- Papa John's has signed its largest domestic franchisee agreement in the company's history with Dallas-based Sun Holdings, which will oversee the development of 100 stores in high-growth markets in Texas by 2029, according to a press release.
- Sun Holdings, the third largest franchisee in the country, operates Arby's, Burger King, McAlister's, Popeyes and IHOP locations and owns Taco Bueno. Its portfolio includes 1,000 locations across 12 states.
- This agreement follows a 220-unit deal earlier this month between Papa John's and Drake Food Service International — which already operates 280 locations across Latin America, Spain and Portugal — to open new units in these regions as well as the United Kingdom. Papa John's also reported record unit growth during the first half of the year as franchisees accelerated opening plans within their current pipelines.
Papa John's has experienced double-digit same-store sales growth since the start of the pandemic, and is shifting its focus to growing domestically and around the globe.
In late September 2020, the company signed what was then considered its largest North American franchisee deal in 20 years with HB Restaurant Group, which planned to open 49 new locations in Philadelphia and southern New Jersey through 2028. It also signed a 250-unit deal with PJ Western Group, one of the company's largest franchisees in Central and Eastern Europe, to allow the chain to expand into Germany over the next seven years.
"Two years ago, almost none of our domestic franchisees were talking about development. And now, almost all of them are," Papa John's CEO Rob Lynch said during the company's Q2 2021 earnings call.
The chain is working to ensure franchisees open profitable stores and find the right real estate and brokers, Papa John's Chief Development Officer Amanda Clark previously told Restaurant Dive. Part of that strategy includes going to franchisees' respective markets and leveraging Papa John's analytical tools to find opportunities that would create more saturation, allowing Papa John's to reduce drive time and improve customer service, Lynch said.
"Our new development team in infrastructure have moved quickly to meet the dramatic rise in interest from well-financed and experienced franchisees, both current and new," Lynch said on the call. "Our franchisees are focused on investing capital back into Papa John's system, and the development strategy we put in place last year is bearing fruit."
During the first half of the year, Papa John's added 123 net new units, Lynch said, adding that it has had 176 new units added to its system over the 12 months ending June 30, 2021. The company remains bullish on domestic development going forward, and one of its largest privately owned franchisees signed its first development agreement in some time with Papa John's, Lynch said on the call.
"We've got more lined up. So, I would expect that our development pipeline [will] accelerate pretty dramatically here over the next 12 to 18 months," Lynch said on the call.
The company is also developing its own units, with several opening during the fall, Papa John's CFO Ann Gugino, said during the Q2 2021 company call. These mark the first company-owned stores the company has opened in a long time, Lynch said.