Papa Johns is selling stores in Washington D.C. and Baltimore to a franchisee. | Photo: Shutterstock.
Papa Johns on Tuesday said it completed the “strategic refranchising” of a joint venture operation in the Baltimore and Washington, D.C. markets as the company shifts away from operating its own restaurants.
Chris Patel of Pie Investments has acquired 85 locations in the market that had been operated by Colonel’s Limited, LLC, a joint-venture operation between Papa Johns and the franchisee Steeplechase Express.
William Freitas, one of Papa Johns’ longest-tenured operators who oversaw Colonel’s Limited, is retiring.
As part of the deal, Patel has agreed to open another 52 locations in the Philadelphia, Washington, D.C., and Baltimore markets by 2030. Pie Investments currently operates 150 locations, making the company one of Papa Johns’ largest operators. Its goal is to have 250 locations by 2030.
Terms of the deal were not disclosed.
The refranchising comes as Papa Johns is looking to reduce its company holdings. The pizza chain finished the third quarter with 545 of its 3,507 North America locations, or about 16% of the chain’s domestic locations.
The company earlier this month, however, said it plans accelerate its plans to sell many of those corporate units to franchisees over the next two years. CEO Todd Penegor had hinted that the 85-unit sale was coming.
Penegor said the goal is to get Papa Johns’ restaurant ownership to the “mid-single-digit” level currently favored by many large-scale franchise brands such as McDonald’s.
“We believe that refranchising with strategy-forward, well-capitalized growing franchisees strengthens the long-term health of the Papa Johns system and unlocks future growth opportunities,” Penegor told analysts earlier this month.
Papa Johns’ company-owned locations have been underperforming franchisee restaurants, dating back at least two years, though the system as a whole has struggled with weak sales.
Same-store sales have declined 2.5% through the first three quarters of the year at company locations. They’ve declined 1.3% at franchised locations so far this year.
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