Segment Information

6 Months Ended

Jun. 28, 2020

Segment Information

Segment Information

10. Segment Information

We have four reportable segments: domestic Company-owned restaurants, North America commissaries, North America franchising and international operations. 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 segment principally consists of distribution sales to franchised Papa John’s restaurants located in the United Kingdom 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 “all other,” which consists of operations that derive revenues from the sale, principally to Company-owned and franchised restaurants, of printing and promotional items, franchise contributions to marketing funds 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 income 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:

	Three Months Ended				Six Months Ended
	June 28,		June 30,		June 28,		June 30,
(In thousands)	2020		2019		2020		2019
Revenues:
Domestic Company-owned restaurants	$	186,506	$	163,656	$	347,946	$	325,459
North America commissaries		167,619		147,128		323,041		296,032
North America franchising		24,174		19,761		43,614		37,291
International		34,366		31,420		66,518		62,920
All others		47,958		37,658		89,363		76,326
Total revenues	$	460,623	$	399,623	$	870,482	$	798,028
Intersegment revenues:
North America commissaries	$	47,357	$	46,962	$	91,863	$	92,517
North America franchising		793		787		1,467		1,460
International		—		94		—		191
All others		18,386		17,985		39,341		33,396
Total intersegment revenues	$	66,536	$	65,828	$	132,671	$	127,564
Income before income taxes
Domestic Company-owned restaurants	$	16,746	$	7,712	$	25,413	$	12,309
North America commissaries		8,567		7,792		16,076		15,304
North America franchising		22,176		17,910		39,502		33,601
International		4,589		5,403		9,088		10,720
All others		1,983		(1,209)		1,724		(1,715)
Unallocated corporate expenses		(26,430)		(27,891)		(52,481)		(60,356)
Elimination of intersegment (profits) losses		(724)		242		(910)		(671)
Total income before income taxes	$	26,907	$	9,959	$	38,412	$	9,192
Property and equipment:
Domestic Company-owned restaurants	$	226,404
North America commissaries		143,474
International		15,493
All others		88,602
Unallocated corporate assets		213,517
Accumulated depreciation and amortization		(486,909)
Property and equipment, net	$	200,581

Disaggregation of Revenue

In the following tables, revenues are disaggregated by major product/service line. The tables also include a reconciliation of the disaggregated revenues by the reportable segment (in thousands):

		Reportable Segments
		Three Months Ended June 28, 2020
Major Products/Services Lines		Domestic Company-owned restaurants		North America commissaries		North America franchising		International		All others		Total
Company-owned restaurant sales	$	186,506	$	-	$	-	$	-	$	-	$	186,506
Commissary sales		-		214,976		-		20,350		-		235,326
Franchise royalties and fees		-		-		24,967		7,743		-		32,710
Other revenues		-		-		-		6,273		66,344		72,617
Eliminations		-		(47,357)		(793)		-		(18,386)		(66,536)
Total segment revenues	$	186,506	$	167,619	$	24,174	$	34,366	$	47,958	$	460,623
International other revenues (1)		-		-		-		(6,273)		6,273		-
Total revenues	$	186,506	$	167,619	$	24,174	$	28,093	$	54,231	$	460,623
		Reportable Segments
		Three Months Ended June 30, 2019
Major Products/Services Lines		Domestic Company-owned restaurants		North America commissaries		North America franchising		International		All others		Total
Company-owned restaurant sales	$	163,656	$	-	$	-	$	-	$	-	$	163,656
Commissary sales		-		194,090		-		15,948		-		210,038
Franchise royalties and fees		-		-		20,548		9,549		-		30,097
Other revenues		-		-		-		6,017		55,643		61,660
Eliminations		-		(46,962)		(787)		(94)		(17,985)		(65,828)
Total segment revenues	$	163,656	$	147,128	$	19,761	$	31,420	$	37,658	$	399,623
International other revenues (1)		-		-		-		(6,017)		6,017		-
International eliminations (1)		-		-		-		94		(94)		-
Total revenues	$	163,656	$	147,128	$	19,761	$	25,497	$	43,581	$	399,623
		Reportable Segments
		Six Months Ended June 28, 2020
Major Products/Services Lines		Domestic Company-owned restaurants		North America commissaries		North America franchising		International		All others		Total
Company-owned restaurant sales	$	347,946	$	-	$	-	$	-	$	-	$	347,946
Commissary sales		-		414,904		-		36,893		-		451,797
Franchise royalties and fees		-		-		45,081		17,259		-		62,340
Other revenues		-		-		-		12,366		128,704		141,070
Eliminations		-		(91,863)		(1,467)		-		(39,341)		(132,671)
Total segment revenues	$	347,946	$	323,041	$	43,614	$	66,518	$	89,363	$	870,482
International other revenues (1)		-		-		-		(12,366)		12,366		-
International eliminations (1)		-		-		-		-		-		-
Total revenues	$	347,946	$	323,041	$	43,614	$	54,152	$	101,729	$	870,482
		Reportable Segments
		Six Months Ended June 30, 2019
Major Products/Services Lines		Domestic Company-owned restaurants		North America commissaries		North America franchising		International		All others		Total
Company-owned restaurant sales	$	325,459	$	-	$	-	$	-	$	-	$	325,459
Commissary sales		-		388,549		-		31,814		-		420,363
Franchise royalties and fees		-		-		38,751		19,350		-		58,101
Other revenues		-		-		-		11,947		109,722		121,669
Eliminations		-		(92,517)		(1,460)		(191)		(33,396)		(127,564)
Total segment revenues	$	325,459	$	296,032	$	37,291	$	62,920	$	76,326	$	798,028
International other revenues (1)		-		-		-		(11,947)		11,947		-
International eliminations (1)		-		-		-		191		(191)		-
Total revenues	$	325,459	$	296,032	$	37,291	$	51,164	$	88,082	$	798,028

(1) Other revenues as reported in the Condensed Consolidated Statements of Operations include $6.3 million and $12.4 million of revenue for the three and six months ended June 28, 2020, respectively, and $5.9 million and $11.8 million

for the three and six months ended June 30, 2019, respectively, that are part of the international reporting segment. These amounts include marketing fund contributions and sublease rental income from international franchisees in the United Kingdom that provide no significant contribution to income before income taxes but must be reported on a gross basis under accounting requirements. The related expenses for these Other revenues are reported in Other expenses in the Condensed Consolidated Statements of Operations.