Papa Johns 2013 Annual Report Download - page 11

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3฀
฀
The฀average฀cash฀investment฀for฀the฀13฀domestic฀traditional฀Company-owned฀restaurants฀opened฀during฀
the฀2013฀fiscal฀year,฀exclusive฀of฀land,฀was฀approximately฀$280,000฀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฀also฀opened฀11฀Company-owned฀restaurants฀in฀China,฀with฀an฀average฀
investment฀cost฀of฀approximately฀$225,000.฀
฀
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฀domestic฀inline฀or฀end฀cap฀
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.฀
฀
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฀100฀seats.฀
฀฀฀
Development฀฀
฀
A฀total฀of฀386฀Papa฀John’s฀restaurants฀were฀opened฀during฀2013,฀consisting฀of฀30฀Company-owned฀(19฀in฀
North฀America฀and฀11฀in฀Beijing฀and฀North฀China)฀and฀356฀franchised฀restaurants฀(152฀in฀North฀America฀
and฀ 204฀ international),฀ while฀ 121฀ Papa฀ John’s฀ restaurants฀ closed฀ during฀ 2013,฀ consisting฀ of฀ three฀
Company-owned฀(two฀in฀North฀America฀and฀one฀in฀Beijing)฀and฀118฀franchised฀restaurants฀(87฀in฀North฀
America฀and฀31฀international).฀฀
฀
During฀2014,฀we฀expect฀net฀unit฀growth฀of฀approximately฀220฀to฀250฀units,฀approximately฀70%฀of฀which฀
will฀ open฀ in฀ international฀ markets.฀ International฀ franchised฀ unit฀ expansion฀ includes฀ an฀ emphasis฀ on฀
markets฀in฀the฀Americas,฀the฀United฀Kingdom,฀the฀Middle฀East฀and฀Asia.฀฀
฀
Although฀ most฀ of฀ our฀ domestic฀ Company-owned฀ markets฀ are฀ well-penetrated,฀ our฀ Company-owned฀
growth฀ strategy฀ is฀ to฀ continue฀ to฀ open฀ domestic฀ restaurants฀ in฀ existing฀ markets฀ as฀ appropriate,฀ 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.฀
฀