Papa Johns Q3 sales fall 8.3% as “Unbox Better” plan rolls out

By Olivia Hart

Papa Johns’ North American same-store sales fell 8.3% in the third quarter of 2025, marking the ninth negative quarter in the past 10 periods, as the chain introduced its enterprise-wide “Unbox Better” plan. Global systemwide restaurant sales declined 5.6% to $1.15 billion, while domestic company-operated restaurants posted a 7.5% comparable-sales decrease and North American franchised restaurants fell 8.5%.

The chain opened 47 restaurants systemwide during the quarter, including 11 in North America and 36 in international markets. Net income fell to $3 million from $4 million, and adjusted EBITDA declined to $38 million from $48 million, showing that unit growth did not prevent weaker system performance.

North American comparable sales also fell 8.3% in Q2. Separately, Technomic’s Top 500 analysis found that chain restaurant sales slowed in 2025 as consumers cut back on dining, although coffee, beverage, snack and chicken concepts thrived.

What does Unbox Better change for guests and franchisees?

For guests, the plan promises more reasons to visit and more consistent pizza. For franchisees, it changes the advertising contribution, margin support and technology costs. For restaurant labor, it adds training while replacing manual systems with a modern point-of-sale platform.

CEO Todd Penegor attributed the results to continued pressure in a competitive operating environment and an intensifying pizza category. He said: “The plan is built around two priorities: strengthening our brand by giving customers more reasons to visit and strengthening our system to consistently deliver on their expectations.”

The company spent six months researching what consumers were saying about the brand. Penegor said consumers could not identify why Papa Johns deserves its “Better Ingredients, Better Pizza” positioning, and they doubted the company delivers that promise every day. The strategy spans menu innovation, operations and marketing, and organizes the response into seven focus areas:

• Food worth choosing: better pizza and a broader menu.
• Bring the brand to life: consistency at every customer touchpoint.
• Deliver great value: offers designed to encourage return visits.
• Deepen customer connection: relevant marketing, personalization and loyalty.
• Deliver on every promise: training and operational excellence on every pizza, every time.
• Reach more customers: footprint expansion and restaurant modernization.
• Help franchisees thrive: financial and operating support.

Franchisee economics. Papa Johns approved a reduction in the national advertising fund to 5% from 6%, while raising the local advertising fund to 2% from zero. The local contribution restores the level used before 2024, and 98.5% of franchisees supported the contributions. The company also aims to reactivate local marketing co-ops at their pre-2024 structure.

Penegor said the company also increased commissary margin support by 100 basis points and cut technology fees by another 25 basis points. That gives operators more margin and lower system costs, but the local marketing increase still requires spending from a zero base.

Technology and training. Papa Johns expects its new point-of-sale system to reach every restaurant by the end of 2027. It will replace a 35-year-old platform that Penegor said creates cumbersome, manual work, freeing employees to focus on making pizza.

The company also recommitted to in-restaurant training. The results do not disclose hardware, installation or implementation costs, so they do not establish who bears the capital expense; Papa Johns did reduce franchise technology fees by 25 basis points.

Customer feedback and marketing. A “Bounceback” campaign launches the following week, inviting customers to photograph their pizza and submit the image for a $5 incentive. Papa Johns did not specify whether the company or franchisees fund that incentive.

Papa Johns’ AI algorithm will scan the submitted pizzas and collect feedback, giving operators targets such as stronger cheese flavor or better dough. The campaign also brings consumers along with the broader “Unbox Better” journey.

Penegor said: “We want feedback from customers because we know they have a lot of choices and we need to earn it.” The company plans to solicit feedback several more times in 2027, using the findings to improve quality and rebuild trust.

Penegor described the franchise support as fuel for the turnaround, adding that the plan must do more than tell a story. He called it a commitment to own quality, improve continually and make good on the plan’s promises.

For now, 47 new restaurants alongside lower profit show a system adding units without lifting earnings. The test is whether better pizza execution, stronger local marketing and a newer operating system can reverse the comparable-sales slide as the POS rollout advances through 2027.