Fast-food pizza chain Papa John’s (NASDAQ: PZZA) missed Wall Street’s revenue expectations in Q1 CY2026, with sales falling 7.7% year on year to $478.6 million. Its non-GAAP profit of $0.32 per share was 13.6% below analysts’ consensus estimates.
Is now the time to buy Papa John's? Find out by accessing our full research report, it’s free.
Papa John's (PZZA) Q1 CY2026 Highlights:
- Revenue: $478.6 million vs analyst estimates of $485.5 million (7.7% year-on-year decline, 1.4% miss)
- Adjusted EPS: $0.32 vs analyst expectations of $0.37 (13.6% miss)
- Adjusted EBITDA: $47.76 million vs analyst estimates of $51.21 million (10% margin, 6.7% miss)
- EBITDA guidance for the full year is $205 million at the midpoint, in line with analyst expectations
- Operating Margin: 4.3%, in line with the same quarter last year
- Free Cash Flow was -$6.23 million, down from $19.11 million in the same quarter last year
- Locations: 6,020 at quarter end, up from 6,019 in the same quarter last year
- Same-Store Sales fell 3.9% year on year (-1.3% in the same quarter last year)
- Market Capitalization: $1.11 billion
Company Overview
Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ: PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years.
With $2.01 billion in revenue over the past 12 months, Papa John's is a mid-sized restaurant chain, which sometimes brings disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale.
As you can see below, Papa John's grew its sales at a sluggish 3.5% compounded annual growth rate over the last seven years.
This quarter, Papa John's missed Wall Street’s estimates and reported a rather uninspiring 7.7% year-on-year revenue decline, generating $478.6 million of revenue.
Looking ahead, sell-side analysts expect revenue to decline by 4.9% over the next 12 months, a deceleration versus the last seven years. This projection is underwhelming and implies its menu offerings will face some demand challenges.
ALSO WORTH WATCHING: Nvidia’s Quiet Partner. Nvidia’s chips cost a hundred grand. The connectors that make them work cost even more. One company makes them all.
Every AI server needs specialized infrastructure the chip companies don’t make. High-speed cables. Power connectors. Thermal sensors. This 90-year-old company built a monopoly on it. The AI boom just started. This stock is still flying under the radar. Claim The Stock Ticker Here for FREE.
Restaurant Performance
Number of Restaurants
Papa John's sported 6,020 locations in the latest quarter. Over the last two years, it has opened new restaurants quickly, averaging 1.4% annual growth. This was faster than the broader restaurant sector. Furthermore, one dynamic making expansion more seamless is the company’s franchise model, where franchisees are primarily responsible for opening new restaurants while Papa John's provides support.
When a chain opens new restaurants, it usually means it’s investing for growth because there’s healthy demand for its meals and there are markets where its concepts have few or no locations.
Same-Store Sales
The change in a company's restaurant base only tells one side of the story. The other is the performance of its existing locations, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales gives us insight into this topic because it measures organic growth at restaurants open for at least a year.
Papa John’s demand has been shrinking over the last two years as its same-store sales have averaged 2.1% annual declines. This performance is concerning - it shows Papa John's artificially boosts its revenue by building new restaurants. We’d like to see a company’s same-store sales rise before it takes on the costly, capital-intensive endeavor of expanding its restaurant base.
In the latest quarter, Papa John’s same-store sales fell by 3.9% year on year. This decrease represents a further deceleration from its historical levels. We hope the business can get back on track.
Key Takeaways from Papa John’s Q1 Results
We struggled to find many positives in these results. Its EBITDA missed and its revenue fell slightly short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 3.1% to $32.75 immediately following the results.
Papa John's may have had a tough quarter, but does that actually create an opportunity to invest right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
