Consistent with its focus on international expansion,
Papa John's International
(
PZZA
) recently opened its first restaurant in Baku, Azerbaijan. This
Louisville, Kentucky-based restaurateur now plans to spread across
the Azerbaijan market in association with PJA Limited, over the
next few years.
PJA Limited offers dine-in and delivery services and has superior
local market knowledge. The above mentioned deal affirms
management's intent to make Azerbaijan one of the prime markets for
international expansion considering its vibrant economy. Azerbaijan
is a strategic fit for new openings, as it is an important tourist
destination and boasts an abundance of natural resources.
The country's capital, Baku, is particularly an oil-rich city. Its
petroleum exports make it a large contributor to Azerbaijan's
economy. The company seeks to fully capitalize on the country's
potential. Papa John's will now cater to more than 2 million
residents in Baku.
According to Euromonitor, demand for pizza consumer food service
is higher in Azerbaijan. It is observed that the country's younger
population is more inclined toward western fast-food chains.
Moreover, the saturation in the domestic pizza category along with
the emergence of other quick service brands have led major pizza
companies to venture outside the border in search of better
opportunities.
Papa John's is not the only U.S. based food chain that is expanding
in Azerbaijan;
The Wendy's Co.
(
WEN
) is also tapping the market in association with the Wissol Group.
Papa John's opened 67 restaurants and closed 27 restaurants in its
second quarter 2012, representing a worldwide increase of 6.4%. As
of June 24, 2012, Papa John's had 3,973 restaurants in 50 states
across 33 countries.
By the next six years, the company expects to open approximately
1,500 restaurants, including 300 in North America and 1,200 in the
international market. At the end of the second quarter, Papa John's
had 855 restaurants operating outside the United States. Papa
John's has been operating in the international arena for 13 years.
For 2012, Papa John's expects comparable store sales in the range
of 4%-5% on the international front, and the same for the domestic
front is expected to be in the range of 2%-3%.
Papa John's currently carries a Zacks #2 Rank, implying a
short-term 'Buy' rating. We also reiterate our long-term
'Outperform' recommendation on the stock.
PAPA JOHNS INTL (PZZA): Free Stock Analysis
Report
WENDYS CO/THE (WEN): Free Stock Analysis Report
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