LOUISVILLE Ky. Papa John's International Inc. reported a 7-percent increase in fourth-quarter profit and reaffirmed its outlook for 2010, in which it plans to maintain its franchisee incentives.
For the Dec. 27-ended quarter, Papa John's recorded net income of $13.7 million, or 49 cents per share, which included an 8-cent benefit from finalizing certain income tax issues and the consolidation of results from its franchisee-owned purchasing company BIBP Commodities Inc. That result marked an improvement from a year earlier, when it posted fourth-quarter net income of $12.8 million, or 46 cents per share, which had a 2-cent negative impact from the noted items.
Revenue in the latest fourth quarter rose slightly, to $280.5 million from $279.6 million last year, and reflected the sale of 62 underperforming restaurants to franchisees, Papa John's said. Domestic same-store sales dipped 0.5 percent for the fourth quarter.
“Our system had a solid fourth quarter and a very good 2009 in a challenging consumer environment,” said John Schnatter, Papa John’s founder, chairman and chief executive. “The investments made in our system over the last 15 months, supported by a favorable commodities environment, helped drive positive transaction momentum and some of the most profitable unit economics in the history of our company.”
Full-year net income, including benefits from noted items, was $57.5 million in 2009, or $2.06 per share, compared with net income of $36.8 million in 2008, or $1.30 per share. Consolidated revenue rose 2.3 percent to $1.1 billion. Domestic same-store sales were flat in 2009.
The company reaffirmed its earnings guidance for 2010 to be range between $1.70 and $1.90 per share, excluding the consolidation of BIBP.
Papa John’s celebrated its 25th anniversary in 2009 by offering franchisees financial incentives for opening locations in the United States, waiving the franchise fee and royalties for the first 12 months while offering a $10,000 bonus for opening ahead of schedule.
The chain is carrying those goals over to this year with its 2010 U.S. Development Incentive Program. Papa John’s again will waive the franchise fee for new locations and will reduce the royalty rate for the first 12 months for restaurants that open on time, including a zero-percent royalty for units that are opened by June. The company also is providing franchisees with two Middleby-Marshall pizza ovens, which may be purchased for $50 after locations are operating for two years.
Papa John’s opened 11 net locations in the fourth quarter and 89 net restaurants for the full year. It ended the year with 588 corporate and 2,193 franchised locations in the United States and 26 corporate and 662 franchised restaurants in international markets.
Contact Mark Brandau at [email protected].