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Papa John's New Advertising Blitz Helps Restaurant Sales

By Dave Simpson

Papa John's International Inc has reported a smaller-than-expected decline in quarterly comparable sales in North America, helped by new advertising and rebranding as it tries to recover from bad publicity stemming from an acrimonious split with its founder.

The Louisville, Kentucky-based company said it now expects full-year North America comparable sales to decline in the range of 6.5% to 8.5%, compared to a prior outlook for a 7% to 10% decline.

"Improved Customer Sentiment"

Papa John's said its newly-launched campaign "Voices of Papa John's" featuring employees and the chain's franchisees owners helped improve traffic in September.

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"We are seeing improved consumer sentiment. Our attention now is on activating that sentiment to drive increased sales,” Chief Executive Officer Steve Ritchie said on a post-earnings call with analysts.

The company reported a 9.8% sales decline in North America in the third quarter ended September 30. Analysts on average had expected a 10.9% drop, according to IBES data by Refinitiv.

Costly Plans

Papa John's is also focusing on providing assistance to franchises in North America, its biggest market, tackling food-servicing pricing and online fees through 2018.

But the company's plans are coming at a cost. Papa John's said it now expects special charges including rebranding and franchise support to be about $50 million to $60 million this year - higher than the earlier anticipated cost of about $30 million to $50 million.

Papa John's reported a net loss attributable to the company of $13 million or 41 cents per share, compared to a profit of $22 million or 60 cents, a year earlier.

Excluding items, Papa John's earned 20 cents per share missing analysts' estimates of 22 cents.

Revenue fell 15.7 percent to $364.01 million, missing Wall Street estimates of $393.7 million.

Reuters had reported last week that private equity firms including Bain Capital and CVC Capital Partners were interested in buying the pizza chain.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition. 

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Enjoy full access to Hospitality Ireland, our weekly email news digest, all website and app content, and every digital issue.
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