Segment Information

12 Months Ended

Dec. 31, 2023

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 principally generates revenues from retail sales of pizza, Papadias, and side items, including breadsticks, Papa Bites, cheesesticks, boneless chicken wings and bone-in chicken 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 consists of the operations of all Company-owned restaurants located in the UK, as well as 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)	2023		2022		2021
Revenues:
Domestic Company-owned restaurants	$	726,362	$	708,389	$	778,323
North America franchising	144,550		137,399		129,310
North America commissaries	852,361		869,634		761,305
International	182,487		158,682		184,099
All others	229,953		227,999		215,384
Total revenues	$	2,135,713	$	2,102,103	$	2,068,421
Intersegment revenues:
North America franchising	$	4,267	$	4,122	$	4,179
North America commissaries	210,614		217,570		215,393
All others	66,487		70,283		75,366
Total intersegment revenues	$	281,368	$	291,975	$	294,938
Depreciation and amortization:
Domestic Company-owned restaurants	$	14,184	$	11,495	$	11,728
North America commissaries	16,046		13,299		11,974
International	3,167		1,774		2,326
All others	15,572		12,681		9,928
Unallocated corporate expenses	15,121		12,783		12,860
Total depreciation and amortization	$	64,090	$	52,032	$	48,816
Operating income:
Domestic Company-owned restaurants (a)	$	33,470	$	15,966	$	49,628
North America franchising	133,800		127,882		120,949
North America commissaries	43,316		42,531		39,873
International (b) (c)	11,766		17,891		34,896
All others	10,116		10,084		17,704
Unallocated corporate expenses (d)	(85,353)		(104,419)		(94,114)
Elimination of intersegment losses (profits)	27		(905)		(695)
Total operating income	$	147,142	$	109,030	$	168,241

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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)    For the year ended December 31, 2023, International includes the following:

•$4.2 million of costs associated with repositioning the UK portfolio as well as transaction costs related to the acquisition of restaurants from franchisees.

•$2.2 million of costs related to the Company’s International restructuring plan, comprised of $1.5 million in severance compensation costs and $0.7 million in consulting and professional fees.

•$0.9 million one-time non-cash charge related to the reserve of certain accounts receivable related to the conflict in the Middle East.

(c)    For the year ended December 25, 2022, International 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.

(d)    For the year ended December 31, 2023, Unallocated corporate expenses includes $2.0 million of severance and related costs associated with the transition of certain executives and $0.6 million for certain legal settlements. 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.

(In thousands)	2023		2022		2021
Property and equipment, net:
Domestic Company-owned restaurants	$	257,318	$	238,658	$	241,050
North America commissaries	161,303		149,920		149,218
International	32,083		16,080		14,642
All others	138,028		131,210		109,052
Unallocated corporate assets	253,959		254,425		236,132
Accumulated depreciation and amortization	(559,879)		(540,500)		(526,238)
Property and equipment, net	$	282,812	$	249,793	$	223,856
Expenditures for property and equipment:
Domestic Company-owned restaurants	$	25,016	$	23,057	$	16,108
North America commissaries	10,654		5,729		4,007
International	6,518		5,175		1,979
All others	18,664		18,296		18,645
Unallocated corporate	15,768		26,134		27,820
Total expenditures for property and equipment	$	76,620	$	78,391	$	68,559

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 31, 2023
Major Products/Services Lines	Domestic Company-owned restaurants		North America franchising		North America commissaries		International		All others		Total
Company-owned restaurant sales	$	726,362	$	—	$	—	$	34,463	$	—	$	760,825
Franchise royalties and fees	—		148,817		—		50,437		—		199,254
Commissary sales	—		—		1,062,975		72,287		—		1,135,262
Other revenues	—		—		—		25,300		296,440		321,740
Eliminations	—		(4,267)		(210,614)		—		(66,487)		(281,368)
Total segment revenues	726,362		144,550		852,361		182,487		229,953		2,135,713
International other revenues (a)	—		—		—		(25,300)		25,300		—
Total revenues	$	726,362	$	144,550	$	852,361	$	157,187	$	255,253	$	2,135,713

	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

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(a)    Other revenues as reported in the Consolidated Statements of Operations include $25.3 million, $28.8 million and $33.3 million of revenue for the years ended December 31, 2023, December 25, 2022, and December 26, 2021 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.