Leases

12 Months Ended

Dec. 29, 2024

Leases [Abstract]

Leases

3. Leases

The Company has significant leases that include most Domestic Company-owned restaurant and commissary locations as well as our restaurant support center located in Atlanta, Georgia. Other Domestic leases include tractor and trailer leases used by our distribution subsidiary as well as commissary equipment. Additionally, the Company leases a significant number of restaurants within the UK, many of which contain early termination rights exercisable by the Company; these restaurants are then subleased to franchisees or operated as Company-owned restaurants. The Company’s leases have terms as follows:

	Average lease term
Domestic Company-owned restaurants	Five years, plus at least one renewal
UK Company-owned and franchise-owned restaurants	15 years
Domestic commissary locations	10 years, plus at least one renewal
Domestic and International tractors and trailers	Five to seven years
Domestic and International commissary and office equipment	Three to five years

The Company determines if an arrangement is or contains a lease at contract inception and recognizes a right-of-use asset and a lease liability at the lease commencement date. For all of its leases in which it is a lessee, the Company has elected to include both the lease and non-lease components as a single component and account for it as a lease. Leases with an initial term of 12 months or less but greater than one month are not recorded on the balance sheet for select asset classes. The lease liability is measured at the present value of future lease payments as of the lease commencement date. The right-of-use asset recognized is based on the lease liability adjusted for prepaid and deferred rent and unamortized lease incentives. An operating lease right-of-use asset is amortized on a straight-line basis over the lease term and is recognized as a single lease cost against the operating lease liability. A finance lease right-of-use asset is amortized on a straight-line basis, with interest costs reported separately, over the lesser of the useful life of the leased asset or lease term. Operating lease expense is recognized on a straight-line basis over the lease term and is included in Cost of sales or General and administrative expenses. Variable lease payments are expensed as incurred.

The Company uses its incremental borrowing rates as the discount rate for its leases, which is equal to the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar

terms. The lease terms for all the Company’s leases include the contractually obligated period of the leases, plus any additional periods covered by Company options to extend the leases that the Company is reasonably certain to exercise.

Certain leases provide that the lease payments may be increased annually based on the fixed rate terms or adjustable terms such as the Consumer Price Index. Future base rent escalations that are not contractually quantifiable as of the lease commencement date are not included in our lease liability.

The following schedule details the total right-of-use assets and lease liabilities on the Consolidated Balance Sheets as of December 29, 2024 and December 31, 2023 (in thousands):

Leases	Classification	December 29, 2024		December 31, 2023
Assets
Finance lease assets, net	Finance lease right-of-use assets, net	$	28,761	$	31,740
Operating lease assets, net	Operating lease right-of-use assets	184,425		164,158
Total lease assets		$	213,186	$	195,898
Liabilities
Current finance lease liabilities	Current finance lease liabilities	$	7,280	$	9,029
Current operating lease liabilities	Current operating lease liabilities	25,756		24,076
Noncurrent finance lease liabilities	Long-term finance lease liabilities	22,885		24,144
Noncurrent operating lease liabilities	Long-term operating lease liabilities	173,557		151,050
Total lease liabilities		$	229,478	$	208,299

Lease costs for the years ended December 29, 2024, December 31, 2023 and December 25, 2022 were as follows:

(Dollars in thousands)	Year Ended
	December 29, 2024		December 31, 2023		December 25, 2022
Finance lease:
Amortization of right-of-use assets	$	8,831	$	8,949	$	5,704
Interest on lease liabilities	1,420		1,542		1,029
Operating lease:
Operating lease cost	43,345		41,514		42,815
Short-term lease cost	4,237		4,239		4,171
Variable lease cost	11,096		10,005		9,129
Total lease costs	68,929		66,249		62,848
Sublease income	(9,748)		(9,842)		(11,654)
Total lease costs, net of sublease income	$	59,181	$	56,407	$	51,194

Future minimum lease payments under contractually-obligated leases and associated sublease income as of December 29, 2024 were as follows (in thousands):

Fiscal Year	Finance Lease Costs		Operating Lease Costs		Expected Sublease Income
2025	$	9,077	$	34,544	$	7,197
2026	8,077		37,343		6,154
2027	6,822		31,611		5,259
2028	4,159		26,169		4,389
2029	3,115		21,485		3,671
Thereafter	2,497		113,256		6,639
Total future minimum lease payments	33,747		264,408		33,309
Less imputed interest	(3,582)		(65,095)
Total present value of lease liabilities	$	30,165	$	199,313

Lessor Operating Leases

The Company subleases certain retail space to our franchisees in the UK which are primarily operating leases. At December 29, 2024, we leased and subleased approximately 350 Papa Johns restaurants to franchisees in the UK. The initial lease terms on the franchised sites in the UK are generally 15 years. The Company has the option to negotiate an extension toward the end of the lease term at the landlord’s discretion. The initial lease terms of the franchisee subleases are generally five to ten years. Rental income, primarily derived from properties leased and subleased to franchisees in the UK, is recognized on a straight-line basis over the respective operating lease terms. The Company recognized total sublease income of $9.7 million, $9.8 million and $11.7 million for the years ended December 29, 2024, December 31, 2023 and December 25, 2022, respectively, within Other revenues in the Consolidated Statements of Operations.

Lease Guarantees

As a result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are contingently liable for payment of approximately 81 Domestic leases. These leases have varying terms, the latest of which expires in 2034. As of December 29, 2024, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was approximately $10.4 million. This contingent liability is not included in the Consolidated Balance Sheets or future minimum lease obligation. The fair value of the guarantee is not material.

There were no leases recorded between related parties.

Supplemental Cash Flow & Other Information

The following table presents supplemental cash flow information related to leases for the years ended December 29, 2024, December 31, 2023 and December 25, 2022:

(Dollars in thousands)	Year Ended
	December 29, 2024		December 31, 2023		December 25, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	1,416	$	1,542	$	1,029
Financing cash flows from finance leases	$	8,529	$	8,821	$	5,416
Operating cash flows from operating leases (a)	$	40,488	$	37,814	$	35,573
Right-of-use assets obtained in exchange for new finance lease liabilities	$	9,076	$	16,734	$	9,875
Right-of-use assets obtained in exchange for new operating lease liabilities	$	65,134	$	24,380	$	53,869
Cash received from sublease income	$	7,442	$	8,855	$	10,847
Weighted-average remaining lease term (in years):
Finance leases	4.2		4.3		4.4
Operating leases	9.2		7.8		8.4
Weighted-average discount rate:
Finance leases	5.0%		4.9%		4.6%
Operating leases	5.8%		5.6%		5.6%

______________________________

(a)Included within the change in Other assets and liabilities within the Consolidated Statements of Cash Flows offset by non-cash operating lease right-of-use asset amortization and lease liability accretion.

Leases

3. Leases

The Company has significant leases that include most Domestic Company-owned restaurant and commissary locations as well as our restaurant support center located in Atlanta, Georgia. Other Domestic leases include tractor and trailer leases used by our distribution subsidiary as well as commissary equipment. Additionally, the Company leases a significant number of restaurants within the UK, many of which contain early termination rights exercisable by the Company; these restaurants are then subleased to franchisees or operated as Company-owned restaurants. The Company’s leases have terms as follows:

	Average lease term
Domestic Company-owned restaurants	Five years, plus at least one renewal
UK Company-owned and franchise-owned restaurants	15 years
Domestic commissary locations	10 years, plus at least one renewal
Domestic and International tractors and trailers	Five to seven years
Domestic and International commissary and office equipment	Three to five years

The Company determines if an arrangement is or contains a lease at contract inception and recognizes a right-of-use asset and a lease liability at the lease commencement date. For all of its leases in which it is a lessee, the Company has elected to include both the lease and non-lease components as a single component and account for it as a lease. Leases with an initial term of 12 months or less but greater than one month are not recorded on the balance sheet for select asset classes. The lease liability is measured at the present value of future lease payments as of the lease commencement date. The right-of-use asset recognized is based on the lease liability adjusted for prepaid and deferred rent and unamortized lease incentives. An operating lease right-of-use asset is amortized on a straight-line basis over the lease term and is recognized as a single lease cost against the operating lease liability. A finance lease right-of-use asset is amortized on a straight-line basis, with interest costs reported separately, over the lesser of the useful life of the leased asset or lease term. Operating lease expense is recognized on a straight-line basis over the lease term and is included in Cost of sales or General and administrative expenses. Variable lease payments are expensed as incurred.

The Company uses its incremental borrowing rates as the discount rate for its leases, which is equal to the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar

terms. The lease terms for all the Company’s leases include the contractually obligated period of the leases, plus any additional periods covered by Company options to extend the leases that the Company is reasonably certain to exercise.

Certain leases provide that the lease payments may be increased annually based on the fixed rate terms or adjustable terms such as the Consumer Price Index. Future base rent escalations that are not contractually quantifiable as of the lease commencement date are not included in our lease liability.

The following schedule details the total right-of-use assets and lease liabilities on the Consolidated Balance Sheets as of December 29, 2024 and December 31, 2023 (in thousands):

Leases	Classification	December 29, 2024		December 31, 2023
Assets
Finance lease assets, net	Finance lease right-of-use assets, net	$	28,761	$	31,740
Operating lease assets, net	Operating lease right-of-use assets	184,425		164,158
Total lease assets		$	213,186	$	195,898
Liabilities
Current finance lease liabilities	Current finance lease liabilities	$	7,280	$	9,029
Current operating lease liabilities	Current operating lease liabilities	25,756		24,076
Noncurrent finance lease liabilities	Long-term finance lease liabilities	22,885		24,144
Noncurrent operating lease liabilities	Long-term operating lease liabilities	173,557		151,050
Total lease liabilities		$	229,478	$	208,299

Lease costs for the years ended December 29, 2024, December 31, 2023 and December 25, 2022 were as follows:

(Dollars in thousands)	Year Ended
	December 29, 2024		December 31, 2023		December 25, 2022
Finance lease:
Amortization of right-of-use assets	$	8,831	$	8,949	$	5,704
Interest on lease liabilities	1,420		1,542		1,029
Operating lease:
Operating lease cost	43,345		41,514		42,815
Short-term lease cost	4,237		4,239		4,171
Variable lease cost	11,096		10,005		9,129
Total lease costs	68,929		66,249		62,848
Sublease income	(9,748)		(9,842)		(11,654)
Total lease costs, net of sublease income	$	59,181	$	56,407	$	51,194

Future minimum lease payments under contractually-obligated leases and associated sublease income as of December 29, 2024 were as follows (in thousands):

Fiscal Year	Finance Lease Costs		Operating Lease Costs		Expected Sublease Income
2025	$	9,077	$	34,544	$	7,197
2026	8,077		37,343		6,154
2027	6,822		31,611		5,259
2028	4,159		26,169		4,389
2029	3,115		21,485		3,671
Thereafter	2,497		113,256		6,639
Total future minimum lease payments	33,747		264,408		33,309
Less imputed interest	(3,582)		(65,095)
Total present value of lease liabilities	$	30,165	$	199,313

Lessor Operating Leases

The Company subleases certain retail space to our franchisees in the UK which are primarily operating leases. At December 29, 2024, we leased and subleased approximately 350 Papa Johns restaurants to franchisees in the UK. The initial lease terms on the franchised sites in the UK are generally 15 years. The Company has the option to negotiate an extension toward the end of the lease term at the landlord’s discretion. The initial lease terms of the franchisee subleases are generally five to ten years. Rental income, primarily derived from properties leased and subleased to franchisees in the UK, is recognized on a straight-line basis over the respective operating lease terms. The Company recognized total sublease income of $9.7 million, $9.8 million and $11.7 million for the years ended December 29, 2024, December 31, 2023 and December 25, 2022, respectively, within Other revenues in the Consolidated Statements of Operations.

Lease Guarantees

As a result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are contingently liable for payment of approximately 81 Domestic leases. These leases have varying terms, the latest of which expires in 2034. As of December 29, 2024, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was approximately $10.4 million. This contingent liability is not included in the Consolidated Balance Sheets or future minimum lease obligation. The fair value of the guarantee is not material.

There were no leases recorded between related parties.

Supplemental Cash Flow & Other Information

The following table presents supplemental cash flow information related to leases for the years ended December 29, 2024, December 31, 2023 and December 25, 2022:

(Dollars in thousands)	Year Ended
	December 29, 2024		December 31, 2023		December 25, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	1,416	$	1,542	$	1,029
Financing cash flows from finance leases	$	8,529	$	8,821	$	5,416
Operating cash flows from operating leases (a)	$	40,488	$	37,814	$	35,573
Right-of-use assets obtained in exchange for new finance lease liabilities	$	9,076	$	16,734	$	9,875
Right-of-use assets obtained in exchange for new operating lease liabilities	$	65,134	$	24,380	$	53,869
Cash received from sublease income	$	7,442	$	8,855	$	10,847
Weighted-average remaining lease term (in years):
Finance leases	4.2		4.3		4.4
Operating leases	9.2		7.8		8.4
Weighted-average discount rate:
Finance leases	5.0%		4.9%		4.6%
Operating leases	5.8%		5.6%		5.6%

______________________________

(a)Included within the change in Other assets and liabilities within the Consolidated Statements of Cash Flows offset by non-cash operating lease right-of-use asset amortization and lease liability accretion.

Leases

3. Leases

The Company has significant leases that include most Domestic Company-owned restaurant and commissary locations as well as our restaurant support center located in Atlanta, Georgia. Other Domestic leases include tractor and trailer leases used by our distribution subsidiary as well as commissary equipment. Additionally, the Company leases a significant number of restaurants within the UK, many of which contain early termination rights exercisable by the Company; these restaurants are then subleased to franchisees or operated as Company-owned restaurants. The Company’s leases have terms as follows:

	Average lease term
Domestic Company-owned restaurants	Five years, plus at least one renewal
UK Company-owned and franchise-owned restaurants	15 years
Domestic commissary locations	10 years, plus at least one renewal
Domestic and International tractors and trailers	Five to seven years
Domestic and International commissary and office equipment	Three to five years

The Company determines if an arrangement is or contains a lease at contract inception and recognizes a right-of-use asset and a lease liability at the lease commencement date. For all of its leases in which it is a lessee, the Company has elected to include both the lease and non-lease components as a single component and account for it as a lease. Leases with an initial term of 12 months or less but greater than one month are not recorded on the balance sheet for select asset classes. The lease liability is measured at the present value of future lease payments as of the lease commencement date. The right-of-use asset recognized is based on the lease liability adjusted for prepaid and deferred rent and unamortized lease incentives. An operating lease right-of-use asset is amortized on a straight-line basis over the lease term and is recognized as a single lease cost against the operating lease liability. A finance lease right-of-use asset is amortized on a straight-line basis, with interest costs reported separately, over the lesser of the useful life of the leased asset or lease term. Operating lease expense is recognized on a straight-line basis over the lease term and is included in Cost of sales or General and administrative expenses. Variable lease payments are expensed as incurred.

The Company uses its incremental borrowing rates as the discount rate for its leases, which is equal to the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar

terms. The lease terms for all the Company’s leases include the contractually obligated period of the leases, plus any additional periods covered by Company options to extend the leases that the Company is reasonably certain to exercise.

Certain leases provide that the lease payments may be increased annually based on the fixed rate terms or adjustable terms such as the Consumer Price Index. Future base rent escalations that are not contractually quantifiable as of the lease commencement date are not included in our lease liability.

The following schedule details the total right-of-use assets and lease liabilities on the Consolidated Balance Sheets as of December 29, 2024 and December 31, 2023 (in thousands):

Leases	Classification	December 29, 2024		December 31, 2023
Assets
Finance lease assets, net	Finance lease right-of-use assets, net	$	28,761	$	31,740
Operating lease assets, net	Operating lease right-of-use assets	184,425		164,158
Total lease assets		$	213,186	$	195,898
Liabilities
Current finance lease liabilities	Current finance lease liabilities	$	7,280	$	9,029
Current operating lease liabilities	Current operating lease liabilities	25,756		24,076
Noncurrent finance lease liabilities	Long-term finance lease liabilities	22,885		24,144
Noncurrent operating lease liabilities	Long-term operating lease liabilities	173,557		151,050
Total lease liabilities		$	229,478	$	208,299

Lease costs for the years ended December 29, 2024, December 31, 2023 and December 25, 2022 were as follows:

(Dollars in thousands)	Year Ended
	December 29, 2024		December 31, 2023		December 25, 2022
Finance lease:
Amortization of right-of-use assets	$	8,831	$	8,949	$	5,704
Interest on lease liabilities	1,420		1,542		1,029
Operating lease:
Operating lease cost	43,345		41,514		42,815
Short-term lease cost	4,237		4,239		4,171
Variable lease cost	11,096		10,005		9,129
Total lease costs	68,929		66,249		62,848
Sublease income	(9,748)		(9,842)		(11,654)
Total lease costs, net of sublease income	$	59,181	$	56,407	$	51,194

Future minimum lease payments under contractually-obligated leases and associated sublease income as of December 29, 2024 were as follows (in thousands):

Fiscal Year	Finance Lease Costs		Operating Lease Costs		Expected Sublease Income
2025	$	9,077	$	34,544	$	7,197
2026	8,077		37,343		6,154
2027	6,822		31,611		5,259
2028	4,159		26,169		4,389
2029	3,115		21,485		3,671
Thereafter	2,497		113,256		6,639
Total future minimum lease payments	33,747		264,408		33,309
Less imputed interest	(3,582)		(65,095)
Total present value of lease liabilities	$	30,165	$	199,313

Lessor Operating Leases

The Company subleases certain retail space to our franchisees in the UK which are primarily operating leases. At December 29, 2024, we leased and subleased approximately 350 Papa Johns restaurants to franchisees in the UK. The initial lease terms on the franchised sites in the UK are generally 15 years. The Company has the option to negotiate an extension toward the end of the lease term at the landlord’s discretion. The initial lease terms of the franchisee subleases are generally five to ten years. Rental income, primarily derived from properties leased and subleased to franchisees in the UK, is recognized on a straight-line basis over the respective operating lease terms. The Company recognized total sublease income of $9.7 million, $9.8 million and $11.7 million for the years ended December 29, 2024, December 31, 2023 and December 25, 2022, respectively, within Other revenues in the Consolidated Statements of Operations.

Lease Guarantees

As a result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are contingently liable for payment of approximately 81 Domestic leases. These leases have varying terms, the latest of which expires in 2034. As of December 29, 2024, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was approximately $10.4 million. This contingent liability is not included in the Consolidated Balance Sheets or future minimum lease obligation. The fair value of the guarantee is not material.

There were no leases recorded between related parties.

Supplemental Cash Flow & Other Information

The following table presents supplemental cash flow information related to leases for the years ended December 29, 2024, December 31, 2023 and December 25, 2022:

(Dollars in thousands)	Year Ended
	December 29, 2024		December 31, 2023		December 25, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	1,416	$	1,542	$	1,029
Financing cash flows from finance leases	$	8,529	$	8,821	$	5,416
Operating cash flows from operating leases (a)	$	40,488	$	37,814	$	35,573
Right-of-use assets obtained in exchange for new finance lease liabilities	$	9,076	$	16,734	$	9,875
Right-of-use assets obtained in exchange for new operating lease liabilities	$	65,134	$	24,380	$	53,869
Cash received from sublease income	$	7,442	$	8,855	$	10,847
Weighted-average remaining lease term (in years):
Finance leases	4.2		4.3		4.4
Operating leases	9.2		7.8		8.4
Weighted-average discount rate:
Finance leases	5.0%		4.9%		4.6%
Operating leases	5.8%		5.6%		5.6%

______________________________

(a)Included within the change in Other assets and liabilities within the Consolidated Statements of Cash Flows offset by non-cash operating lease right-of-use asset amortization and lease liability accretion.