Segment Information

6 Months Ended

Jun. 25, 2017

Segment Information

Segment Information

6.Segment Information

We have five reportable segments: domestic Company-owned restaurants, North America commissaries, North America franchising, international operations and “all other” units. The domestic Company-owned restaurant segment consists of the operations of all domestic (“domestic” is defined as contiguous United States) Company-owned restaurants and derives its revenues principally from retail sales of pizza and side items, including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages. The North America commissary segment consists of the operations of our regional dough production and product distribution centers and derives its revenues principally from the sale and distribution of food and paper products to domestic Company-owned and franchised restaurants in the United States and Canada. The North America franchising segment consists of our franchise sales and support activities and derives its revenues from sales of franchise and development rights and collection of royalties from our franchisees located in the United States and Canada. The international operations segment principally consists of Company-owned restaurants in China and distribution sales to franchised Papa John’s restaurants located in the United Kingdom, Mexico and China and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our international franchisees. International franchisees are defined as all franchise operations outside of the United States and Canada. All other business units that do not meet the quantitative thresholds for determining reportable segments, which are not operating segments, we refer to as our “all other” segment, which consists of operations that derive revenues from the sale, principally to Company-owned and franchised restaurants, of printing and promotional items, and information systems and related services used in restaurant operations, including our point-of-sale system, online and other technology-based ordering platforms.

Generally, we evaluate performance and allocate resources based on profit or loss from operations before income taxes and intercompany eliminations. Certain administrative and capital costs are allocated to segments based upon predetermined rates or actual estimated resource usage. We account for intercompany sales and transfers as if the sales or transfers were to third parties and eliminate the activity in consolidation.

Our reportable segments are business units that provide different products or services. Separate management of each segment is required because each business unit is subject to different operational issues and strategies. No single external customer accounted for 10% or more of our consolidated revenues.

Our segment information is as follows (in thousands):

(In thousands)
	Three Months Ended				Six Months Ended
	June 25, 2017		June 26, 2016		June 25, 2017		June 26, 2016
Revenues from external customers:
Domestic Company-owned restaurants	$	202,756	$	204,248	$	409,652	$	409,927
North America commissaries		160,059		150,895		331,399		306,849
North America franchising		26,588		25,302		54,195		51,778
International		30,230		28,460		58,748		55,915
All others		15,145		14,059		30,050		27,090
Total revenues from external customers	$	434,778	$	422,964	$	884,044	$	851,559
Intersegment revenues:
North America commissaries	$	59,202	$	57,722	$	120,938	$	116,048
North America franchising		751		739		1,515		1,452
International		68		67		131		132
All others		4,084		4,075		9,110		8,172
Total intersegment revenues	$	64,105	$	62,603	$	131,694	$	125,804
Income (loss) before income taxes:
Domestic Company-owned restaurants	$	15,550	$	15,325	$	31,037	$	35,512
North America commissaries		12,088		11,682		24,331		23,228
North America franchising		23,999		22,445		48,874		46,025
International		3,265		2,875		7,609		5,913
All others		22		425		(144)		476
Unallocated corporate expenses		(18,203)		(17,079)		(33,958)		(33,411)
Elimination of intersegment profit and losses		(1,263)		(473)		(420)		(1,134)
Total income before income taxes	$	35,458	$	35,200	$	77,329	$	76,609
Property and equipment:
Domestic Company-owned restaurants	$	227,191
North America commissaries		133,607
International		17,411
All others		57,264
Unallocated corporate assets		197,720
Accumulated depreciation and amortization		(398,669)
Net property and equipment	$	234,524