What Happened to Papa Johns? Why 300 Stores Are Shutting Down

Papa Johns made headlines this week with a bold claim: the pizza giant is struggling. On Thursday, February 26, 2026, company leaders held their fourth-quarter earnings call. They announced plans to close around 300 underperforming restaurants in North America. This will happen by the end of 2027. That’s nearly 9% of its total locations gone in under two years. This news shocked the fast-food industry. It raised a big question: what went wrong for one of America’s top pizza brands?

By the Numbers: How Bad Is It?

The financial outlook shared during the earnings call was grim. Papa Johns reported a 5% decline in same-store sales in North America for Q4 2025. Total revenue also fell by 6% compared to the same time in 2024.

Global revenues were essentially flat at $1.2 billion. North American sales decreased 2%, and U.S. company-owned stores recorded a 3% sales decrease.

Perhaps most damning of all: According to Restaurant Business Online, Papa Johns North America same-store sales have now fallen in seven of the past eight quarters — a level of sustained weakness the chain hasn’t seen since 2018 and 2019, when it was rocked by a scandal involving its founder, John Schnatter.

To put the closures in perspective, Papa Johns had approximately 3,500 total locations at the end of 2025. Closing 300 is significant but strategic — about 200 of those closures are expected to happen in 2026 alone, with the remainder following by the end of 2027.

Which Stores Are Closing — And Why?

Papa Johns CFO and North America President, Ravi Thanawala, was specific about the profile of stores being cut. Speaking on the earnings call, he said the company identified restaurants that are over a decade old, generate average unit volumes (AUVs) of under $600,000, and typically produce negative four-wall income — meaning they’re losing money even before accounting for overhead and corporate costs.

“We have identified approximately 300 underperforming restaurants across North America that are not meeting brand expectations or lack a clear path to sustainable financial improvement,” Thanawala said. The locations being closed are primarily franchise-owned and include stores where the surrounding trade area has shifted, or where significant investment would be required to turn performance around.

Importantly, the closures are not expected to eliminate customers entirely — in many cases, Papa Johns says nearby locations will absorb the business from shuttered stores.

The Deeper Problem: A Perfect Storm

The store closures don’t exist in a vacuum. They reflect a broader set of pressures that have been building on Papa Johns — and the pizza industry as a whole — for several years.

1. Consumer Spending Fatigue

Years of inflation have left Americans more careful with their discretionary spending. Fast food and delivery pizza, once considered affordable luxuries, have seen prices creep up significantly. Customers are cooking more at home and trading down. This shift has hit pizza chains hard. As CNN reported, Papa John’s is “the latest pizza chain to close hundreds of locations.” Customers are spending less.”

2. Intensifying Competition

The pizza market is a tough battleground. While Papa Johns is struggling, Domino’s is doing well. It reported a 3.7% rise in same-store sales for Q4, thanks to value deals and a new brand campaign. The difference is clear. At the same time, Pizza Hut is set to close around 250 locations in early 2026. This shows that the issues aren’t just with Papa Johns; they affect the entire category. However, not all brands are doing poorly.

3. Third-Party Delivery Disruption

Ironically, Papa Johns was a pioneer in third-party delivery. It was one of the first major pizza chains to use platforms like DoorDash and Uber Eats. However, this shift has weakened brand loyalty. When customers open an app, they see many pizza options. This makes name recognition less valuable. It’s harder to keep customers, margins are slimmer, and competition is just one scroll away.

4. Years of Brand Turbulence

Papa Johns hasn’t had a smooth decade. The controversy surrounding founder John Schnatter, who resigned as chairman in 2018 following a racial slur scandal, left lasting scars. The chain spent years in recovery mode, going through multiple CEOs and struggling to find a consistent identity and message.

Also Read: Starbucks’ Viral Bearista Cup Returns as 2025 Holiday Hit

What Is Papa Johns Doing to Fix It?

To its credit, Papa Johns isn’t just cutting — it’s also trying to rebuild. Under CEO Todd Penegor, who is now in year two of a transformation plan, the company is taking several steps:

• Menu Overhaul: The chain is simplifying its offerings. Two items — Papadias (the flatbread sandwiches introduced in 2021) and Papa Bites — are being eliminated in Q2 2026 to reduce operational complexity. While this may pressure same-store sales by about 150 basis points in the short term, leadership believes leaner menus lead to better execution and customer experience. New items like a pan pizza (launched in Q1 2026) are reportedly performing above expectations, and oven-toasted sandwiches made with ciabatta are being tested.
• Operational Improvements: Penegor has ordered restaurants to recalibrate their ovens to ensure more consistent pizza quality — a back-to-basics move that signals the company knows its product execution has slipped.
• Cost Cutting: Papa Johns also announced it is cutting 7% of its corporate workforce and expects to deliver at least $25 million in cost savings outside of marketing through 2027, with approximately $13 million realized in 2026.
• Franchise Strategy: The company is shifting to an asset-light model. It is refranchising corporate-owned locations to strong operators. In November 2025, it refranchised 85 units. It is also negotiating to transfer 29 more in the Southeast.
• International Growth: North America is slowing down. So, Papa John’s is focusing on international markets. The chain opened 183 international units in 2025, while only 96 opened in North America. For 2026, it aims for 180–220 new restaurants globally. The U.K. is already testing chicken tenders with dipping sauces, with plans to bring similar innovations to North America.

Is This the Beginning of the End — Or a Necessary Reset?

Industry analysts often see strategic closures as painful yet necessary for struggling chains. Keeping weak locations open drains resources, demoralises franchisees, and weakens the brand. By cutting its weakest links, Papa John’s could become a leaner and more profitable system.

After 2027, the company expects closures to return to a normal rate of 1.5% to 2% per year. This shows that leadership views these actions as a one-time fix, not a long-term decline.

Still, the road ahead is steep. The pizza market is very competitive. Consumer trust is weak. Domino’s keeps getting ahead each quarter. Penegor sees the challenges but stays hopeful. He said, “We’re building the business to thrive in a strong, growing category.”

Also Read: Chick-fil-A Launches 80th Anniversary Bash with Nationwide Free Food Giveaway

The Bottom Line

Papa John’s decision to close 300 stores is the product of years of compounding pressures: weak consumer spending, internal brand turbulence, stiffening competition, and an aging restaurant fleet that was no longer pulling its financial weight. The closures, combined with layoffs, menu simplification, and a renewed operational focus, represent a genuine attempt at transformation — but the brand has work to do to win back the confidence of franchisees, customers, and investors alike.

The pizza wars are far from over. But for Papa Johns, the next chapter has to be written with far fewer — and far stronger — locations.

Sources:

• Restaurant Dive – Papa Johns will close 300 restaurants (Feb. 26, 2026)
• Restaurant Business Online – Papa Johns is closing 300 restaurants and cutting staff (Feb. 26, 2026)
• CNN Business – Papa Johns is closing hundreds of locations (Feb. 26, 2026)
• National Restaurant News – Papa Johns announces 300 store closures and 7% corporate layoffs (Feb. 26, 2026)
• Pizza Marketplace – Papa Johns reports Q4 2025 sales; will close 300 underperforming restaurants (Feb. 26, 2026)
• Fast Company – Papa Johns pizza closing restaurants 2026 (Feb. 27, 2026)
• WDRB Louisville – Papa Johns plans to close hundreds of stores this year nationwide (Feb. 26, 2026)