Segment Information

12 Months Ended

Dec. 25, 2022

Segment Reporting [Abstract]

Segment Information

23. 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 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 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 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 International segment principally consists of distribution sales to franchised Papa Johns restaurants located in the UK 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. 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 total revenues.

The following tables present our segment information.

(In thousands)	2022		2021		2020
Revenues:
Domestic Company-owned restaurants	$	708,389	$	778,323	$	700,757
North America franchising	137,399		129,310		96,732
North America commissaries	869,634		761,305		680,793
International	158,682		184,099		150,939
All others	227,999		215,384		184,013
Total revenues	$	2,102,103	$	2,068,421	$	1,813,234
Intersegment revenues:
North America franchising	$	4,122	$	4,179	$	3,229
North America commissaries	217,570		215,393		192,332
All others	70,283		75,366		83,635
Total intersegment revenues	$	291,975	$	294,938	$	279,196
Depreciation and amortization:
Domestic Company-owned restaurants	$	11,495	$	11,728	$	11,905
North America commissaries	13,299		11,974		9,660
International	1,774		2,326		1,975
All others	12,681		9,928		10,254
Unallocated corporate expenses	12,783		12,860		15,911
Total depreciation and amortization	$	52,032	$	48,816	$	49,705
Operating income:
Domestic Company-owned restaurants (a)	$	15,966	$	49,628	$	37,049
North America franchising	127,882		120,949		89,801
North America commissaries	42,531		39,873		33,185
International (b)	17,891		34,896		24,034
All others	10,084		17,704		7,043
Unallocated corporate expenses (c)	(104,419)		(94,114)		(100,069)
Elimination of intersegment (profits)	(905)		(695)		(790)
Total operating income	$	109,030	$	168,241	$	90,253

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(a)    Includes a one-time, non-cash charge of $8.4 million associated with the refranchising of the Company’s ownership interest in a 90-restaurant joint venture, recorded as Refranchising and impairment loss for the year ended December 25, 2022. See “Note 22. Divestitures” for additional information.

(b)    Includes charges of $3.5 million related to one-time, non-cash reserves for certain accounts receivable and impairments of reacquired franchise rights due to the financial and operational impact of the conflict in Ukraine and $6.1 million of costs associated with the termination of significant franchisees in the UK, including the reserve of certain accounts and notes receivable and operating lease right-of-use assets impairment. See “Note 22. Divestitures” and “Note 10. Allowance for Credit Losses” for additional information.

(c)    For the year ended December 25, 2022, Unallocated corporate expenses includes $15.0 million for certain legal settlements, $13.9 million of one-time, non-cash reserves of certain notes receivable, and $1.5 million of advisory fees and severance costs associated with the transition of certain executives. For the year ended December 26, 2021, Unallocated corporate expense includes $13.1 million of reorganization costs. See “Note 16. Strategic Corporate Reorganization for Long-term Growth” for additional information.

(In thousands)	2022		2021		2020
Property and equipment, net:
Domestic Company-owned restaurants	$	238,658	$	241,050	$	228,077
North America commissaries	149,920		149,218		145,282
International	16,080		14,642		13,604
All others	131,210		109,052		91,724
Unallocated corporate assets	254,425		236,132		213,828
Accumulated depreciation and amortization	(540,500)		(526,238)		(491,620)
Property and equipment, net	$	249,793	$	223,856	$	200,895
Expenditures for property and equipment:
Domestic Company-owned restaurants	$	23,057	$	16,108	$	12,848
North America commissaries	5,729		4,007		4,447
International	5,175		1,979		1,065
All others	18,296		18,645		11,700
Unallocated corporate	26,134		27,820		5,592
Total expenditures for property and equipment (a)	$	78,391	$	68,559	$	35,652

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(a)    Increases of $9.8 million and $32.9 million in expenditures for property and equipment in 2022 and 2021, respectively, were 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:

	Reportable Segments
(In thousands)	Year Ended December 25, 2022
Major Products/Services Lines	Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	708,389	$	—	$	—	$	—	$	—	$	708,389
Franchise royalties and fees	—		141,521		—		49,422		—		190,943
Commissary sales	—		—		1,087,204		80,481		—		1,167,685
Other revenues	—		—		—		28,779		298,282		327,061
Eliminations	—		(4,122)		(217,570)		—		(70,283)		(291,975)
Total segment revenues	708,389		137,399		869,634		158,682		227,999		2,102,103
International other revenues (a)	—		—		—		(28,779)		28,779		—
Total revenues	$	708,389	$	137,399	$	869,634	$	129,903	$	256,778	$	2,102,103

	Reportable Segments
(In thousands)	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 (a)	—		—		—		(33,328)		33,328		—
Total revenues	$	778,323	$	129,310	$	761,305	$	150,771	$	248,712	$	2,068,421

	Reportable Segments
(In thousands)	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 (a)	—		—		—		(26,976)		26,976		—
Total revenues	$	700,757	$	96,732	$	680,793	$	123,963	$	210,989	$	1,813,234

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(a)    Other revenues as reported in the Consolidated Statements of Operations include $28.8 million, $33.3 million and $27.0 million of revenue for the years ended December 25, 2022, December 26, 2021, and December 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 UK 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.