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Papa Johns has an eye toward Asia as its next expansion frontier.

Papa Johns announces its largest-ever franchise deal; plans to expand aggressively in China and beyond

Papa Johns is looking to bolster its international presence in new markets like China, Russia, and Germany starting with a franchise agreement in Southern China

After a successful period of significant growth during the pandemic, Papa Johns has an eye toward international expansion as its next target. The pizza chain announced Friday its largest-ever franchise deal (and CEO Rob Lynch believes one of the largest franchise deals in the restaurant industry) with Chinese private equity firm FountainVest Partners to open 1,350 new stores across South China over the next two decades.

“The motto kind of used to be that if you wanted to own a Papa Johns, and you could find a spot on a street and you had enough capital to build one, like, we would let you open a restaurant,” Lynch told Nation’s Restaurant News. “We’re much more selective with who our partners are now. We have much bigger requirements for people coming into the system: they have to have the capital to build restaurants at scale and the operating experience.”

FountainVest, for example, is one of the largest private equity firms in China, and as part of the deal, has also purchased a majority stake in current Papa Johns franchisee CFB Group, which owns and operates approximately 160 restaurants in Shanghai and across southern China.

Currently, Lynch said, Papa Johns is in 50 countries, whereas their pizza industry competitors are in 100+. Pizza Hut particularly has a massive presence in China and has become a part of mainstream culture in multiple Asian countries. He thinks Papa Johns could take advantage of its relative whitespace in Asia to gain traction in places where the company has zero presence and also in markets where it the Papa Johns brand is under-penetrated.

“We’re not looking to bring someone on board that was a bank teller last month and now want to open a pizzeria in Uzbekistan,” Lynch said, adding that they’re open to exploring options in Australia and Brazil where the company does not currently have a footprint, and also in Cambodia and Germany where Papa John’s just opened for the first time last year.

Papa Johns chief development officer Amanda Clark added, “we’re looking at countries with high GDP, large populations, a high number of people that want to eat pizza, places where our competitors are and we're not. So, what are those countries that we can go after? And how can we improve our pace of growth?”

Papa Johns has absolutely been focused on improving its pace of growth. Development understandably slowed in 2020 with only five net store openings, but in Sept. 2020, the company signed its largest development deal in North America with 49 stores planned in the Philadelphia market. The Louisville-based pizza chain followed that up with another record-breaking franchise announcement the following September, with a 100-unit franchise deal announced in Texas.

Despite supply chain and labor market issues, Papa Johns is confident in its international brand expansion capabilities moving forward.

“We want to make sure that we go into a market, we are going in with a strategy and a plan that gives the franchisees the highest probability of success,” Lynch said.

Contact Joanna at [email protected]

Find her on Twitter: @JoannaFantozzi

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