Papa John’s CFO Plans Strategy to Shut 300 Low Performing Restaurants by 2027

Papa John’s CFO Ravi Thanawala says closing 300 underperforming locations will help to improve annual sales and strengthen the performance.

Papa Johns, an American pizza restaurant chain and the fourth largest pizza delivery restaurant chain in the United States plans to eliminate hundreds of underperforming locations across North America by the end of next year. The announcement follows rival Pizza Hut's statement that it intends to close several of its own failing stores.

During the company's fourth-quarter earnings call last week, Papa John's Chief Financial Officer Ravi Thanawala stated that the company has identified about 300 underperforming restaurants in North America that either don't meet brand expectations or don't have a clear path to sustainable financial improvement, as well as locations where they can successfully transfer sales to a nearby restaurant.

According to Thanawala, the stores are over ten years old, mostly franchise-owned, and produce less than $600,000 in annual sales (AUVs). About 200 restaurants will close this year, he said, and most will close by the end of 2027. By enabling franchisees to reallocate resources towards operational excellence in their existing restaurants and open units in priority markets, Thanawala thinks these closures will further strengthen the system, raising AUVs by at least 3% and improving franchisee health.

Additionally, he stated that most of the company's restaurants around the world have "performed well over the years and delivered strong returns for both corporate and franchise owners," and that closing underperforming establishments strategically is "among the most impactful actions we can take to improve restaurant profitability and fleet health."

The company's leadership described the closures, which account for about 9% of its national footprint, as the result of a thorough strategic examination of its restaurant portfolio. The Louisville-based firm said it plans to accelerate its refranchising initiative in addition to reducing the number of its stores.