Targeted Closures Target Long-Standing Strugglers (Image Credits: Flickr)
Papa Johns disclosed plans Thursday to close nearly 300 underperforming restaurants across North America by the end of 2027, intensifying challenges within the competitive pizza industry.[1][2]
Targeted Closures Target Long-Standing Strugglers
The chain pinpointed about 300 locations, mostly franchise-owned and over a decade old, that failed to meet performance benchmarks.[3] These stores typically generated less than $600,000 in annual revenue and operated at negative profitability.[2] Company leaders expect roughly 200 closures this year alone, with the rest following by 2027.
Ravi Thanawala, Papa Johns’ chief financial officer and president of North America operations, explained the rationale during an earnings call. “We have identified approximately 300 underperforming restaurants across North America that are not meeting brand expectations or lack a clear path to sustainable financial improvement,” he stated.[2] The strategy mirrors successful international efforts, where similar cuts boosted average sales at remaining sites by 17 percent.
Economic Headwinds Fuel Consumer Changes
Weak spending power and heightened promotions eroded same-store sales by 5.4 percent in North America during the fourth quarter of 2025.[1] Delivery orders also dipped, falling from 61 percent of sales in 2022 to 55 percent in 2025.[2]
A notable trend emerged as 25 percent of consumers reported turning to frozen pizzas amid rising restaurant prices, according to the 2025 Technomic Pizza Consumer Trend Report.[2] Papa Johns joins Pizza Hut, which announced the closure of 250 U.S. locations in the first half of this year, as both chains confront these pressures.[1]
- Declining delivery demand due to competition and costs.
- Increased appeal of affordable frozen alternatives.
- Persistent inflation squeezing family budgets.
- Over-reliance on promotions diluting margins.
- Aging store footprints in saturated markets.
Workforce Adjustments and Financial Snapshot
Beyond store rationalization, Papa Johns reduced its corporate staff by 7 percent, affecting around 50 positions from a base of 700 employees.[3] Full-year revenues held steady at $2.1 billion, though net income dropped to $32 million from $84 million the prior year.[2]
These measures aim to streamline operations and redirect resources toward high-potential areas. The company refranchised 85 units late last year and anticipates 40 to 50 new openings in 2026 despite the cuts.[4]
Path Forward Emphasizes Innovation
Executives outlined a transformation plan centered on menu enhancements, including recalibrated ovens for consistent quality and a revamped pan pizza.[1] CEO Todd Penegor highlighted progress in brand health and value offerings. “We are encouraged by the progress we are making in our transformation,” he said.[2]
While Domino’s posted gains through targeted promotions, Papa Johns seeks to reclaim momentum by prioritizing operational excellence and market expansion post-closures.
Key Takeaways:
- Papa Johns targets 300 closures by 2027 to bolster profitability.
- Industry faces frozen pizza competition and economic strain.
- New menu items and refranchising signal growth focus.
Papa Johns’ actions underscore a pivotal moment for pizza chains, where adaptation to evolving tastes and economics determines survival. What impacts have you noticed at local pizzerias? Share your thoughts in the comments.
