Sun Holdings is doubling down on Papa John’s.
The large Texas-based multi-brand franchisee, which last year signed a 100-unit development agreement, is now buying a majority stake in 90 Papa Johns locations from the franchisor, the pizza chain announced on Thursday.
Papa John’s owned the restaurants with a joint venture partner, Blue and Silver Ventures, which will remain a limited partner in the restaurants with Sun Holdings. Papa John’s is selling its interest in the restaurants to Sun, which has assumed control of the restaurants.
According to a federal securities filing on Thursday, the restaurants generated $106 million in revenue for the company last year and $8.6 million in operating income. Yet Papa John’s said in the filing the deal is expected to have a “neutral” impact on earnings.
The Louisville, Ky.-based pizza chain believes it will have a positive, long-term impact on its overall growth.
The company has been eager to grow its domestic unit count. The brand has about 3,100 U.S. locations, making it smaller than its three big rivals Domino’s, Pizza Hut and Little Caesars. It signed the deal with Sun Holdings, one of the country’s largest restaurant operators, in September of last year—its largest domestic development deal to date. Sun will develop the locations by 2029.
The refranchising deal will give Sun Holdings a springboard to help jumpstart that development, noting that Sun “is strongly positioned to accelerate its development plans and Papa John’s domestic growth.”
Amanda Clark, Papa John’s chief development officer, said the company would continue to build new corporate restaurants “as well as refranchise when we can provide our franchisees strategic scale to support the brand’s long-term growth.” She said in a statement that this refranchising deal is a “great example” of that strategy.
Guillermo Perales, CEO of Sun Holdings, said its deal with Papa John's “has already begun to deliver a high return on our investment.”
The agreement continues an aggressive growth strategy for Papa John’s, which signed a 1,350-unit deal in China with the private equity firm FountainVest Partners just last year.
Sun Holdings is based in Dallas. It also operates Burger King and Arby’s, among other brands, and is the owner of the Taco Bueno concept.
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