The rankings in the pizza franchise industry are shifting. With last year's sales of Domino's Pizza, the industry's No. 1, increasing from a year earlier and Pizza Hut losing a lawsuit over "rebate" franchise fees, Papa Johns took second place for the first time.
On the 15th, according to audit reports on the Financial Supervisory Service electronic disclosure system, Korea Papa Johns posted 80.59 billion won in sales last year, surpassing Korea Pizza Hut, which recorded 74.84 billion won. Papa Johns 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 franchising operator of the Domino's Pizza brand, recorded 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 runner-up.
Pizza Hut's sales graph has generally trended downward since 2019, shrinking its scale. Papa Johns, by contrast, maintained sales growth in recent years, narrowed the gap, and for the first time last year overtook Pizza Hut in sales to take second place in the industry.
Elsewhere, Banolim Pizza (Pizza & Company), which acquired Ogu Ssal Pizza, logged 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 sales in 2024, are following behind.
Papa Johns grew with a store-efficiency-focused strategy. It opened mainly small and midsize stores rather than large dine-in halls, cutting fixed costs by operating delivery- and takeout-centered locations. Papa Johns said it believes a rollout strategy focused on regional cities, led by its small-store model "Grab Express," contributed to higher sales. It also maintained a premium materials and supplies strategy and secured a loyal customer base by marketing with girl group IVE as its model, which proved effective.
Pizza Hut, by contrast, has faced a decline in the number of franchisees and weakening profitability, while ongoing franchisee-related disputes such as the rebate franchise fee lawsuit have weighed on its brand image and business environment. In January, the Supreme Court finalized an appellate ruling partially in favor of 94 Korea Pizza Hut franchisees in their lawsuit against headquarters to return unjust enrichment, ordering Pizza Hut to return 21.5 billion won. Separate from that ruling, Pizza Hut effectively went bankrupt as it entered corporate rehabilitation proceedings at the end of 2024 amid the rebate franchise fee litigation.
◇ Task of securing profitability amid intensifying market competition
The pizza industry is seeing demand fall as high inflation persists, while the growth of single-person households and the spread of low-priced pizza brands intensify competition. Discount battles with rivals and weak consumption are perpetuating a structure in which it is difficult to secure profitability.
In this environment, the industry sees the ranking shake-up as potentially a structural realignment rather than a temporary phenomenon. As store efficiency and franchisee profitability emerge as key competitive factors, attention is focusing on whether the pizza industry's landscape will keep shifting. In the 1990s and 2000s, Domino's Pizza, Mr. Pizza, and Pizza Hut formed a big three, but Mr. Pizza's recognition plunged in 2016 due to various controversies. There are concerns Pizza Hut could follow a similar path.
A pizza industry official said, "After the 'rebate' franchise fee controversy, it appears Pizza Hut no longer had the capacity to operate franchise stores. The number of locations also fell significantly," adding, "In this situation, Papa Johns kept growing through active marketing and efficient store operations centered on delivery and takeout instead of large dine-in halls, leading to the sales reversal."
Another official said, "The pizza market has been flat for the past two to three years, with neither strong growth nor steep decline," adding, "Even if large franchises shrink in scale, the delivery market and low-priced pizza segment are expanding, so the market's overall size will likely hold for a while. Going forward, large franchises will move upmarket, while low-priced pizza players will target specific demand such as students, effectively splitting the market."