Papa John's Launches 'Unbox Better' Strategy Amid Sales Slump

Papa John's reported an 8.3% decline in North America same-store sales for the third quarter of 2025. Domestic company-owned restaurant sales fell 7.5%, while franchised locations saw an 8.5% drop. The results were worse than analysts had expected, prompting the immediate unveiling of a new corporate strategy called 'Unbox Better'.

Unbox Better Strategy Unveiled

The new plan is a wide-scope effort to re-strengthen the entire Papa John's system. Its first priority is to give customers more reasons to choose the brand, while the second is to bolster the system to consistently deliver on expectations. The framework, approved by 98% of franchisee votes, focuses on reigniting food quality, improving core menu items, and recommitting to operational fundamentals. Employees will be retrained on pizza-making fundamentals, including dough optimization, bake consistency, and better toppings and presentation. The chain will also investigate renovation needs to ensure flavorful, easy-melting cheese and invest in ensuring orders are delivered at the correct temperature.

Technology Modernization

A central pillar of the transformation is a massive technology overhaul. Papa John's is currently testing a modern, AI-native point-of-sale platform in a small number of restaurants, with plans for a full systemwide deployment by the end of 2027. This will replace the current 35-year-old POS system. The new platform aims to allow more accurate forecasting, better labor scheduling, and increased speed and flexibility for offers and promotions. The goal is to free restaurant teams from non-guest-facing tasks. Also, the company is training AI to recognize and grade its own pizzas using in-restaurant camera technology and Google Cloud. In the third quarter, restaurants with the top operational scores performed 400 basis points better in comparable sales and margin than those in the bottom section.

Franchisee Support and Financials

The strategy includes direct financial support for franchisees. Papa John's is reducing its supply chain margin to 4%, providing a 100 basis-point margin improvement for operators compared to previously targeted 2027 numbers. This commissary margin support is scheduled to step up to 4.5% in 2028 and 5% in 2029. Additionally, tech fees for franchisees are being rolled back from 1.75% to 1.5%. The new POS system will cost franchisees essentially nothing upfront, as they will be charged the same monthly fee as the old system. The company also plans to continue about $35 million of investment into next year. As part of restructuring, Papa John's has closed 239 restaurants systemwide year-to-date, including 146 in North America, representing about half of the 300 North American closures committed to through 2027. Early results show strong sales transfer to neighboring locations.

Customer Engagement and Marketing

Marketing and customer engagement are being retooled. Papa John's has approved returning to a 5% national advertising fund, down from 6%, while increasing the local ad fund to 2% from 0%. A new 'Bounceback' campaign will launch next week. It requires a minimum $15 purchase and asks customers to take a picture of their pizza via the app. In return, they receive a coupon for a free large one-topping pizza with a $5 purchase. The AI algorithm will analyze the submitted photos for feedback on aspects like cheese flavor and dough. The company's quality guarantee, where it remakes a pizza if there's a mistake, remains in place. Loyalty members, who outperform non-users by 10 percentage points, order about twice as often and have tickets 4% higher per order. CEO Todd Penegor told reporters the quarter was 'softer than we would have anticipated' and called the landscape 'challenged, especially for pizza.' The 'Bounceback' campaign will launch next week, encouraging customers to submit pizza photos for a free large one-topping pizza, with AI scanning for feedback.