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Papa John's (PZZA) Ties Up to Open 1,350 Stores in China by 2040

Papa John's International, Inc. PZZA recently partnered with FountainVest Partners in an effort to expand its presence in China, which is the world’s fastest-growing pizza delivery market. Per the agreement, the company is planning to open more than 1,350 new stores across South China by 2040. This franchisee development agreement is the biggest in Papa John's history.

Rob Lynch, president and CEO of Papa John’s, said “Papa Johns has enormous global development whitespace in the US and in attractive growth markets, especially relative to our peers. Our new development agreement with FountainVest alone stands to grow Papa Johns current global unit count by 25%.”

Over the past year, Papa John's has set foot in 15 new countries, which include Spain, Portugal, Germany, Cambodia, Pakistan, France and Poland. The recent development will help drive the company’s top line.

Shares of the company have gained 38.2% in the past year, compared with the industry’s growth of 8.9%.

Image Source: Zacks Investment Research

International Expansion & Focus on Franchising

Many of Papa John’s restaurants are located in international markets like the U.K. and Chile, continue to perform strongly. The company’s optimized restaurant model, brand design enhancements and increased integration with third-party aggregators to boost its accessibility channels will drive performance.

Papa John’s is committed to developing and maintaining a strong franchise system. The Zacks Rank #3 (Hold) company is continually striving to eliminate barriers to expansion in existing international markets and identify new market opportunities. Over the next few years, the company plans to increase its international units, a large portion of which will be franchised.

During the third quarter of fiscal 2020, the company collaborated with HB Restaurant Group to boost its presence in Philadelphia and the southern New Jersey market. Under the development agreement, the company will open 49 new stores between 2021 and 2028. The company intends to tap growth opportunities in France and Italy. For fiscal 2021, Papa John’s anticipates opening between 220 and 260 net new restaurants globally. This represents approximately 4.5-5% growth in its system for the year.

As of Sep 26, the company had a global restaurant count of 5,569, operating in 50 countries and territories worldwide. The company expanded its partnership with Drake Food Service International to open more than 220 Papa John’s restaurants by 2025.

Key Picks

Some better-ranked stocks in the same space include Chuy's Holdings, Inc. CHUY, Arcos Dorados Holdings Inc. ARCO and McDonald's Corporation MCD.

Chuy's Holdings currently carries a Zacks Rank #2 (Buy). CHUY has reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 52.7%. Shares of the company have increased 6% in the past month.

The Zacks Consensus Estimate for Chuy's Holdings current financial-year sales and EPS suggests growth of 23.8% and 115.5%, respectively, from the year-ago period’s levels. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arcos Dorados carries a Zacks Rank #2. ARCO has a long-term earnings growth of 42.9%. Shares of the company have increased 14.4% in the past three months.

The Zacks Consensus Estimate for Arcos Dorados current financial-year sales and EPS suggests growth of 31% and 112.5%, respectively, from the year-ago period’s levels.

McDonald’s carries a Zacks Rank #2. A robust drive-thru presence and investments in delivery and digitization in the past few years have helped the company to tide over the pandemic. The company has a trailing four-quarter earnings surprise of 6.8%, on average.

The Zacks Consensus Estimate for McDonald's current financial year sales and EPS suggests growth of 20.9% and 55.7%, respectively, from the year-ago period’s levels. MCD has rallied 27.5% in the past year.


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McDonald's Corporation (MCD): Free Stock Analysis Report
 
Papa John's International, Inc. (PZZA): Free Stock Analysis Report
 
Chuy's Holdings, Inc. (CHUY): Free Stock Analysis Report
 
Arcos Dorados Holdings Inc. (ARCO): Free Stock Analysis Report
 
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