, UK
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This is what drove most of Papa Johns Q3 2023 growth

However, lower North America commissary revenues offset some of the gains.

Papa Johns revenues from domestic company-owned restaurants increased by $11.1m in the third quarter of 2023, which represented a substantial portion of the revenue growth, generated mostly by a 5.9% increase in same-store sales.

Total revenues increased by 2.4%, or $12.3m in Q3, compared to the same quarter the previous year, and even excluding the impact of acquiring international restaurants, revenues still increased by 0.9%.

Meanwhile, operating income increased by $12.4m to $31.9m, primarily driven by improved North America comparable sales, lower food costs, and operational efficiency improvements.

However, this year was not without challenges for Papa Johns. Lower North America commissary revenues due to decreased commodity prices in 2023 compared to 2022 offset some of the revenue gains.

Papa Johns also incurred higher variable compensation expenses, employee benefits costs, and depreciation expenses compared to the previous year. Operating losses from the recently acquired UK Company-owned restaurants also partially offset the increase in operating income.

Adjusted operating income remained consistent with the previous year, indicating that the company's core operational performance did not see significant improvement.

“As we evolve our commissary business model, we will be increasing our fixed operating margin by 100 basis points in each of the next four years, from 4% in 2023 to 8% in 2027. Concurrently, we will be offering new opportunities for our franchisees to earn annual incentive-based rebates as they increase volume and open new restaurants, which will drive even more continued productivity for our system,” Rob Lynch, Papa Johns president and CEO said.

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