Papa Johns 2010 Annual Report Download - page 11

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franchised restaurants (154 to 168 domestic and 143 to 157 international). We also expect approximately
120 restaurants to close during 2011, the majority of which are expected to be domestic franchised units.
Domestic and international franchised unit expansion is expected to continue with an emphasis on
markets in the Americas, the United Kingdom, the Middle East and Asia. We expect our expansion in
Asia to include a significant focus in China.
Our Company-owned expansion strategy is to continue to open domestic restaurants in existing markets
as appropriate, although most of our Company-owned markets are well penetrated, thereby increasing
consumer awareness and enabling us to take advantage of operational and marketing efficiencies. Our
experience in developing markets indicates that market penetration through the opening of multiple
restaurants in a particular market results in increased average restaurant sales in that market over time.
We have co-developed domestic markets with some franchisees or divided markets among franchisees,
and will continue to utilize market co-development in the future, where appropriate.
Of the total 2,871 domestic units open as of December 26, 2010, 591 or 21% were Company-owned
(including 127 units owned in joint venture arrangements with franchisees in which the Company has a
majority ownership position). The Company expects the percentage of domestic Company-owned units
to decline over the next several years, because future net openings will be more heavily weighted toward
franchise units.
Restaurant Design and Site Selection
Backlit awnings, neon window designs and other visible signage characterize the exterior of most Papa
John’s restaurants. A typical inline or endcap domestic Papa John’s restaurant averages 1,100 to 1,500
square feet. Papa John’s restaurants are designed to facilitate a smooth flow of food orders through the
restaurant. The layout includes specific areas for order taking, pizza preparation and routing, resulting in
simplified operations, lower training and labor costs, increased efficiency and improved consistency and
quality of food products. The typical interior of a Papa John’s restaurant has a vibrant color scheme, and
includes a bright menu board, custom counters and a customer carryout area. The counters are designed
to allow customers to watch the team members slap out the dough and put sauce and toppings on pizzas.
A substantial majority of domestic restaurants are required to have an approved lobby enhancement re-
design package installed by the end of 2011. The estimated cost of the new package ranges from $15,000
to $20,000 for each restaurant. Approximately 400 Company-owned units will be required to install the
new design package during 2011.
Most of our international Papa John’s restaurants are between 900 and 1,400 square feet; however, in
order to meet certain local customer preferences, many international restaurants have been opened in
larger spaces to accommodate both dine-in and restaurant-based delivery service, typically with 35 to 100
seats. We expect the substantial majority of our future international openings to focus on delivery and
carryout units with limited seating.
We define a “traditional” domestic Papa John’s restaurant as a delivery and carryout unit that services a
defined trade area. We consider the location of a traditional restaurant to be important and therefore
devote significant resources to the investigation and evaluation of potential sites. The site selection
process includes a review of trade area demographics, target population density and competitive factors.
A member of our development team inspects each potential domestic Company-owned restaurant
location and substantially all franchised restaurant locations and the surrounding market before a site is
approved. Our restaurants are typically located in strip shopping centers or freestanding buildings that
provide visibility, curb appeal and accessibility. Our restaurant design can be configured to fit a wide
variety of building shapes and sizes, which increases the number of suitable locations for our restaurants.