Segment Information

3 Months Ended

Mar. 28, 2021

Segment Information

Segment Information

11. 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 (“domestic” is defined as contiguous United States) Company-owned restaurants and derives its revenues principally from retail sales of pizza, Papadias, which are flatbread-style sandwiches, 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 operating income 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 28,		March 29,
(In thousands)	2021		2020
Revenues:
Domestic Company-owned restaurants	$	197,234	$	161,440
North America franchising		32,715		19,440
North America commissaries		184,878		155,422
International		42,604		32,152
All others		54,315		41,405
Total revenues	$	511,746	$	409,859
Intersegment revenues:
North America franchising	$	1,060	$	674
North America commissaries		52,070		44,506
All others		19,148		20,955
Total intersegment revenues	$	72,278	$	66,135
Operating income:
Domestic Company-owned restaurants	$	15,324	$	8,667
North America franchising		30,443		17,326
North America commissaries		9,713		7,660
International		8,364		4,379
All others		6,118		(198)
Unallocated corporate expenses		(23,162)		(22,176)
Elimination of intersegment losses (profits)		62		(186)
Total operating income	$	46,862	$	15,472
Property and equipment, net:
Domestic Company-owned restaurants	$	230,302
North America commissaries		145,432
International		14,169
All others		92,961
Unallocated corporate assets		214,845
Accumulated depreciation and amortization		(502,626)
Total property and equipment, net	$	195,083

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 March 28, 2021
Major Products/Services Lines		Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	197,234	$	-	$	-	$	-	$	-	$	197,234
Franchise royalties and fees		-		33,775		-		12,208		-		45,983
Commissary sales		-		-		236,948		22,399		-		259,347
Other revenues		-		-		-		7,997		73,463		81,460
Eliminations		-		(1,060)		(52,070)		-		(19,148)		(72,278)
Total segment revenues	$	197,234	$	32,715	$	184,878	$	42,604	$	54,315	$	511,746
International other revenues (1)		-		-		-		(7,997)		7,997		-
Total revenues	$	197,234	$	32,715	$	184,878	$	34,607	$	62,312	$	511,746
	Reportable Segments
	Three Months Ended March 29, 2020
Major Products/Services Lines		Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	161,440	$	-	$	-	$	-	$	-	$	161,440
Franchise royalties and fees		-		20,114		-		9,516		-		29,630
Commissary sales		-		-		199,928		16,543		-		216,471
Other revenues		-		-		-		6,093		62,360		68,453
Eliminations		-		(674)		(44,506)		-		(20,955)		(66,135)
Total segment revenues	$	161,440	$	19,440	$	155,422	$	32,152	$	41,405	$	409,859
International other revenues (1)		-		-		-		(6,093)		6,093		-
Total revenues	$	161,440	$	19,440	$	155,422	$	26,059	$	47,498	$	409,859

(1) Other revenues as reported in the Condensed Consolidated Statements of Operations include $8.0 million and $6.1 million of revenue for the three months ended March 28, 2021 and March 29, 2020, 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 operating income 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.