Segment Information

6 Months Ended

Jun. 27, 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 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				Six Months Ended
	June 27,		June 28,		June 27,		June 28,
(In thousands)	2021		2020		2021		2020
Revenues:
Domestic Company-owned restaurants	$	196,124	$	186,506	$	393,358	$	347,946
North America franchising		32,475		24,174		65,190		43,614
North America commissaries		186,641		167,619		371,519		323,041
International		46,277		34,366		88,881		66,518
All others		53,491		47,958		107,806		89,363
Total revenues	$	515,008	$	460,623	$	1,026,754	$	870,482
Intersegment revenues:
North America franchising	$	1,041	$	793	$	2,101	$	1,467
North America commissaries		53,428		47,357		105,498		91,863
All others		18,943		18,386		38,091		39,341
Total intersegment revenues	$	73,412	$	66,536	$	145,690	$	132,671
Operating income:
Domestic Company-owned restaurants	$	15,361	$	16,746	$	30,685	$	25,413
North America franchising		30,518		22,176		60,961		39,502
North America commissaries		9,778		8,711		19,491		16,371
International		8,683		4,471		17,047		8,849
All others		4,894		2,035		11,012		1,838
Unallocated corporate expenses		(24,617)		(22,881)		(47,779)		(45,057)
Elimination of intersegment losses (profits)		20		(724)		82		(910)
Total operating income	$	44,637	$	30,534	$	91,499	$	46,006
Property and equipment, net:
Domestic Company-owned restaurants	$	234,022
North America commissaries		146,040
International		14,657
All others		97,086
Unallocated corporate assets		220,627
Accumulated depreciation and amortization		(513,614)
Total property and equipment, net	$	198,818

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 June 27, 2021
Major Products/Services Lines		Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	196,124	$	-	$	-	$	-	$	-	$	196,124
Franchise royalties and fees		-		33,516		-		13,156		-		46,672
Commissary sales		-		-		240,069		24,458		-		264,527
Other revenues		-		-		-		8,663		72,434		81,097
Eliminations		-		(1,041)		(53,428)		-		(18,943)		(73,412)
Total segment revenues	$	196,124	$	32,475	$	186,641	$	46,277	$	53,491	$	515,008
International other revenues (1)		-		-		-		(8,663)		8,663		-
Total revenues	$	196,124	$	32,475	$	186,641	$	37,614	$	62,154	$	515,008
	Reportable Segments
	Three Months Ended June 28, 2020
Major Products/Services Lines		Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	186,506	$	-	$	-	$	-	$	-	$	186,506
Franchise royalties and fees		-		24,967		-		7,743		-		32,710
Commissary sales		-		-		214,976		20,350		-		235,326
Other revenues		-		-		-		6,273		66,344		72,617
Eliminations		-		(793)		(47,357)		-		(18,386)		(66,536)
Total segment revenues	$	186,506	$	24,174	$	167,619	$	34,366	$	47,958	$	460,623
International other revenues (1)		-		-		-		(6,273)		6,273		-
Total revenues	$	186,506	$	24,174	$	167,619	$	28,093	$	54,231	$	460,623
		Reportable Segments
		Six Months Ended June 27, 2021
Major Products/Services Lines		Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	393,358	$	-	$	-	$	-	$	-	$	393,358
Franchise royalties and fees		-		67,291		-		25,364		-		92,655
Commissary sales		-		-		477,017		46,857		-		523,874
Other revenues		-		-		-		16,660		145,897		162,557
Eliminations		-		(2,101)		(105,498)		-		(38,091)		(145,690)
Total segment revenues	$	393,358	$	65,190	$	371,519	$	88,881	$	107,806	$	1,026,754
International other revenues (1)		-		-		-		(16,660)		16,660		-
Total revenues	$	393,358	$	65,190	$	371,519	$	72,221	$	124,466	$	1,026,754
	Reportable Segments
	Six Months Ended June 28, 2020
Major Products/Services Lines		Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	347,946	$	-	$	-	$	-	$	-	$	347,946
Franchise royalties and fees		-		45,081		-		17,259		-		62,340
Commissary sales		-		-		414,904		36,893		-		451,797
Other revenues		-		-		-		12,366		128,704		141,070
Eliminations		-		(1,467)		(91,863)		-		(39,341)		(132,671)
Total segment revenues	$	347,946	$	43,614	$	323,041	$	66,518	$	89,363	$	870,482
International other revenues (1)		-		-		-		(12,366)		12,366		-
Total revenues	$	347,946	$	43,614	$	323,041	$	54,152	$	101,729	$	870,482

(1) Other revenues as reported in the Condensed Consolidated Statements of Operations include $8.7 million and $16.7 million of revenue for the three and six months ended June 27, 2021, respectively, and $6.3 million and $12.4 million of revenue for the three and six months ended June 28, 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.