Segment Information

9 Months Ended

Sep. 26, 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				Nine Months Ended
	September 26,		September 27,		September 26,		September 27,
(In thousands)	2021		2020		2021		2020
Revenues:
Domestic Company-owned restaurants	$	191,584	$	178,371	$	584,942	$	526,317
North America franchising		31,933		25,281		97,123		68,895
North America commissaries		189,224		181,338		560,743		504,379
International		46,880		40,328		135,761		106,846
All others		53,161		47,623		160,967		136,986
Total revenues	$	512,782	$	472,941	$	1,539,536	$	1,343,423
Intersegment revenues:
North America franchising	$	1,037	$	824	$	3,138	$	2,291
North America commissaries		53,454		50,306		158,952		142,169
All others		18,522		27,168		56,613		66,509
Total intersegment revenues	$	73,013	$	78,298	$	218,703	$	210,969
Operating income:
Domestic Company-owned restaurants	$	9,480	$	8,439	$	40,165	$	33,852
North America franchising		29,830		23,353		90,791		62,855
North America commissaries		9,598		8,208		29,089		24,579
International		9,618		7,986		26,665		16,836
All others		3,848		3,193		14,860		5,030
Unallocated corporate expenses		(23,158)		(26,921)		(70,937)		(71,978)
Elimination of intersegment losses (profits)		(639)		291		(557)		(619)
Total operating income	$	38,577	$	24,549	$	130,076	$	70,555
Property and equipment, net:
Domestic Company-owned restaurants	$	237,155
North America commissaries		147,186
International		15,026
All others		103,054
Unallocated corporate assets		229,359
Accumulated depreciation and amortization		(522,708)
Total property and equipment, net	$	209,072

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 26, 2021
Major Products/Services Lines		Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	191,584	$	-	$	-	$	-	$	-	$	191,584
Franchise royalties and fees		-		32,970		-		14,031		-		47,001
Commissary sales		-		-		242,678		24,377		-		267,055
Other revenues		-		-		-		8,472		71,683		80,155
Eliminations		-		(1,037)		(53,454)		-		(18,522)		(73,013)
Total segment revenues	$	191,584	$	31,933	$	189,224	$	46,880	$	53,161	$	512,782
International other revenues (1)		-		-		-		(8,472)		8,472		-
Total revenues	$	191,584	$	31,933	$	189,224	$	38,408	$	61,633	$	512,782
	Reportable Segments
	Three Months Ended September 27, 2020
Major Products/Services Lines		Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	178,371	$	-	$	-	$	-	$	-	$	178,371
Franchise royalties and fees		-		26,105		-		10,703		-		36,808
Commissary sales		-		-		231,644		22,737		-		254,381
Other revenues		-		-		-		6,888		74,791		81,679
Eliminations		-		(824)		(50,306)		-		(27,168)		(78,298)
Total segment revenues	$	178,371	$	25,281	$	181,338	$	40,328	$	47,623	$	472,941
International other revenues (1)		-		-		-		(6,888)		6,888		-
Total revenues	$	178,371	$	25,281	$	181,338	$	33,440	$	54,511	$	472,941
		Reportable Segments
		Nine Months Ended September 26, 2021
Major Products/Services Lines		Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	584,942	$	-	$	-	$	-	$	-	$	584,942
Franchise royalties and fees		-		100,261		-		39,396		-		139,657
Commissary sales		-		-		719,695		71,233		-		790,928
Other revenues		-		-		-		25,132		217,580		242,712
Eliminations		-		(3,138)		(158,952)		-		(56,613)		(218,703)
Total segment revenues	$	584,942	$	97,123	$	560,743	$	135,761	$	160,967	$	1,539,536
International other revenues (1)		-		-		-		(25,132)		25,132		-
Total revenues	$	584,942	$	97,123	$	560,743	$	110,629	$	186,099	$	1,539,536
	Reportable Segments
	Nine Months Ended September 27, 2020
Major Products/Services Lines		Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	526,317	$	-	$	-	$	-	$	-	$	526,317
Franchise royalties and fees		-		71,186		-		27,962		-		99,148
Commissary sales		-		-		646,548		59,630		-		706,178
Other revenues		-		-		-		19,254		203,495		222,749
Eliminations		-		(2,291)		(142,169)		-		(66,509)		(210,969)
Total segment revenues	$	526,317	$	68,895	$	504,379	$	106,846	$	136,986	$	1,343,423
International other revenues (1)		-		-		-		(19,254)		19,254		-
Total revenues	$	526,317	$	68,895	$	504,379	$	87,592	$	156,240	$	1,343,423

(1) Other revenues as reported in the Condensed Consolidated Statements of Operations include $8.5 million and $25.1 million of revenue for the three and nine months ended September 26, 2021, respectively, and $6.9 million and $19.3 million of revenue for the three and nine months ended September 27, 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.