Segment Information

9 Months Ended

Sep. 27, 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 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				Nine Months Ended
	September 27,		September 29,		September 27,		September 29,
(In thousands)	2020		2019		2020		2019
Revenues:
Domestic Company-owned restaurants	$	178,371	$	165,135	$	526,317	$	490,594
North America commissaries		181,338		154,703		504,379		450,735
North America franchising		25,281		15,924		68,895		53,215
International		40,328		29,888		106,846		92,808
All others		47,623		38,056		136,986		114,382
Total revenues	$	472,941	$	403,706	$	1,343,423	$	1,201,734
Intersegment revenues:
North America commissaries	$	50,306	$	47,599	$	142,169	$	140,116
North America franchising		824		612		2,291		2,072
International		—		—		—		191
All others		27,168		19,362		66,509		52,758
Total intersegment revenues	$	78,298	$	67,573	$	210,969	$	195,137
Income before income taxes
Domestic Company-owned restaurants	$	8,439	$	9,162	$	33,852	$	21,471
North America commissaries		8,069		6,790		24,145		22,094
North America franchising		23,353		14,092		62,855		47,693
International		8,123		4,195		17,211		14,915
All others		3,181		(866)		4,905		(2,581)
Unallocated corporate expenses		(30,543)		(32,329)		(83,024)		(92,685)
Elimination of intersegment losses (profits)		291		(366)		(619)		(1,037)
Total income before income taxes	$	20,913	$	678	$	59,325	$	9,870
Property and equipment:
Domestic Company-owned restaurants	$	230,669
North America commissaries		144,799
International		16,335
All others		87,355
Unallocated corporate assets		215,144
Accumulated depreciation and amortization		(495,011)
Property and equipment, net	$	199,291

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 September 27, 2020
Major Products/Services Lines		Domestic Company-owned restaurants		North America commissaries		North America franchising		International		All others		Total
Company-owned restaurant sales	$	178,371	$	-	$	-	$	-	$	-	$	178,371
Commissary sales		-		231,644		-		22,737		-		254,381
Franchise royalties and fees		-		-		26,105		10,703		-		36,808
Other revenues		-		-		-		6,888		74,791		81,679
Eliminations		-		(50,306)		(824)		-		(27,168)		(78,298)
Total segment revenues	$	178,371	$	181,338	$	25,281	$	40,328	$	47,623	$	472,941
International other revenues (1)		-		-		-		(6,888)		6,888		-
Total revenues	$	178,371	$	181,338	$	25,281	$	33,440	$	54,511	$	472,941
		Reportable Segments
		Three Months Ended September 29, 2019
Major Products/Services Lines		Domestic Company-owned restaurants		North America commissaries		North America franchising		International		All others		Total
Company-owned restaurant sales	$	165,135	$	-	$	-	$	-	$	-	$	165,135
Commissary sales		-		202,302		-		15,195		-		217,497
Franchise royalties and fees		-		-		16,536		9,484		-		26,020
Other revenues		-		-		-		5,209		57,418		62,627
Eliminations		-		(47,599)		(612)		-		(19,362)		(67,573)
Total segment revenues	$	165,135	$	154,703	$	15,924	$	29,888	$	38,056	$	403,706
International other revenues (1)		-		-		-		(5,209)		5,209		-
Total revenues	$	165,135	$	154,703	$	15,924	$	24,679	$	43,265	$	403,706
		Reportable Segments
		Nine Months Ended September 27, 2020
Major Products/Services Lines		Domestic Company-owned restaurants		North America commissaries		North America franchising		International		All others		Total
Company-owned restaurant sales	$	526,317	$	-	$	-	$	-	$	-	$	526,317
Commissary sales		-		646,548		-		59,630		-		706,178
Franchise royalties and fees		-		-		71,186		27,962		-		99,148
Other revenues		-		-		-		19,254		203,495		222,749
Eliminations		-		(142,169)		(2,291)		-		(66,509)		(210,969)
Total segment revenues	$	526,317	$	504,379	$	68,895	$	106,846	$	136,986	$	1,343,423
International other revenues (1)		-		-		-		(19,254)		19,254		-
Total revenues	$	526,317	$	504,379	$	68,895	$	87,592	$	156,240	$	1,343,423
		Reportable Segments
		Nine Months Ended September 29, 2019
Major Products/Services Lines		Domestic Company-owned restaurants		North America commissaries		North America franchising		International		All others		Total
Company-owned restaurant sales	$	490,594	$	-	$	-	$	-	$	-	$	490,594
Commissary sales		-		590,851		-		47,009		-		637,860
Franchise royalties and fees		-		-		55,287		28,834		-		84,121
Other revenues		-		-		-		17,156		167,140		184,296
Eliminations		-		(140,116)		(2,072)		(191)		(52,758)		(195,137)
Total segment revenues	$	490,594	$	450,735	$	53,215	$	92,808	$	114,382	$	1,201,734
International other revenues (1)		-		-		-		(17,156)		17,156		-
International eliminations (1)		-		-		-		191		(191)		-
Total revenues	$	490,594	$	450,735	$	53,215	$	75,843	$	131,347	$	1,201,734

(1) Other revenues as reported in the Condensed Consolidated Statements of Operations include $6.9 million and $19.3 million of revenue for the three and nine months ended September 27, 2020, respectively, and $5.2 million and $17.0 million for the three and nine months ended September 29, 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.