Segment Information

12 Months Ended

Dec. 29, 2024

Segment Reporting [Abstract]

Segment Information

23. Segment Information

We have four reportable segments: Domestic Company-owned restaurants, North America franchising, North America commissaries, and International operations. The Domestic Company-owned restaurant segment consists of the operations of all Domestic Company-owned restaurants and principally generates revenues from retail sales of pizza and other food and beverage products. 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 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 International segment consists of the operations of all Company-owned restaurants located in the UK, as well as distribution sales to franchised Papa Johns restaurants located in the UK 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. 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.

All other business units that do not meet the quantitative or qualitative thresholds for determining reportable segments, which are not operating segments, we refer to as “All Other”. These consist of operations that derive revenues from 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. Prior to the sale of Preferred Marketing Solutions in the fourth quarter of 2023, All Other included revenues from the sale of printing and promotional items (principally to Company-owned and franchised restaurants).

Our chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM evaluates performance and allocates resources to our segments based on Adjusted operating income. This measure excludes certain general and administrative expenses and other items that do not reflect normal, recurring expenses necessary to operate our business. During the annual budget and forecasting process, the CODM uses Adjusted operating income to allocate resources (including employees, property, and financial or capital resources) to the segments. The CODM regularly reviews trends in Adjusted operating income on at least a quarterly basis to evaluate the profitability of the segments and to make resource allocation decisions. When our CODM reviews balance sheet information, it is at a consolidated level.

Certain administrative and capital costs are allocated to our segments based upon predetermined rates or estimated resource usage. In the fourth quarter of 2024, we updated our internal cost allocation methodology to reflect recent changes in the business, including changes to the CODM and ongoing transformation projects. The methodology updates better align corporate cost allocations with how the CODM allocates resources to the segments and evaluates segment profitability, and result in reductions to the Adjusted operating income of our segments. These changes are offset in Unallocated corporate expenses and have no impact on consolidated operating income. We have chosen to prospectively adopt this update in allocation methodology and the comparative information has not been restated.

Segment Results

The tables below present our operating results by segment (in thousands). The significant expense categories and amounts presented in the tables below align with the segment-level information that is regularly provided to the CODM. A reconciliation to Company results is included in the following section.

	Year Ended December 29, 2024
	Domestic Company-owned restaurants		North America franchising		North America commissaries		International		Total
Revenues from external customers	$	692,736	$	139,091	$	831,774	$	174,054	$	1,837,655
Intersegment revenues	—		4,150		205,234		—		209,384
Revenues	$	692,736	$	143,241	$	1,037,008	$	174,054	$	2,047,039
Less costs and expenses(a):
COS - Product Costs	$	207,704	$	—	$	756,170	$	51,889	$	1,015,763
COS - Salaries & Benefits	226,325		—		116,645		13,759		356,729
General & Administrative (b)	39,822		35,064		37,690		38,379		150,955
Other Segment Expenses (c)	194,216		—		77,945		56,259		328,420
Adjusted operating income	$	24,669	$	108,177	$	48,558	$	13,768	$	195,172
	Year Ended December 31, 2023
	Domestic Company-owned restaurants		North America franchising		North America commissaries		International		Total
Revenues from external customers	$	726,362	$	144,550	$	852,361	$	182,487	$	1,905,760
Intersegment revenues	—		4,267		210,614		—		214,881
Revenues	$	726,362	$	148,817	$	1,062,975	$	182,487	$	2,120,641
Less costs and expenses(a):
COS - Product Costs	$	215,545	$	—	$	787,966	$	54,514	$	1,058,025
COS - Salaries & Benefits	238,434		—		118,678		17,853		374,965
General & Administrative	40,714		15,017		36,960		31,271		123,962
Other Segment Expenses (c)	198,199		—		76,055		59,794		334,048
Adjusted operating income	$	33,470	$	133,800	$	43,316	$	19,055	$	229,641
	Year Ended December 25, 2022
	Domestic Company-owned restaurants		North America franchising		North America commissaries		International		Total
Revenues from external customers	$	708,389	$	137,399	$	869,634	$	158,682	$	1,874,104
Intersegment revenues	—		4,122		217,570		—		221,692
Revenues	$	708,389	$	141,521	$	1,087,204	$	158,682	$	2,095,796
Less costs and expenses(a):
COS - Product Costs	$	218,732	$	—	$	820,636	$	57,781	$	1,097,149
COS - Salaries & Benefits	237,095		—		113,357		4,117		354,569
General & Administrative	29,510		13,639		33,291		21,889		98,329
Other Segment Expenses (c)	198,674		—		77,389		47,360		323,423
Adjusted operating income	$	24,378	$	127,882	$	42,531	$	27,535	$	222,326

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(a) Costs and expenses excludes certain general and administrative expenses and other items that do not reflect normal, recurring expenses necessary to operate our business (see reconciliation table that follows).

(b) As noted in the commentary above, the Company prospectively adjusted for updates in internal cost allocation methodologies in 2024, which increased the amount of internal general and administrative expenses allocated to the segments from Unallocated corporate expenses. The allocation updates resulted in the following increases to segment G&A in 2024: $0.4 million to Domestic Company-Owned restaurants, $22.9 million to North America franchising, $3.3 million to International and $0.1 million to North America commissaries. There was no impact on overall company profitability, as the change was offset within Unallocated corporate expenses (see reconciliation table below).

(c) Other Segment Expenses represents all operating expenses that are not included in the significant segment expense categories. The components of Other Segment Expenses are: other cost of sales that are not included in “COS - Product Costs” or “COS - Salaries & Benefits” (including, but not limited to, delivery expenses, Company-owned restaurant advertising costs, insurance, rent, utilities, and aggregator fees), advertising costs, depreciation and amortization costs, and other operating expenses.

Reconciliation of Segment Results to Company Results

The following table reconciles Total Revenues from our segments to Total Revenues and Total Adjusted operating income from our segments to Income before income taxes (in thousands):

	Year Ended
	2024		2023		2022
Total Revenues from our segments	$	2,047,039	$	2,120,641	$	2,095,796
All Other revenue (a)	279,385		296,440		298,282
Elimination of intersegment revenue	(267,037)		(281,368)		(291,975)
Total Revenues	$	2,059,387	$	2,135,713	$	2,102,103
	Year Ended
	2024		2023		2022
Total Adjusted operating income from our segments	$	195,172	$	229,641	$	222,326
All Other profit (a)	4,065		10,116		10,084
Unallocated corporate expenses (b)	(51,054)		(82,759)		(74,043)
Elimination of intersegment (profit) loss	—		27		(905)
Other income/(expense) adjustments (c)	8,521		(9,883)		(48,432)
Operating income	156,704		147,142		109,030
Net interest expense	(42,578)		(43,469)		(25,261)
Income before income taxes	$	114,126	$	103,673	$	83,769

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(a) As noted in the commentary above, All Other revenue and profit is derived from business units that do not meet the quantitative or qualitative thresholds for determining reportable segments, including: franchise contributions to marketing funds, information systems and related services used in restaurant operations, and sale of printing and promotional items (principally to Company-owned and franchised restaurants).

(b) Unallocated corporate expenses represent administrative fees incurred by the restaurant support centers, including: information systems and related services, corporate salaries and bonuses, stock compensation expense, and other corporate costs.

(c) Other income/(expense) adjustments represent certain general and administrative expenses and other items that do not reflect normal, recurring expenses necessary to operate our business. As such, management excludes these items from the evaluation of Adjusted operating income. For the periods above, the adjustments include:

	Year Ended
(In thousands)	December 29, 2024		December 31, 2023		December 25, 2022
Gain on sale of QC Center properties (See Note 22)	$	41,289	$	—	$	—
International restructuring costs (See Note 16)	(27,273)		(2,178)		—
Refranchising and impairment losses	(5,495)		—		(26,702)
UK repositioning and acquisition-related costs	—		(4,243)		(5,223)
Legal settlements	—		(577)		(15,000)
Other costs	—		(2,885)		(1,507)
Total adjustments	$	8,521	$	(9,883)	$	(48,432)

Depreciation and Amortization by Segment

The following table presents depreciation and amortization by segment.

(In thousands)	2024		2023		2022
Depreciation and amortization:
Domestic Company-owned restaurants	$	16,560	$	14,184	$	11,495
North America commissaries	15,780		16,046		13,299
International	4,134		3,167		1,774
All Other	22,396		15,572		12,681
Unallocated corporate expenses	10,537		15,121		12,783
Total depreciation and amortization	$	69,407	$	64,090	$	52,032

Disaggregation of Revenue

Our segments earn revenue from both external and internal customers. No single external customer accounted for 10% or more of our total revenues. We account for intercompany sales and transfers as if the sales or transfers were to third parties and subsequently eliminate the activity. The accounting policies of our segments are the same as those described in Note 2. Significant Accounting Policies.

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

	Year Ended December 29, 2024
	Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All Other		Elimination of Intersegment Revenue		Total
Company-owned restaurant sales	$	692,736	$	—	$	—	$	31,930	$	—	$	—	$	724,666
Franchise royalties and fees	—		143,241		—		47,941		—		(4,150)		187,032
Commissary revenues	—		—		1,037,008		67,890		—		(205,234)		899,664
Other revenues	—		—		—		12,701		85,914		(14,933)		83,682
Advertising funds revenue	—		—		—		13,592		193,471		(42,720)		164,343
Total Revenues	$	692,736	$	143,241	$	1,037,008	$	174,054	$	279,385	$	(267,037)	$	2,059,387

	Year Ended December 31, 2023
	Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All Other		Elimination of Intersegment Revenue		Total
Company-owned restaurant sales	$	726,362	$	—	$	—	$	34,463	$	—	$	—	$	760,825
Franchise royalties and fees	—		148,817		—		50,437		—		(4,267)		194,987
Commissary revenues	—		—		1,062,975		72,287		—		(210,614)		924,648
Other revenues	—		—		—		12,617		101,789		(16,369)		98,037
Advertising funds revenue	—		—		—		12,683		194,651		(50,118)		157,216
Total Revenues	$	726,362	$	148,817	$	1,062,975	$	182,487	$	296,440	$	(281,368)	$	2,135,713

	Year Ended December 25, 2022
	Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All Other		Elimination of Intersegment Revenue		Total
Company-owned restaurant sales	$	708,389	$	—	$	—	$	—	$	—	$	—	$	708,389
Franchise royalties and fees	—		141,521		—		49,422		—		(4,122)		186,821
Commissary revenues	—		—		1,087,204		80,481		—		(217,570)		950,115
Other revenues	—		—		—		14,135		107,194		(19,683)		101,646
Advertising funds revenue	—		—		—		14,644		191,088		(50,600)		155,132
Total Revenues	$	708,389	$	141,521	$	1,087,204	$	158,682	$	298,282	$	(291,975)	$	2,102,103