Segment Information | Segment Information We have four reportable segments: Domestic Company-owned restaurants, North America franchising, North America commissaries, and international operations. The domestic Company-owned restaurant segment consists of the operations of all domestic (“domestic” is defined as contiguous United States) Company-owned restaurants and derives its revenues principally from retail sales of pizza, Papadias, which are flatbread-style sandwiches, and side items, including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages. The North America commissary segment consists of the operations of our regional dough production and product distribution centers and derives its revenues principally from the sale and distribution of food and paper products to domestic Company-owned and franchised restaurants in the United States and Canada. The North America franchising segment consists of our franchise sales and support activities and derives its revenues from sales of franchise and development rights and collection of royalties from our franchisees located in the United States and Canada. The international segment principally consists of distribution sales to franchised Papa John’s restaurants located in the United Kingdom and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our international franchisees. International franchisees are defined as all franchise operations outside of the United States and Canada. All other business units that do not meet the quantitative thresholds for determining reportable segments, which are not operating segments, we refer to as “all other,” which consists of operations that derive revenues from the sale, principally to Company-owned and franchised restaurants, of printing and promotional items, franchise contributions to marketing funds and information systems and related services used in restaurant operations, including our point-of-sale system, online and other technology-based ordering platforms. Generally, we evaluate performance and allocate resources based on operating income and intercompany eliminations. Certain administrative and capital costs are allocated to segments based upon predetermined rates or estimated resource usage. We account for intercompany sales and transfers as if the sales or transfers were to third parties and eliminate the activity in consolidation. Our reportable segments are business units that provide different products or services. Separate management of each segment is required because each business unit is subject to different operational issues and strategies. No single external customer accounted for 10% or more of our consolidated revenues. Our segment information is as follows: Three Months Ended Nine Months Ended (In thousands) September 25, September 26, September 25, September 26, Revenues: Domestic Company-owned restaurants $ 166,050 $ 191,584 $ 536,226 $ 584,942 North America franchising 33,712 31,933 102,897 97,123 North America commissaries 216,115 189,224 645,177 560,743 International 37,707 46,880 119,696 135,761 All others 56,928 53,161 171,873 160,967 Total revenues $ 510,512 $ 512,782 $ 1,575,869 $ 1,539,536 Intersegment revenues: North America franchising $ 996 $ 1,037 $ 3,097 $ 3,138 North America commissaries 51,330 53,454 162,591 158,952 All others 15,562 18,522 50,830 56,613 Total intersegment revenues $ 67,888 $ 73,013 $ 216,518 $ 218,703 Operating income: Domestic Company-owned restaurants (a) $ 3,667 $ 9,480 $ 11,579 $ 40,165 North America franchising 31,464 29,830 96,225 90,791 North America commissaries 8,425 9,598 28,717 29,089 International (b) 1,136 9,618 12,897 26,665 All others 2,037 3,848 7,943 14,860 Unallocated corporate expenses (c) (27,684) (23,158) (84,138) (70,937) Elimination of intersegment (profits) losses 416 (639) (423) (557) Total operating income $ 19,461 $ 38,577 $ 72,800 $ 130,076 Property and equipment, net: Domestic Company-owned restaurants $ 229,480 North America commissaries 153,604 International 14,601 All others 122,927 Unallocated corporate assets 246,006 Accumulated depreciation and amortization (535,724) Total property and equipment, net $ 230,894 (a) Includes a one-time, non-cash charge of $8.4 million associated with the refranchising of the Company’s ownership interest in a 90-restaurant joint venture, recorded as Refranchising and impairment loss for the nine months ended September 25, 2022. See Note 10 for additional information. (b) The three months ended September 25, 2022 includes a charge of $4.1 million related to the reserve of certain accounts and notes receivable and operating lease right-of-use assets impairment associated with the termination of a significant franchisee in the United Kingdom. The nine months ended September 25, 2022 also includes $3.5 million of one-time, non-cash reserves for certain accounts receivable and impairments of reacquired franchise rights. See Notes 2 and 10 for additional information. (c) Unallocated corporate expenses includes $10.0 million for certain legal settlements for the three months ended September 25, 2022. For the nine months ended September 25, 2022, Unallocated corporate expenses includes $13.9 million of one-time, non-cash reserves of certain notes receivable, $15.0 million for certain legal settlements (see Note 9 for more information), and $1.5 million of advisory fees and severance costs associated with the transition of certain executives. Unallocated corporate expense includes $2.2 million and $9.4 million of reorganization costs for the three and nine months ended September 26, 2021. See Notes 2 and 9 for additional information. Disaggregation of Revenue In the following tables, revenues are disaggregated by major product/service line. The tables also include a reconciliation of the disaggregated revenues by the reportable segment (in thousands): Reportable Segments Three Months Ended September 25, 2022 Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total Company-owned restaurant sales $ 166,050 $ — $ — $ — $ — $ 166,050 Franchise royalties and fees — 34,708 — 11,619 — 46,327 Commissary sales — — 267,445 19,116 — 286,561 Other revenues — — — 6,972 72,490 79,462 Eliminations — (996) (51,330) — (15,562) (67,888) Total segment revenues $ 166,050 $ 33,712 $ 216,115 $ 37,707 $ 56,928 $ 510,512 International other revenues (a) — — — (6,972) 6,972 — Total revenues $ 166,050 $ 33,712 $ 216,115 $ 30,735 $ 63,900 $ 510,512 Reportable Segments Three Months Ended September 26, 2021 Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total Company-owned restaurant sales $ 191,584 $ — $ — $ — $ — $ 191,584 Franchise royalties and fees — 32,970 — 14,031 — 47,001 Commissary sales — — 242,678 24,377 — 267,055 Other revenues — — — 8,472 71,683 80,155 Eliminations — (1,037) (53,454) — (18,522) (73,013) Total segment revenues $ 191,584 $ 31,933 $ 189,224 $ 46,880 $ 53,161 $ 512,782 International other revenues (a) — — — (8,472) 8,472 — Total revenues $ 191,584 $ 31,933 $ 189,224 $ 38,408 $ 61,633 $ 512,782 Reportable Segments Nine Months Ended September 25, 2022 Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total Company-owned restaurant sales $ 536,226 $ — $ — $ — $ — $ 536,226 Franchise royalties and fees — 105,994 — 37,097 — 143,091 Commissary sales — — 807,768 60,213 — 867,981 Other revenues — — — 22,386 222,703 245,089 Eliminations — (3,097) (162,591) — (50,830) (216,518) Total segment revenues $ 536,226 $ 102,897 $ 645,177 $ 119,696 $ 171,873 $ 1,575,869 International other revenues (a) — — — (22,386) 22,386 — Total revenues $ 536,226 $ 102,897 $ 645,177 $ 97,310 $ 194,259 $ 1,575,869 Reportable Segments Nine Months Ended September 26, 2021 Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total Company-owned restaurant sales $ 584,942 $ — $ — $ — $ — $ 584,942 Franchise royalties and fees — 100,261 — 39,396 — 139,657 Commissary sales — — 719,695 71,233 — 790,928 Other revenues — — — 25,132 217,580 242,712 Eliminations — (3,138) (158,952) — (56,613) (218,703) Total segment revenues $ 584,942 $ 97,123 $ 560,743 $ 135,761 $ 160,967 $ 1,539,536 International other revenues (a) — — — (25,132) 25,132 — Total revenues $ 584,942 $ 97,123 $ 560,743 $ 110,629 $ 186,099 $ 1,539,536 (a) Other revenues as reported in the Condensed Consolidated Statements of Operations include $7.0 million and $22.4 million of revenue for the three and nine months ended September 25, 2022, respectively, and $8.5 million and $25.1 million for the three and nine months ended September 26, 2021, respectively, that are part of the international reporting segment. These amounts include marketing fund contributions and sublease rental income from international franchisees in the United Kingdom that provide no significant contribution to operating income but must be reported on a gross basis under accounting requirements. The related expenses for these Other revenues are reported in Other expenses in the Condensed Consolidated Statements of Operations. |