Segment Information

3 Months Ended

Mar. 29, 2020

Segment Information

Segment Information

11. 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 (loss) 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
	March 29,		March 31,
(In thousands)	2020		2019
Revenues:
Domestic Company-owned restaurants	$	161,440	$	161,803
North America commissaries		155,422		148,904
North America franchising		19,440		17,530
International		32,152		31,500
All others		41,405		38,668
Total revenues	$	409,859	$	398,405
Intersegment revenues:
North America commissaries	$	44,506	$	45,555
North America franchising		674		673
International		—		97
All others		20,955		15,411
Total intersegment revenues	$	66,135	$	61,736
Income (loss) before income taxes:
Domestic Company-owned restaurants	$	8,667	$	4,597
North America commissaries		7,509		7,512
North America franchising		17,326		15,691
International		4,499		5,317
All others		(259)		(506)
Unallocated corporate expenses		(26,051)		(32,465)
Elimination of intersegment (profits)		(186)		(913)
Total income (loss) before income taxes	$	11,505	$	(767)
Property and equipment:
Domestic Company-owned restaurants	$	223,539
North America commissaries		143,279
International		15,468
All others		85,775
Unallocated corporate assets		212,537
Accumulated depreciation and amortization		(475,563)
Property and equipment, net	$	205,035

Disaggregation of Revenue

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):

		Reportable Segments
		Three Months Ended March 29, 2020
Major Products/Services Lines		Domestic Company-owned restaurants		North America commissaries		North America franchising		International		All others		Total
Company-owned restaurant sales	$	161,440	$	-	$	-	$	-	$	-	$	161,440
Commissary sales		-		199,928		-		16,543		-		216,471
Franchise royalties and fees		-		-		20,114		9,516		-		29,630
Other revenues		-		-		-		6,093		62,360		68,453
Eliminations		-		(44,506)		(674)		-		(20,955)		(66,135)
Total segment revenues	$	161,440	$	155,422	$	19,440	$	32,152	$	41,405	$	409,859
International other revenues (1)		-		-		-		(6,093)		6,093		-
Total revenues	$	161,440	$	155,422	$	19,440	$	26,059	$	47,498	$	409,859
		Reportable Segments
		Three Months Ended March 31, 2019
Major Products/Services Lines		Domestic Company-owned restaurants		North America commissaries		North America franchising		International		All others		Total
Company-owned restaurant sales	$	161,803	$	-	$	-	$	-	$	-	$	161,803
Commissary sales		-		194,459		-		15,866		-		210,325
Franchise royalties and fees		-		-		18,203		9,801		-		28,004
Other revenues		-		-		-		5,930		54,079		60,009
Eliminations		-		(45,555)		(673)		(97)		(15,411)		(61,736)
Total segment revenues	$	161,803	$	148,904	$	17,530	$	31,500	$	38,668	$	398,405
International other revenues (1)		-		-		-		(5,930)		5,930		-
International eliminations (1)		-		-		-		97		(97)		-
Total revenues	$	161,803	$	148,904	$	17,530	$	25,667	$	44,501	$	398,405

(1) Other revenues as reported in the Condensed Consolidated Statements of Operations include $6.1 million and $5.8 million of revenue for the three months ended March 29, 2020 and March 31, 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 (loss) 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.