dropped 6.4% year-over-year. Company-owned stores saw a 5.2% decline, while franchised locations fared worse with a 6.7% drop. CEO Todd Penegor acknowledged the headwinds, saying, "In North America, results were in line with our expectations as we navigate the cautious consumer environment and promotional QSR marketplace." In other words, Papa John's is fighting for every slice in a market where everyone is slashing prices.
International business provided a brighter spot, with comparable sales rising 3.6% from the prior year. The company opened 28 new restaurants system-wide during the quarter—8 in North America and 20 internationally—bringing the total to 6,020 locations across 50 countries and territories. Adjusted EBITDA slipped to $48 million from $50 million a year ago, mainly due to lower North American sales and volumes.
Looking ahead, Papa John's is keeping its 2026 guidance intact. The company expects global system-wide restaurant sales to be flat to down low single digits, with North America comparable sales declining 2% to 4% and international comparable sales rising 2% to 4%. It plans to open 40 to 50 gross new restaurants in North America and 180 to 220 internationally this year. Adjusted EBITDA is forecast at $200 million to $210 million, with capital expenditures of $70 million to $80 million.
Shares of Papa John's were down 4.47% at $32.27 at the time of publication Thursday. The market is clearly not loving the discount-driven pressure, but the company's international growth and steady outlook suggest there's still some dough left to rise.
