Segment Information

12 Months Ended

Dec. 26, 2021

Segment Information

Segment Information

22. 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:

(In thousands)	2021		2020		2019
Revenues:
Domestic Company-owned restaurants	$	778,323	$	700,757	$	652,053
North America franchising		129,310		96,732		71,828
North America commissaries		761,305		680,793		612,652
International		184,099		150,939		126,077
All others		215,384		184,013		156,638
Total revenues	$	2,068,421	$	1,813,234	$	1,619,248
Intersegment revenues:
North America franchising	$	4,179	$	3,229	$	2,782
North America commissaries		215,393		192,332		187,073
International		-		-		191
All others		75,366		83,635		88,286
Total intersegment revenues	$	294,938	$	279,196	$	278,332
Depreciation and amortization:
Domestic Company-owned restaurants	$	11,728	$	11,905	$	12,883
North America commissaries		11,974		9,660		8,131
International		2,326		1,975		1,722
All others		9,928		10,254		10,738
Unallocated corporate expenses		12,860		15,911		13,807
Total depreciation and amortization	$	48,816	$	49,705	$	47,281
Operating income:
Domestic Company-owned restaurants (1)	$	49,628	$	37,049	$	33,957
North America franchising		120,949		89,801		64,362
North America commissaries		39,873		33,185		30,690
International		34,896		24,034		18,738
All others		17,704		7,043		(1,966)
Unallocated corporate expenses		(94,114)		(100,069)		(120,280)
Elimination of intersegment (profits)		(695)		(790)		(966)
Total operating income	$	168,241	$	90,253	$	24,535

(1) Includes $4.7 million of refranchising gains in 2019.

(In thousands)	2021		2020		2019
Property and equipment, net:
Domestic Company-owned restaurants	$	241,050	$	228,077	$	221,420
North America commissaries		149,218		145,282		142,946
International		14,642		13,604		16,031
All others		109,052		91,724		84,167
Unallocated corporate assets		236,132		213,828		211,842
Accumulated depreciation and amortization		(526,238)		(491,620)		(464,665)
Property and equipment, net	$	223,856	$	200,895	$	211,741
Expenditures for property and equipment:
Domestic Company-owned restaurants	$	16,108	$	12,848	$	8,811
North America commissaries		4,007		4,447		3,773
International		1,979		1,065		1,143
All others		18,645		11,700		11,541
Unallocated corporate		27,820		5,592		12,443
Total expenditures for property and equipment (1)	$	68,559	$	35,652	$	37,711

(1) Increase of $32.9 million in expenditures for property and equipment in 2021 primarily driven by investment in growth, including technology and development initiatives.

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
	Year Ended December 26,2021
Major Products/Services Lines		Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	778,323	$	-	$	-	$	-	$	-	$	778,323
Franchise royalties and fees		-		133,489		-		53,148		-		186,637
Commissary sales		-		-		976,698		97,623		-		1,074,321
Other revenues		-		-		-		33,328		290,750		324,078
Eliminations		-		(4,179)		(215,393)		-		(75,366)		(294,938)
Total segment revenues	$	778,323	$	129,310	$	761,305	$	184,099	$	215,384	$	2,068,421
International other revenues (1)		-		-		-		(33,328)		33,328		-
Total revenues	$	778,323	$	129,310	$	761,305	$	150,771	$	248,712	$	2,068,421
	Reportable Segments
	Year Ended December 27, 2020
Major Products/Services Lines		Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	700,757	$	-	$	-	$	-	$	-	$	700,757
Franchise royalties and fees		-		99,961		-		39,920		-		139,881
Commissary sales		-		-		873,125		84,043		-		957,168
Other revenues		-		-		-		26,976		267,648		294,624
Eliminations		-		(3,229)		(192,332)		-		(83,635)		(279,196)
Total segment revenues	$	700,757	$	96,732	$	680,793	$	150,939	$	184,013	$	1,813,234
International other revenues (1)		-		-		-		(26,976)		26,976		-
Total revenues	$	700,757	$	96,732	$	680,793	$	123,963	$	210,989	$	1,813,234
		Reportable Segments
		Year Ended December 29, 2019
Major Products/Services Lines		Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	652,053	$	-	$	-	$	-	$	-	$	652,053
Franchise royalties and fees		-		74,610		-		38,745		-		113,355
Commissary sales		-		-		799,725		64,179		-		863,904
Other revenues		-		-		-		23,344		244,924		268,268
Eliminations		-		(2,782)		(187,073)		(191)		(88,286)		(278,332)
Total segment revenues	$	652,053	$	71,828	$	612,652	$	126,077	$	156,638	$	1,619,248
International other revenues (1)		-		-		-		(23,344)		23,344		-
International eliminations (1)		-		-		-		191		(191)		-
Total revenues	$	652,053	$	71,828	$	612,652	$	102,924	$	179,791	$	1,619,248

(1) Other revenues as reported in the Consolidated Statements of Operations include $33.3 million, $27.0 million and $23.2 million of revenue for the years ended December 26, 2021, December 27, 2020, and December 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 Consolidated Statements of Operations.