Papa John's Plans to Close 300 Locations to Improve Profitability

2026-02-27 companies

Atlanta, Thursday, 26 February 2026.
Facing a 62% profit decline, Papa John’s will shutter 300 North American locations by 2027 to optimize its portfolio and address shifting consumer spending habits.

Strategic Restructuring and Closures

Papa John’s International (PZZA) confirmed on Thursday, February 26, 2026, that it intends to close approximately 300 restaurants across North America by the end of 2027 as part of a strategic review to improve portfolio health [1][2]. The company plans to execute the majority of these closures—roughly 200 locations—within the current calendar year of 2026 [1][2]. This reduction represents approximately 9% of the chain’s total restaurant footprint in the region [3]. According to Chief Financial Officer Ravi Thanawala, the locations earmarked for closure are primarily franchise-owned and have been in operation for over a decade [3][6]. These units were identified as underperforming because they either fail to meet current brand expectations or lack a clear path to sustainable financial improvement [1][3]. In specific cases, the company intends to transfer sales from closed units to nearby restaurants to maintain market presence while reducing overhead [1].

Financial Performance and Cost Management

The announcement coincides with the release of the company’s financial results for the fourth quarter and full fiscal year ended December 28, 2025. Papa John’s reported a significant contraction in profitability, with full-year net income falling to $32.1 million from $84.2 million in the prior year [8]. This represents a year-over-year decline of -61.855%, highlighting the financial pressures the chain faces [8]. While global system-wide sales saw a marginal increase of 1.1% to $4.92 billion, North American comparable sales declined by 2.5% in 2025 [8]. To mitigate these headwinds, the company is implementing efficiency initiatives expected to generate at least $25 million in corporate cost savings through 2027, with approximately $13 million of those savings projected to be realized in 2026 [2][8]. Additionally, the company recently reduced its corporate workforce by 7% to further align its cost structure with current revenue trends [1][6].

Future Outlook and Industry Context

Despite the reduction in its physical footprint, Papa John’s remains focused on targeted growth in viable markets. The company plans to open between 40 and 50 new restaurants in North America during 2026 [2][6]. This follows active portfolio management in 2025, which included the refranchising of 85 units in November [6][8]. This restructuring reflects a broader trend within the quick-service pizza industry, as competitor Pizza Hut also announced plans earlier this month to close 250 underperforming locations in the first half of 2026 [3][6]. Looking ahead, Papa John’s has issued conservative guidance for 2026, projecting North America comparable sales to decline between 2% and 4% as it navigates this transitional period [8].

Sources

Restructuring Fast Food