Remember when ordering pizza was exciting? You’d call Papa Johns, and soon a steaming hot pie would arrive at your door. But things have changed. The pizza giant that once dominated Friday nights across America is now struggling to stay relevant. With sales dropping by 4% in 2024 alone and the stock price tumbling from over $100 in 2021 to around $49 today, Papa Johns is showing serious signs of trouble. What’s going on with one of America’s most famous pizza chains? And should pizza lovers be worried about the future of their pepperoni fix?
Sales are dropping as customers choose cheaper options
If you’ve noticed that Papa Johns seems more expensive than it used to be, you’re not alone. Many customers are turning away from the chain because of high prices. In the fourth quarter of 2024, the company reported a 4% decline in North American sales. That might not sound like much, but for a massive chain with thousands of stores, it represents millions in lost revenue. Global sales fell by 8% compared to the same period in 2023. This marks the third straight quarter of falling sales, showing this isn’t just a blip but possibly a lasting problem.
While Papa Johns struggles, competitors like Domino’s and Pizza Hut are fighting for those lost customers with aggressive deals and value menus. Many customers are also skipping pizza altogether and choosing fast food options like McDonald’s and Wendy’s, which have stepped up their value game. The squeeze on household budgets from inflation means people are being more careful with their takeout dollars. Papa Johns’ CEO has admitted they need to be more competitive on price, but so far, their attempts haven’t stopped the slide in customer numbers.
Stock price has fallen dramatically since its peak
If you’re watching Papa Johns’ financial health, the stock price tells a worrying story. In 2021, the company’s stock was riding high between $100 and $133 per share. Fast forward to early 2025, and the picture looks very different. The stock has dropped to around $49, a massive 63% fall from its peak. This huge decline shows that investors are losing faith in the company’s future. While there was a small 26% bounce from February to March 2025, the stock is still far below where it once was. Investors are clearly worried about the company’s ability to turn things around.
The drop isn’t just about general market conditions. Financial analysts have been cutting their price targets for Papa Johns shares. Stifel recently lowered their target from $45 to $40, citing ongoing sales problems. They’re particularly concerned about how Papa Johns is trying to increase customer visits by lowering prices, which might be bringing in more transactions but at much lower value. This strategy might help short-term numbers but could hurt overall profits. The stock has already fallen about 32% just in the past year, showing that the downward trend continues.
Profits are taking a serious hit
Looking at Papa Johns’ bottom line doesn’t provide much comfort either. The company’s total revenue fell by 7.1% in the fourth quarter of 2024 compared to the same period in 2023. For the whole year, revenue was down 3.6% to $2.1 billion. Operating income also took a hit, dropping by $13 million in the fourth quarter. These numbers show that Papa Johns isn’t just losing customers – it’s losing money. For a public company that needs to keep shareholders happy, falling profits are a serious red flag.
The company did manage to increase its full-year operating income slightly, but this came mainly from selling off properties rather than from selling more pizza. When a company starts selling assets to boost its financial numbers, that’s often not a good sign for long-term health. It’s like selling your furniture to pay your rent – it works for a while but isn’t sustainable. For 2025, Papa Johns is forecasting adjusted EBITDA (a measure of profitability) of $200-220 million, which some analysts say falls short of expectations. This suggests the company doesn’t see a quick turnaround coming.
Emergency financing moves raise eyebrows
When companies start making major changes to their financing, it often signals concerns about cash flow. Papa Johns recently completed an amended credit agreement that extends their existing $600 million revolving credit facility to 2030 and adds a new $200 million loan. Why would a healthy company need to restructure its debt and add more borrowing capacity? While Papa Johns describes this as “strengthening its financial foundation,” others might see it as preparing for tough times ahead. It’s like refinancing your mortgage and taking out a home equity loan at the same time – sometimes it’s smart planning, but often it’s a response to financial pressure.
The company says the move is “leverage neutral,” meaning they’re not taking on more debt overall. But they are extending their credit availability and pushing out repayment dates. For a company facing declining sales, securing more flexible financing could be seen as a defensive move. They’re giving themselves more breathing room in case sales continue to fall. This type of financial maneuvering is common when companies are preparing for potential cash flow problems, raising questions about how confident leadership really is about their turnaround plans.
Quality concerns plague customer perception
Price isn’t the only reason customers are turning away from Papa Johns. Many have complained about a decline in quality compared to competitors. Even with the company’s long-standing “Better ingredients. Better pizza.” slogan, customers don’t seem convinced anymore. When people spend their hard-earned money on takeout pizza, they expect good value – a tasty pizza at a fair price. Many feel Papa Johns no longer delivers on that promise. Some have noted smaller portions, less generous toppings, or inconsistent quality from one location to another.
Customer perception matters enormously in the food industry. Once people decide a restaurant’s quality has declined, it’s very hard to change their minds. Papa Johns’ new CEO has acknowledged they need to focus on their core product and simplify their menu. They’re planning to amplify their “better ingredients, better pizza” message again. But will customers believe it? Many have already switched to competitors who they feel offer better value or quality. Winning back lost customers is much harder than keeping existing ones, especially when there are so many alternatives just a phone tap away.
Franchisees feel the squeeze of corporate decisions
Behind every Papa Johns store is an owner who’s invested their money and livelihood in the brand. These franchisees are feeling serious pressure as sales decline while corporate makes changes that affect their bottom line. For example, Papa Johns is increasing the fixed operating margin of its U.S. commissaries by 100 basis points over the next four years. While they’re offering rebates to help offset this change, it still means potentially lower profits for store owners. When franchisees struggle financially, the whole system becomes unstable.
There are growing concerns about franchisee profitability and the potential for store closures. Financial analysts have highlighted this risk, noting that commissary inefficiencies and price increases aimed at improving corporate margins could hurt franchisees. The company is reportedly having “tough conversations” with franchisees about maintaining a “growth mindset.” But if store owners can’t make enough profit, they might choose to close locations or switch to different brands. Store closures would create a downward spiral – fewer locations means less convenience for customers, which leads to fewer sales overall.
Turnaround plans sound familiar to industry watchers
When companies struggle, they often announce big turnaround plans. Papa Johns’ strategy under new CEO Todd Penegor includes focusing on core products, improving marketing, investing in technology, and refranchising select markets. These sound like solid ideas, but they’re also pretty standard playbook moves for struggling restaurant chains. The company is planning to increase its national marketing fund contribution by 20% and offer development incentives to attract growth-driven franchisees. They’re also talking about simplifying operations and creating a better app experience. But will these changes be enough?
The problem is that these types of turnaround plans often take years to show results, if they work at all. Meanwhile, competitors aren’t standing still. Domino’s and Pizza Hut are constantly innovating and improving their own operations. Fast food chains and grocery store frozen pizzas continue to improve their offerings too. Papa Johns is projecting only 2-5% system-wide sales growth for 2025, which isn’t particularly impressive for a company trying to regain lost ground. Their plan to open more stores (85-115 net new North America restaurants) might increase revenue, but if existing stores are struggling, adding more locations could just spread the problems wider.
The pizza industry as a whole faces tough conditions
Papa Johns isn’t suffering alone – the entire pizza industry is dealing with challenges. Higher costs for ingredients, labor, and delivery have forced most chains to raise prices. But while consumers understand inflation, they’re also tightening their belts. Many people who ordered pizza regularly during the pandemic have cut back as prices have risen. The competition for takeout dollars is fierce, with fast food chains offering deals that often beat pizza prices. Even grocery store frozen pizzas have improved in quality while remaining much cheaper than delivery.
Other major pizza chains like Pizza Hut are also facing challenges. The difference is how each company responds to these industry-wide pressures. Some are finding success with aggressive value deals, improved technology, or new menu innovations. So far, Papa Johns hasn’t found its winning formula. The company is the world’s third-largest pizza delivery company with more than 6,000 restaurants, but size alone doesn’t guarantee survival in today’s competitive food landscape. If they can’t adapt quickly to changing consumer preferences and economic pressures, even a giant like Papa Johns could continue to shrink.
What does all this mean for pizza lovers? While Papa Johns isn’t likely to disappear overnight, these warning signs suggest tough times ahead. The company is making efforts to turn things around, but reversing such significant declines won’t be easy. For consumers, the pizza landscape may continue to change, with some chains growing stronger while others struggle. Whether you’re a loyal Papa Johns customer or simply a pizza fan, it’s worth watching how this story unfolds – it might just change where your next pizza comes from.
