Papa Johns is making a significant shift in its business strategy by offloading company-owned operations in favor of franchising. The pizza chain recently sold 85 locations in Baltimore and Washington D.C. to prominent franchisee Chris Patel of Pie Investments. This move signals a major pivot toward becoming primarily a franchising company rather than an operator of restaurants.
Performance Gap Drives Strategic Refranchising
The refranchising initiative reflects a clear performance disparity between company-owned and franchised locations. Papa Johns’ corporate-owned restaurants have underperformed their franchised counterparts for at least two years, with same-store sales declining 2.5% at company units compared to just 1.3% at franchised locations through the first three quarters. These numbers demonstrate that the franchise model is outperforming direct operations, making the strategic shift economically sound.
Aggressive Expansion Goals Under New Leadership
CEO Todd Penegor’s ambitious plan aims to reduce Papa Johns’ company-owned footprint from 545 locations to “mid-single-digit” levels within two years. This transformation mirrors the successful business model employed by franchise giants like McDonald’s, which rely heavily on franchisees rather than corporate operations. Chris Patel’s Pie Investments, which currently operates 150 Papa Johns locations, plans to expand to 250 units by 2030, positioning itself as a major player in the franchise network.
The refranchising strategy allows Papa Johns to focus on brand development, supply chain management, and franchisee support while reducing the financial burden and operational complexity of running hundreds of restaurants directly.