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Papa John's (PZZA) to Expand in Texas With Sun Holdings Tie-Up
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Papa John's International, Inc. (PZZA - Free Report) recently announced its collaboration with a Dallas-based franchisee operator — Sun Holdings — for the development of 100 new stores across Texas by 2029. Following the announcement, shares of the company moved up 2.5% during trading hours on Sep 29.
With respect to the collaboration, Amanda Clark, Papa John’s chief development officer, stated, “We’re excited to launch this milestone partnership with Guillermo and his team at Sun Holdings in Texas. Sun Holdings is a successful and well-financed operator who understands the Texas market and brings deep expertise within the QSR space that will benefit the entire Papa John’s system.”
Increased Focus on Franchising
Papa John’s is committed toward developing and maintaining a strong franchise system. In the first half of 2021, Papa John’s reported record net unit growth, as franchisees accelerate their opening plans for new locations within the current development pipeline. As of Jun 27, the company had a global restaurant count of 5,523, thereby operating in 49 countries and territories worldwide.
Recently, the company expanded its partnership with Drake Food Service International to open more than 220 Papa John’s restaurants by 2025. This includes more than 170 stores across Latin America, Spain and Portugal. Also, Drake Food Service plans to open 50 new restaurants in the U.K. over the next four years. The company already purchased 60 Papa John’s restaurants in London, making it the brand’s largest franchisee in the country. Under the terms of this expanded partnership, Drake Food Service will operate more than 560 Papa John’s restaurants by 2025.
Going forward, the company plans to increase its international units, a large portion of which will be franchised. We believe that re-franchising a large chunk of the system reduces a company’s capital requirements as well as facilitates earnings per share growth and ROE expansion. Free cash flow continues to grow, which enables reinvestment for boosting brand recognition and shareholder return.
Image Source: Zacks Investment Research
So far this year, shares of Papa John's have surged 51.2% compared with the industry’s 12.1% growth.
Some better-ranked stocks in the same space are Chipotle Mexican Grill, Inc. (CMG - Free Report) , The Wendys Company (WEN - Free Report) and Jack in the Box Inc. (JACK - Free Report) , each carrying a Zacks Rank #2 (Buy).
Chipotle's 2021 earnings are expected to increase 137.3%.
Wendys has a three-five year earnings per share growth rate of 14%.
Jack in the Box has a trailing four-quarter earnings surprise of 26.4%, on average.
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Papa John's (PZZA) to Expand in Texas With Sun Holdings Tie-Up
Papa John's International, Inc. (PZZA - Free Report) recently announced its collaboration with a Dallas-based franchisee operator — Sun Holdings — for the development of 100 new stores across Texas by 2029. Following the announcement, shares of the company moved up 2.5% during trading hours on Sep 29.
With respect to the collaboration, Amanda Clark, Papa John’s chief development officer, stated, “We’re excited to launch this milestone partnership with Guillermo and his team at Sun Holdings in Texas. Sun Holdings is a successful and well-financed operator who understands the Texas market and brings deep expertise within the QSR space that will benefit the entire Papa John’s system.”
Increased Focus on Franchising
Papa John’s is committed toward developing and maintaining a strong franchise system. In the first half of 2021, Papa John’s reported record net unit growth, as franchisees accelerate their opening plans for new locations within the current development pipeline. As of Jun 27, the company had a global restaurant count of 5,523, thereby operating in 49 countries and territories worldwide.
Recently, the company expanded its partnership with Drake Food Service International to open more than 220 Papa John’s restaurants by 2025. This includes more than 170 stores across Latin America, Spain and Portugal. Also, Drake Food Service plans to open 50 new restaurants in the U.K. over the next four years. The company already purchased 60 Papa John’s restaurants in London, making it the brand’s largest franchisee in the country. Under the terms of this expanded partnership, Drake Food Service will operate more than 560 Papa John’s restaurants by 2025.
Going forward, the company plans to increase its international units, a large portion of which will be franchised. We believe that re-franchising a large chunk of the system reduces a company’s capital requirements as well as facilitates earnings per share growth and ROE expansion. Free cash flow continues to grow, which enables reinvestment for boosting brand recognition and shareholder return.
So far this year, shares of Papa John's have surged 51.2% compared with the industry’s 12.1% growth.
Zacks Rank & Key Picks
Papa John's currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the same space are Chipotle Mexican Grill, Inc. (CMG - Free Report) , The Wendys Company (WEN - Free Report) and Jack in the Box Inc. (JACK - Free Report) , each carrying a Zacks Rank #2 (Buy).
Chipotle's 2021 earnings are expected to increase 137.3%.
Wendys has a three-five year earnings per share growth rate of 14%.
Jack in the Box has a trailing four-quarter earnings surprise of 26.4%, on average.