As Korea's pizza franchise market enters a plateau, Korea Papa Johns is quietly putting up solid numbers. Its number of franchise stores is smaller than rivals, but its sales per pyeong — a measure of area efficiency — outpace major competitors, drawing assessments that the company is strengthening fundamentals. Recording higher sales per pyeong than competitors suggests it has avoided overexpansion and built an efficient structure.
According to the Fair Trade Commission's Franchise Business Transaction information disclosure on the 20th, Korea Papa Johns' average sales per pyeong for franchisees came to 29.15 million won last year. Domino's Pizza was 25.36 million won. Pizza Hut has not yet disclosed last year's data. Comparing on 2023 figures, Papa Johns was 28.68 million won, Domino's Pizza 25.96 million won, and Pizza Hut 16.2 million won.
In terms of scale alone, Papa Johns is smaller than competitors. Papa Johns' revenue last year was 71.7 billion won, with operating profit of 3.5 billion won. During the same period, Domino's Pizza posted revenue of 201.2 billion won and operating profit of 7 billion won, while Korea Pizza Hut recorded revenue of 83.1 billion won and an operating loss of 2.4 billion won.
The number of stores shows a similar pattern. As of the end of last year, Papa Johns had 262 and Domino's Pizza had 484. On a 2023 basis, Papa Johns had 239, Domino's Pizza 369, and Pizza Hut 297. With such a clear gap in scale, the fact that Papa Johns ranked among the top in the industry for sales per pyeong is cited as an indicator of how efficiently the brand's operating structure is designed.
The domestic franchise pizza market has stalled in both new openings and sales after its pandemic-driven surge faded. According to market research firm Euromonitor, the size of Korea's franchise pizza market has been flat at about 1 trillion won since 2019. As delivery platform fees and materials and supplies prices rose simultaneously, most brands have struggled to defend profitability. Persistent high inflation and changing dining-out trends are also analyzed as key reasons for stagnant growth. As food manufacturers competitively roll out inexpensive frozen pizzas, the room for pizza franchises is gradually shrinking.
In response, pizza franchise players have recently been grappling with menu diversification and differentiation. For example, Domino's Pizza has been rolling out "single-serving pizzas," a value-for-money item, since last year to match consumer trends. Pizza Hut is expanding its lineup of premium items, such as the "Double Shrimp Crunch" pizza. Papa Johns has maintained a product strategy centered on ingredients, including 72-hour cold-fermented dough and natural cheese from U.S.-based Leprino.
In particular, unlike many competitors with large dine-in halls, Papa Johns has a higher share of small and mid-sized stores. The structure is optimized for a delivery and takeout-focused operating model. Even with the same sales, smaller required floor space reduces fixed costs, improving efficiency.
An industry official said, "There is growing support for the view that internal strength indicators such as sales per store and area efficiency matter more than expanding scale," adding, "As fatigue from prolonged discount battles has grown, a strategy focused on protecting existing stores' profitability rather than acquiring new customers has become the core of franchise operations."
There are, however, challenges to address. At the end of last year, Papa Johns was fined a 1.4 billion won penalty surcharge for violating the Franchise Business Act. The company ran into trouble for instructing stores that had passed 10 years under franchise contracts to remodel and indicating that refusal could lead to termination. It was also flagged for designating 15 items, including hand sanitizer and dish detergent, as mandatory supplies and forcing franchisees to purchase them through headquarters. A lawsuit to return differential franchise fees is also underway.
Industry watchers say, "Rebuilding trust with owners, stabilizing the expense structure, and acquiring new customers are tasks Papa Johns must tackle going forward." Whether its strategy of shoring up fundamentals proves sustainable will be key. Attention is on whether Papa Johns can establish itself as a "small but efficient brand" in a stagnant pizza market.