Where Papa John's (Papa Johns?) may close more stores if sales continue to decline

2 months ago by James Mattone in Facts, Trends

Papa John's ($NASDAQ:PZZA) is still slumping almost a year after founder and then-CEO John Schnatter blamed the NFL for declining pizza sales, and three months removed from his messy resignation.

In Papa John's most recent quarterly shareholder update from August 7, the company reported a 10.5% decrease in July same-store sales. It directly cited "recent negative publicity surrounding the company’s brand" as a reason behind decrease. The pizza chain submitted filings to the U.S. Patent and Trade Office to show its desire to drop the apostrophe from its name, most likely to stop the hemorrhaging associated with its ousted face of the company.

According to consumer and retail equity analyst Chris O'Cull, should Papa John's — or Papa Johns — continue to face declining sales, 150 to 250 stores in "noncore markets, the West Coast and the Northeast" could face closure.

Currently, there are 3,370 Papa John's franchisee and company owned stores in America.

Texas claims the most stores out of all 50 states plus Washington D.C. with 314 locations, while California has the most locations in the west with 214. In the Northeast, Maryland claims the most stores in the Mid-Atlantic states, while Massachusetts has the most Papa John's in New England.

State Store Count State Store Count
TX 314 KS 34
FL 303 WI 32
CA 214 IA 30
NC 182 MS 30
OH 176 WV 27
GA 174 AR 24
VA 147 NV 23
IN 139 MA 18
TN 120 NM 17
KY 114 OR 17
MD 113 DE 17
PA 102 HI 14
IL 95 NE 13
AL 92 ID 12
NY 86 ND 11
SC 80 MT 11
MO 75 DC 10
AZ 74 AK 10
LA 59 CT 8
NJ 59 SD 8
CO 54 WY 6
WA 50 ME 4
MI 49 RI 4
MN 43 NH 3
OK 37 VT 1
UT 35

Houston, Texas, a locale that tends to have plenty of fast food locations, leads the list of cities with the most Papa John's stores with 35. Brooklyn, New York, the home of pizza meccas such as Grimaldi's and Spumoni Gardens, claims 18 stores to rank the highest out of all Northeast cities. 

State City City (Count)
TX Houston 35
TX San Antonio 26
FL Miami 24
IN Indianapolis 23
KY Louisville 20
NY Brooklyn 18
FL Jacksonville 18
OH Cincinnati 17
AZ Phoenix 16
TX Austin 16
NV Las Vegas 16
NC Charlotte 16

While we cannot read the minds of those who would enact closures should Papa John's sales continue to decline, we do have data on the other giant pizza chains Domino's ($NYSE:DPZ) and Pizza Hut ($NYSE:YUM). Two months ago, we took a slice of the data we had to show who was winning the "pizza war," which was Yum! Brands' child Pizza Hut.

Now with more updated data, we can see where Papa John's is distant and close to its competitors, which could give clues to where it may shut down stores in case of a continued decline.

Where Papa John's could get kneaded out

Texas and California lead the list of where Pizza Hut and Domino's are dominating Papa John's in terms of store count, with Pennsylvania leading all Northeastern states with 118 more Pizza Huts and 102 more Domino's Pizza stores than the number of Papa John's locations.

Entity Name State Stores vs. Papa John's
Pizza Hut TX 389
Domino's Pizza CA 319
Domino's Pizza TX 264
Pizza Hut CA 254
Pizza Hut MO 159
Pizza Hut KS 132
Domino's Pizza NY 130
Pizza Hut IL 129
Pizza Hut PA 118
Domino's Pizza MA 108
Pizza Hut OH 102
Domino's Pizza PA 102

Along with New York and Massachusetts, two Domino's hot beds, Pennsylvania could be a target for store closures if its competitors are proving to be too much for the Papa to handle.

When looking at the states where Papa John's is winning the pizza war the Northeast crops up again.

Entity Name State Stores vs. Papa John's
Domino's Pizza IN -44
Domino's Pizza KY -26
Pizza Hut DE -8
Pizza Hut DC -5
Pizza Hut NJ -3
Pizza Hut MD -2
Domino's Pizza DC -1
Pizza Hut RI -1

Outside of Indiana, Kentucky and Washington D.C., Papa John's has a few more stores than Pizza Hut in Delaware, New Jersey and Maryland, and one more store in Rhode Island compared to the Hut. While Domino's absolutely crushes New Jersey and Rhode Island with double-digit leads on locations, it only has a handful more stores in Delaware and Maryland.

To go by Hotelling's Model of Spatial Competition (read: similar stores close together is good for all businesses involved), it seems Maryland and Delaware could be targets if business in those areas deem those states "non-core markets."

James Mattone

James is a recent Boston University graduate who calls the world of esports and video games his home. As a young journalist, he has already covered two E3 expos a...

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