Pizza consumption, which has led the U.S. franchise industry, appears to be falling sharply. Major franchise companies are closing hundreds of stores in the United States, and some have filed for bankruptcy protection.
According to CNN and others, Papa Johns, the fourth-largest pizza chain by U.S. sales, said on the 26th (local time) that it plans to close 300 U.S. stores by the end of 2027. Of those, 200 are slated to shut this year. As of the end of last year, Papa Johns operated 3,523 stores in the United States, meaning about 10% of its total will be targeted for closure.
Ravi Thanawala, chief financial officer (CFO) and president of the North America division at Papa Johns, said the move targets stores that "do not meet brand expectations or lack sustainable financial improvement plans." Thanawala added that the stores slated for closure have been open for more than 10 years and are operating with negative store-level revenue.
Restructuring is also underway at headquarters. Papa Johns said it laid off about 7% of its roughly 700 corporate employees. It also signaled a sweeping menu overhaul, including removing Papadia sandwiches and Papa Bites pizza rolls. The move aims to tackle recent weak results. Papa Johns posted fourth-quarter net income of $8.6 million, down 42% from a year earlier.
Rival Pizza Hut said earlier this month it would close about 250 U.S. stores in the first half of this year. Yum Brands, Pizza Hut's parent company, is also reportedly considering a sale of the Pizza Hut business. Pizza Hut has about 6,500 stores in the United States and is the second-largest pizza franchise in the country by size.
Conditions are even more severe for small and mid-sized pizza franchises. The parent company of the pizza chain Pieology filed for Chapter 11 bankruptcy protection in December last year. Pieology was founded by the sibling of former tennis player Michael Chang and became known for investment by NBA star Kevin Durant. The number of its stores once topped 200 but has now shrunk to about 40.
The United States is where pizza, brought over from Italy during World War II and localized, gave birth to the world's first pizza franchise. As franchises grew, pizza established itself as a representative U.S. takeout food, and in the 1990s it ranked No. 2 among restaurant chains by sales.
However, intensifying competition and the rise of various alternative menu options began to erode sales, and as of 2024 franchises have fallen to No. 6 in sales rankings. According to market research firm Datassential, the number of pizza restaurants in the United States has been declining since hitting a record high in 2019.
Pizza franchises are pursuing restructuring and overhauls to overcome the crisis. Small and mid-sized brands such as MOD Pizza and Blaze Pizza have been cutting store counts since 2024, and recently large brands like Pizza Hut have joined in. Papa Johns also ran discount promotions to regain market share but has struggled to break out of weak performance.
The Wall Street Journal (WSJ) said, "U.S. fast-food pizza sales have been nearly flat over the past two years," adding, "Papa Johns is seeking a rebound amid broad industry weakness."