The pizza franchise industry rankings are shifting. With sales at last year's No. 1 Domino's increasing from a year earlier and Pizza Hut losing a lawsuit over differential franchise fees, Papa John's took second place for the first time.
According to audit reports on the Financial Supervisory Service's electronic disclosure system on the 15th, Korea Papa John's posted 80.59 billion won in sales last year, surpassing Korea Pizza Hut, which recorded 74.84 billion won. Papa John's rose 12.3% from the previous year (71.78 billion won), while Pizza Hut fell 10% from last year (83.12 billion won). Cheong-O DPK, the domestic franchise operator for the Domino's brand, posted 210.9 billion won in sales, up 4.8% from the previous year (201.2 billion won), maintaining the top spot by more than double the gap over No. 2.
Pizza Hut's sales graph has generally trended downward since 2019, shrinking its scale. In contrast, Papa John's has maintained sales growth in recent years, narrowing the gap and, for the first time last year, overtaking in sales to take second place in the industry.
In addition, Banollim Pizza (Pizza&Company), which acquired Ogu Rice Pizza, posted 59.3 billion won in sales, and Cheongnyeon Pizza (BSB Food), which has not yet disclosed last year's audit report but recorded 32.8 billion won in 2024, are following behind.
Papa John's grew with a store-efficiency-focused strategy. It opened mainly small and medium-sized stores rather than outlets with large dining halls, cutting fixed costs by operating delivery- and takeout-centered locations. Papa John's said it believes its expansion strategy focused on regional cities—led by the small-store model Grab Express—helped lift sales. It also kept its premium materials and supplies strategy and moved to secure a loyal customer base with marketing that features IVE, a girl group with a strong fan base, which proved effective.
By contrast, Pizza Hut has faced a decline in franchise locations and profitability, while ongoing franchise-related disputes such as the differential franchise fee lawsuits have weighed on brand image and business conditions. In January, the Supreme Court finalized an appellate ruling partially in favor of 94 Korea Pizza Hut franchisees in their suit against headquarters to return unjust enrichment, ordering Pizza Hut to return 21.5 billion won. Separate from this ruling, Pizza Hut effectively entered bankruptcy when it began corporate rehabilitation proceedings at the end of 2024 amid the differential franchise fee litigation.
◇ Task of securing profitability amid intensifying market competition
In the pizza industry, persistent high inflation has dampened demand, while the rise of single-person households and the spread of low-priced pizza brands have intensified competition. Amid discount battles with rivals and weak consumption, it has become harder to secure profitability.
In this environment, the industry sees the ranking shake-up as a potential sign of structural realignment rather than a temporary blip. As store efficiency and franchisee profitability emerge as key competitive factors, attention is on whether the industry landscape will continue to shift. In the 1990s and 2000s, Domino's, Mr. Pizza, and Pizza Hut formed a Big Three, but Mr. Pizza's recognition plunged in 2016 amid various controversies. There are concerns Pizza Hut could follow a similar path.
A pizza industry official said, "After the differential franchise fee controversy, it appears Pizza Hut no longer had the capacity to operate franchise stores. The number of outlets also fell significantly," adding, "In this situation, Papa John's steadily grew through aggressive marketing and efficient store operations focused on delivery and takeout instead of large dining halls, leading to the sales reversal."
Another official said, "The pizza market has been in a holding pattern over the past two to three years, with neither strong growth nor steep decline," adding, "Even if large franchises shrink in scale, the overall size of the pizza market is likely to hold for a while as the delivery market and low-priced pizza market expand. Going forward, major franchises are expected to pursue premiumization, while low-priced pizza operators target specific demand such as students, splitting the market in two."