Papa Johns signs a big deal in China

The pizza delivery chain has a deal with FountainVest Partners to develop 1,350 locations in the country by 2040.
Papa Johns development agreement China
Photograph: Shutterstock

Papa Johns said Friday that it has signed a deal with the private-equity group FountainVest to develop 1,350 locations in China by 2040, the biggest development deal in the pizza chain’s history.

The deal would considerably expand the brand’s presence in the fast-growing economy. It would also on its own increase the pizza chain’s international unit development by 50%.

FountainVest purchased a majority stake in current Papa Johns franchisee CFB Group, which owns and operates 160 locations around Shanghai and Southern China. The firm is focused on investing in businesses that can take advantage of the rapidly increasing Chinese middle class.

“FountainVest is exactly the kind of partner we look to help grow our brand internationally,” Amanda Clark, Papa Johns chief development officer, said in a statement. She called the firm “well-capitalized, experienced operators with deep knowledge of the local market.”

The development deal comes as restaurant chains have a renewed and intense focus on China as a source for international growth. Brands like Tim Hortons, which only entered the country four years ago, already have hundreds of locations. Papa Johns rival Domino’s continues to develop aggressively in the market, as do existing giants KFC, McDonald’s and Starbucks.

For Papa Johns, the deal comes as the company has generated sales momentum globally. Same-store sales have risen for nine straight quarters, improving unit economics and encouraging operators to jump into the system.

The company has been signing a number of development deals in recent months, both in the U.S. and internationally. It has entered into 15 new countries in recent years, including Spain, Portugal, Germany, Cambodia, Pakistan, France and Poland.

Papa Johns currently operates 5,400 restaurants globally, including 2,300 outside the U.S. “Papa Johns premium position offers an attractive opportunity in the QSR sector, which has already been proven in China, and which we believe will continue to thrive,” Andrew Huang, managing director of FountainVest, said in a statement.

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