Segment Information

9 Months Ended

Sep. 25, 2016

Segment Information

Segment Information

6.Segment Information

We have five reportable segments: domestic Company-owned restaurants, domestic 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 domestic 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. 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, risk management services, 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):

	Three Months Ended				Nine Months Ended
	September 25, 2016		September 27, 2015		September 25, 2016		September 27, 2015
Revenues from external customers:
Domestic Company-owned restaurants	$	199,041	$	180,059	$	608,968	$	563,308
Domestic commissaries		155,208		145,863		462,057		457,203
North America franchising		24,776		22,285		76,554		71,185
International		28,941		27,001		84,856		78,753
All others		14,476		14,076		41,566		50,110
Total revenues from external customers	$	422,442	$	389,284	$	1,274,001	$	1,220,559
Intersegment revenues:
Domestic commissaries	$	59,811	$	53,398	$	175,859	$	165,744
North America franchising		688		643		2,140		1,985
International		64		73		196		223
All others		4,129		3,833		12,301		11,459
Total intersegment revenues	$	64,692	$	57,947	$	190,496	$	179,411
Income (loss) before income taxes:
Domestic Company-owned restaurants	$	11,576	$	8,088	$	47,088	$	41,185
Domestic commissaries		11,311		10,192		34,539		32,694
North America franchising		21,856		19,172		67,881		61,545
International		3,083		3,184		8,996		6,807
All others		392		(556)		868		(230)
Unallocated corporate expenses		(16,360)		(13,482)		(49,771)		(60,636)
Elimination of intersegment profit		(231)		(341)		(1,365)		(1,141)
Total income before income taxes	$	31,627	$	26,257	$	108,236	$	80,224
Property and equipment:
Domestic Company-owned restaurants	$	229,546
Domestic commissaries		116,237
International		16,101
All others		53,902
Unallocated corporate assets		189,932
Accumulated depreciation and amortization		(383,909)
Net property and equipment	$	221,809