Papa John's (PZZA) and The Bajco Group Expand Partnership

Papa John’s International, Inc. PZZA strengthens its partnership with franchisee Nadeem Bajwa and his company, The Bajco Group. The collaboration aims to expand PZZA's presence in North America, with plans to open 50 new stores by 2028. The Bajco Group, a long-term franchisee, has been integral to PZZA's growth, making this expansion a strategic move for the company.

The new agreement will expand Papa John’s footprint in The Bajco Group’s existing markets across the Midwest and Arizona, Pennsylvania and Florida, furthering Bajwa’s ambition to own 500 Papa John’s restaurants. This adds to the more than 200 restaurants the franchisee currently operates.

Advancing Towards Back to Better 2.0 Strategy

The move aligns with its Back to Growth Program (B2G Program), a new initiative aimed at accelerating growth in North America as part of its Back to Better 2.0 strategy. This program is expected to enhance restaurant-level margins within the first five years of new restaurant operations, resulting in significant cost savings in restaurant P&Ls. The anticipated outcome includes improved cash-on-cash returns for franchisees, increased market presence for Papa John’s and the attraction of growth-oriented franchisees.

Papa John’s is bolstering its North America development infrastructure in line with the program. The company is reinforcing its development team through strategic hires aimed at attracting new, growth-oriented franchisees and supporting existing ones to drive accelerated franchisee growth.

Price Performance

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Shares of Papa John's have declined 11% in the past three months against the industry’s growth of 1.3%. Although it has underperformed the industry in the said period, the company is likely to benefit from the expansion of its global footprint and enhancements in digital solutions and marketing platforms. Also, focus on product innovation and partnerships bodes well.

Papa John’s is committed to developing and maintaining a strong franchise system. The company is consistently striving to eliminate barriers to expansion in existing international markets and identify new market opportunities. Papa John’s opened 36 net new restaurants in North America during the fiscal 2023 fourth quarter. In the international markets, the company opened 53 new restaurants.

As of Dec 31, the company had a global restaurant count of 5,906, with operations in 50 countries and territories worldwide. Over the next several years, the company plans to increase its international units, a large portion of which will be franchised.

Zacks Rank & Key Picks

Papa John's currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the Zacks Retail-Wholesale sector have been discussed below.

Abercrombie & Fitch Co. ANF currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

It has a trailing four-quarter earnings surprise of 715.6%, on average. The stock has risen 323.3% in the past year. The Zacks Consensus Estimate for ANF’s fiscal 2024 sales and earnings per share (EPS) implies growth of 5.6% and 19.1%, respectively, from the year-ago levels.

Burlington Stores, Inc. BURL currently flaunts a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 10.1%, on average. The stock has risen 0.9% in the past year.

The Zacks Consensus Estimate for BURL’s fiscal 2024 sales and EPS indicates a rise of 10.2% and 22.3%, respectively, from the year-ago levels.

The Gap, Inc. GPS currently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 180.9%, on average. The stock has risen 124.2% in the past year.

The Zacks Consensus Estimate for GPS’ fiscal 2024 sales and EPS implies a decline of 0.3% and 4.9%, respectively, from the year-ago levels.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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