Papa Johns 2014 Annual Report Download - page 16

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growth depends on the maturity of the market and other factors in specific domestic and international
markets, with overall unit growth expected to come increasingly from international markets.
Restaurant Sales and Investment Costs
We are committed to maintaining strong restaurant unit economics. In 2014, the 646 domestic Company-
owned restaurants included in the full year’s comparable restaurant base generated average annual unit
sales of $1.06 million. Our North American franchise restaurants, which included 2,307 restaurants in
2014, generated average annual unit sales of $834,000. North American franchise restaurant sales are
lower than Company-owned restaurants as a higher percentage of our Company-owned restaurants are
located in more heavily penetrated markets.
The average cash investment for the 11 domestic traditional Company-owned restaurants opened during
2014, exclusive of land, was approximately $283,000 per unit, excluding tenant allowances that we
received. With few exceptions, domestic restaurants do not offer a dine-in area, which reduces our
restaurant capital investment.
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 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. A typical traditional domestic Papa
John’s restaurant averages 1,100 to 1,500 square feet with visible exterior signage.
“Non-traditional” Papa John’s restaurants generally do not provide delivery service but rather provide
walk-up or carry out service to a captive customer group within a designated facility, such as a food court
at an airport, university or military base or an event-driven service at facilities such as sports stadiums or
entertainment venues. Non-traditional units are designed to fit the unique requirements of the venue.
All of our international restaurants are franchised, except for 49 Company-owned restaurants in Beijing
and North China. In 2014, we opened two Company-owned restaurants in China with an average
investment cost of approximately $290,000. Most of our international Papa John’s restaurants are slightly
smaller and average between 900 and 1,400 square feet; however, in order to meet certain local customer
preferences, some international restaurants have been opened in larger spaces to accommodate both dine-
in and restaurant-based delivery service, typically with 35 to 140 seats.
Development
A total of 388 Papa John’s restaurants were opened during 2014, consisting of 14 Company-owned (12 in
North America and two in Beijing and North China) and 374 franchised restaurants (132 in North
America and 242 international), while 153 Papa John’s restaurants closed during 2014, consisting of 11
Company-owned (four in North America and seven in Beijing) and 142 franchised restaurants (86 in
North America and 56 international), representing net global unit growth of 235 restaurants.
During 2015, we expect net unit growth of approximately 220 to 250 units, approximately 75% of which
will open in international markets. International franchised unit expansion includes an emphasis on
existing markets in the Americas, the United Kingdom and Asia.