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Effect of Corporate Turmoil on Restaurant Performance


The results for the third quarter of fiscal 2018 posted by Papa John’s attest to the effect of negative publicity involving corporate in-fighting on consumer perception and patronage of restaurants.


For the quarter ended September 30th Papa John’s posted a loss of $13 million on revenue of $364 million.  Earnings, ignoring special charges and adjustments, can be compared to a net profit of $21.8 million for the corresponding quarter of fiscal 2017.  The company experienced a 16 percent downturn in revenue comparing the third quarter of 2017 with 2018.  North American comparable same-store sales declined 10 percent and international sales were 3 percent lower.


The Company projects that degradation of brand image will cost between $50 to $60 million for fiscal 2018 and together with special charges, adjusted diluted earnings per share will be in the range of $1.30 to $1.60 for the year and comparable same-store sales will be down by 6.5 percent to 8.5 percent for the entire year. 


Placing a best-face interpretation on results, Steve Ritchie, President and CEO commented, “Our third-quarter results continue to reflect the brand challenges we have face this year and were exacerbated by the negative impact of the media coverage that began on July 11th.  On an optimistic note he added, “These events are not going to define the future Papa John’s. During the quarter we took important action to help repair our brand reputation and we believe good progress has been made.”