Papa John’s International Inc. (NASDAQ:PZZA) announced plans to re-enter India by October with an ambitious target of 650 stores by 2035, marking the pizza chain’s return to a market it abandoned in 2017 due to underperformance.
The world’s third-largest pizza delivery company will launch operations in Bengaluru through joint master franchisees Pulsar Capital and UAE-based PJP Investments Group, according to Vish Narain, managing partner at Pulsar Capital, Reuters reported.
Strong Q2 Fundamentals Support Expansion Strategy
The India announcement follows Papa John’s robust second-quarter performance, with adjusted EPS of $0.41, beating consensus estimates of $0.34. Quarterly revenue climbed 4.2% to $529.17 million, driven by $20.3 million in increased commissary revenues.
Global system-wide sales reached $1.26 billion, up 4% year-over-year, with international comparable sales increasing 4%. The company opened 45 new restaurants globally, including 26 in international markets.
Market Challenges Present Investment Risks
India’s fast-food sector faces significant headwinds as cash-strapped urban consumers reduce spending due to slow wage growth. Devyani International Ltd., a Pizza Hut franchisee, has closed underperforming stores, while Sapphire Foods India Ltd. remains cautious with expansion.
Papa John’s will compete against Domino’s Pizza Inc. (NYSE:DPZ) with over 2,200 Indian outlets and Pizza Hut’s approximately 950 stores.
Long-Term Growth Thesis
Despite near-term challenges, Pulsar Capital sees India’s 1.4 billion population as a long-term opportunity. “The category is under-penetrated, so we are many years away from saturation,” Narain told Reuters.
For 2025, Papa John’s projects system-wide sales growth of 2%-5% and plans 180-200 international restaurant openings. Adjusted EBITDA is forecast at $200-220 million.
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