Schnatter: Papa John’s “could soon be in a position where the dividends it pays out to shareholders exceed the free cash flow it’s generating"
LOUISVILLE, KY – Ahead of Papa John’s International’s Q3 Earnings Call, the company’s founder, John Schnatter, has issued a warning about the outlook for the company’s future performance. In a recent opinion article reflecting on recent poor data trends for the company, Schnatter predicts that without a significant change of course, the company could face up to 500 store closings.
“Numbers speak for themselves. North American same-store sales have been declining for two and a half years. In the same period, pretax income fell by 30 percent, and I believe Q3 could show these trends getting worse,” Schnatter writes. “During the first half of 2025, Papa John’s had 41 net store closings. With the distribution curve of financially unhealthy stores today, my opinion is that net store closings could reach 200-500 in the next 30 months.”
In addition to facing the possibility of seeing roughly 14 percent of its North American stores shuttered, Schnatter worries that the company “could soon be in a position where the dividends it pays out to shareholders exceed the free cash flow it’s generating.”
Schnatter, who founded Papa John’s out of a broom closet in his father’s tavern in 1984, served as CEO of the company from 1990 until early 2005 and again from 2008 until 2018. Schnatter expresses deep sympathy for the franchisees who may be struggling. “There’s nothing I wouldn’t do to help the franchisees and the company turn this ship around,” he writes.
“The good news is it may not be too late. We’ve fixed it twice before by relentlessly focusing on product, people, and execution,” Schnatter writes. “That same formula can work again, but it requires leadership that prioritizes the long-term health of the business,” he continues. “There is still hope.”
John Schnatter is the founder and former Chairman and CEO of Papa John’s. To learn more visit: https://www.papajohnschnatter.com
“Numbers speak for themselves. North American same-store sales have been declining for two and a half years. In the same period, pretax income fell by 30 percent, and I believe Q3 could show these trends getting worse,” Schnatter writes. “During the first half of 2025, Papa John’s had 41 net store closings. With the distribution curve of financially unhealthy stores today, my opinion is that net store closings could reach 200-500 in the next 30 months.”
In addition to facing the possibility of seeing roughly 14 percent of its North American stores shuttered, Schnatter worries that the company “could soon be in a position where the dividends it pays out to shareholders exceed the free cash flow it’s generating.”
Schnatter, who founded Papa John’s out of a broom closet in his father’s tavern in 1984, served as CEO of the company from 1990 until early 2005 and again from 2008 until 2018. Schnatter expresses deep sympathy for the franchisees who may be struggling. “There’s nothing I wouldn’t do to help the franchisees and the company turn this ship around,” he writes.
“The good news is it may not be too late. We’ve fixed it twice before by relentlessly focusing on product, people, and execution,” Schnatter writes. “That same formula can work again, but it requires leadership that prioritizes the long-term health of the business,” he continues. “There is still hope.”
John Schnatter is the founder and former Chairman and CEO of Papa John’s. To learn more visit: https://www.papajohnschnatter.com
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