Papa John's International Inc. is poised for a significant return to the Indian market this October, embarking on an ambitious plan to establish 650 new stores across the nation by 2035. This strategic maneuver marks the pizza giant's re-entry into a challenging yet promising territory it previously exited in 2017. The company's renewed focus on India underscores a long-term vision for growth, leveraging the country's vast consumer base to build a formidable presence in the competitive fast-food landscape.
The global pizza chain, recognized as the third-largest in terms of delivery, will initiate its renewed operations in Bengaluru. This expansion is a collaborative effort, facilitated by joint master franchisees Pulsar Capital and the UAE-based PJP Investments Group. Vish Narain, a managing partner at Pulsar Capital, emphasized the strategic importance of this re-entry, highlighting the untapped potential within India's quick-service restaurant segment.
This aggressive expansion strategy is underpinned by Papa John's solid financial performance in its recent second quarter. The company reported adjusted earnings per share of $0.41, surpassing analyst expectations, and a revenue increase of 4.2% to $529.17 million. A notable contribution to this growth was a $20.3 million rise in commissary revenues. Globally, system-wide sales reached $1.26 billion, indicating a 4% year-over-year increase, with international comparable sales also showing a 4% rise. During this period, Papa John's successfully inaugurated 45 new restaurants worldwide, with 26 of these located in international markets, demonstrating its ongoing global momentum.
However, Papa John's re-entry into India is not without its hurdles. The Indian fast-food sector is currently navigating a period of economic headwinds, characterized by cautious consumer spending due to stagnant wage growth. This environment has already led to closures of underperforming outlets by established players, such as Devyani International Ltd., a Pizza Hut franchisee, and has prompted Sapphire Foods India Ltd. to adopt a conservative approach to expansion. Papa John's will also face stiff competition from industry leaders like Domino's Pizza Inc., which commands a significant market share with over 2,200 outlets in India, and Pizza Hut, with approximately 950 stores.
Despite these immediate challenges, Pulsar Capital maintains a optimistic outlook on India's long-term potential, citing the country's massive population of 1.4 billion as a key driver for future growth. According to Narain, the pizza segment in India remains largely underserved, suggesting ample room for new entrants and existing players to expand without reaching market saturation for many years to come. Looking ahead to 2025, Papa John's forecasts a system-wide sales growth of 2%-5% and plans for 180-200 new international restaurant openings. The company also anticipates adjusted EBITDA to fall within the range of $200-$220 million, signaling confidence in its global and new market strategies.
The move represents a bold commitment by Papa John's to recapture and grow its market share in one of the world's most populous countries. By focusing on strategic partnerships and leveraging its strong brand, the company aims to overcome past challenges and establish a robust and profitable business in India's dynamic culinary landscape.