Papa John’s first quarter results were met with a negative market reaction, as both revenue and adjusted profit fell short of Wall Street expectations. Management attributed the underperformance primarily to lower order volumes and declining new customer acquisition in North America. CEO Todd Penegor noted that “the pizza category has been very promotional,” and highlighted competitive pressure from both national and local players as a key factor. Severe weather and a shift toward smaller, non-specialty pizzas also weighed on same-store sales, while international markets remained a relative bright spot.
Is now the time to buy PZZA? Find out in our full research report (it’s free for active Edge members).
Papa John's (PZZA) Q1 CY2026 Highlights:
- Revenue: $478.6 million vs analyst estimates of $485.5 million (7.7% year-on-year decline, 1.4% miss)
- Adjusted EPS: $0.32 vs analyst expectations of $0.37 (13.6% miss)
- Adjusted EBITDA: $42.36 million vs analyst estimates of $51.21 million (8.9% margin, 17.3% miss)
- EBITDA guidance for the full year is $205 million at the midpoint, in line with analyst expectations
- Operating Margin: 4.3%, in line with the same quarter last year
- Locations: 6,020 at quarter end, up from 6,019 in the same quarter last year
- Same-Store Sales fell 3.9% year on year (-1.3% in the same quarter last year)
- Market Capitalization: $1.08 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Papa John's’s Q1 Earnings Call
- Brian Bittner (Oppenheimer) asked about the company’s decision to use a 3-year stack for same-store sales guidance. CEO Todd Penegor explained this approach reflects recent competitive dynamics and provides a normalized view given the volatility of the past few years.
- Alexander Slagle (Jefferies) questioned whether the introduction of new menu items would create operational complexity. Penegor described steps taken to simplify processes, such as oven recalibration and removal of more complex items, ensuring new offerings do not disrupt restaurant operations.
- Todd Brooks (Benchmark StoneX) inquired about the breakdown of same-store sales declines between traffic and average check. CFO Ravi Thanawala clarified that the comp decline was driven by fewer orders, especially for smaller transactions, while the average check remained flat quarter to date.
- Isiah Austin (Bank of America) asked about the sources of competitive pressure and the relative performance of third-party delivery. Penegor outlined that both national and regional QSRs are aggressive on price, while Thanawala confirmed third-party channels continue to outperform first-party, though competition remains intense.
- Todd Brooks (Benchmark StoneX) also probed the impact of severe weather on quarterly results. Thanawala quantified the weather effect at just under 40 basis points, advising analysts to focus on the 3-year stack for a more accurate trend assessment.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will watch (1) the impact of new menu introductions and national marketing campaigns on customer acquisition and order mix, (2) the pace and success of store closures and refranchising efforts in improving profitability, and (3) progress in international markets, particularly the U.K. and Asia Pacific. Execution on supply chain savings and technology rollouts will also serve as important markers of operational improvement.
Papa John's currently trades at $33.06, down from $33.78 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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