From a small operation in a broom closet back in 1984, Papa Johns has quickly grown into one of the world’s biggest pizza chains.
The chain managed to scale its operations by prioritizing “better ingredients” and clean labels, as well as early tech adoption. Papa Johns ensured consistency through vertical integration by using Quality Control Centers to distribute fresh dough and proprietary sauce.
However, after years of growth, Papa Johns now faces the same industry-wide headwinds impacting other major pizza chains. Earlier this year, the chain confirmed that like Pizza Hut, it plans a significant operational scale-back to close approximately 300 underperforming North American locations, TheStreet Co-Editor-in-Chief Daniel Kline recently reported.
In 2025, Papa Johns’ North America comparable sales decreased 2%, and total revenues of $2.1 billion were flat compared to 2024. Net income was $32 million, compared to $84 million in 2024, according to the company’s 10K filing with the Securities and Exchange Commission.
Among key reasons for the comparable sales decline and closure of 300 stores is a shift in consumer behavior due to economic stress. More precisely, families are increasingly trading down by choosing frozen pizza over restaurant delivery to save money, Kline pointed out, citing the Baking Business report.
Despite these challenging times for restaurant and fast food chain owners, Papa Johns is not giving up. Rather, it is shifting its strategy to meet customers where they are.
Papa Johns debuts a new line of oven-toasted sandwiches
Papa Johns continues to evolve beyond pizza with the launch of a new sandwich, the chain revealed on March 30. It will apply the brand’s signature “better ingredients” promise to a new category, according to the press release.
The company plans to use premium ingredients, such as ciabatta-style bread and its signature Garlic Sauce, to attract customers who want an “indulgent” lunch or dinner that isn’t a slice of pizza.
“This launch is more than a new menu item — it’s a statement about where our brand is headed. We’re taking the flavor and quality leadership we’ve built in pizza and pushing it further,” stated Senior Vice President of Brand Marketing Shivram Vaideeswaran.
Papa John’s new Oven-Toasted Sandwich lineup includes:
- Philly Cheesesteak: Seasoned steak, roasted onions and peppers, pizza ranch sauce, and white American cheese
- Chicken Bacon Ranch: All white-meat grilled chicken, bacon, diced tomatoes, banana peppers, pizza ranch sauce, and white American cheese
- Steak & Mushroom: Seasoned steak loaded with roasted mushrooms and onions, garlic truffle sauce, and white American cheese
Like McDonald’s, Papa Johns bets on value offering
Papa Johns confirmed that with the launch of new sandwiches, it plans to provide more affordable meal deals.
Specifically, these sandwiches are priced at $7.99 individually. However, customers can choose a “Papa Pairings” deal to get each sandwich for $6.99 when they buy two or more items. They can also bundle them with a Pepsi for about $9.49.
Papa Johns isn’t the only chain doubling down on value offerings to address current industry challenges and shifts in customer behavior. I previously reported on McDonald’s bid to attract low-income diners, who have been skipping fast food due to high prices.
In September 2025, McDonald’s CEO Chris Kempczinski sounded the alarm about a “two-tier economy” in which wealthy customers are still spending, but lower-income guests are skipping meals, especially breakfast, or eating at home to save money. This shift follows years of inflation that led McDonald’s average prices to rise nearly 40%.
To address this, McDonald’s is rolling out new value offerings, including a menu of items priced at $3 or less, and new $4 breakfast meals.
Industry rivals are also struggling amid shift in consumer behavior
Industry statistics reveal that other pizza chains and restaurants are feeling the strain as customer behavior changes.
Key food and restaurant industry statistics:
- More than two-thirds (68%) of U.S. consumers are cutting back on restaurant dining in 2026, prioritizing affordability and convenience, reveals Popmenu’s 2026 report Restaurant Trends To Watch.
- In February 2026, consumers spent $90 per week on food away from home on average, down from $115 in June 2025, according to the same Popmenu’s 2026 report.
- A significant 42% of operators reported their restaurant was not profitable in 2025, and more than nine in 10 operators cite food, labor, insurance, energy, and swipe fees as significant challenges, according to the National Restaurant Association.
It is important to realize that as consumers spend less on eating out, restaurants and pizza chains must contend with rising food, labor, and rent expenses. Some are also still weakened from the Covid pandemic lockdowns, making recovery even more challenging.
As a result, several pizza chains have significantly scaled back their operations or even filed for bankruptcy.
Struggling pizza chains include:
- Papa Johns: The chain is shuttering approximately 300 underperforming North American locations through 2027 to stabilize its domestic system, according to prior reporting by TheStreet.
- Pizza Hut: Parent company Yum! Brands is closing roughly 250 restaurants and exploring a potential sale of the brand, according to Fast Company.
- MOD Pizza: The fast-casual pioneer shuttered over 27 locations across 11 states as it narrowly avoided bankruptcy in 2024, TheStreet previously reported.
- Little Caesars: Rising operational costs have led to “indefinite” shutdowns of dozens of units across several states, according to TheStreet.
- North County Pizza: A major Domino’s Pizza chain franchisee filed for Chapter 11 bankruptcy in March 2026 due to soaring labor and lease rates, reported TheStreet.
- California Pizza Kitchen: The heritage brand was sold to an investor group in late 2025 to stabilize operations after years of sluggish performance, according to FranchiseWire.
- Crust Pizza: A Texas-based dining chain franchisee has filed for Chapter 11 protection to reorganize its two restaurant locations, reported TheStreet.
Can a $7.99 sandwich save Papa Johns from its latest slump?
“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, as well as locations where we can effectively transfer sales to a nearby restaurant,” Papa Johns CEO Todd Penegor said in the earnings release.
The stores slated for closure are mostly franchise-owned units that earn less than $600,000 in annual revenue and are currently losing money (negative EBITDA).
The plan is to shut down about 200 of these in 2026, with the remainder closing by the end of 2027. Beyond store closures, the company is also cutting its corporate workforce by 7% to improve efficiency.
Interestingly, not every pizza chain is struggling. For example, by mastering digital sales (which now account for over 85% of their business) and maintaining lower price points, Domino’s is gaining the market share that Papa Johns and Pizza Hut are now losing, reported Kline.
While it is difficult to predict how well customers will react to Papa Johns’ new value offering, similar moves by fast-food chains such as McDonald’s appear to be working out.
“The Chicago-based chain saw U.S. same-store sales jump 6.8% in the fourth quarter of 2025, a figure that blew past Wall Street’s 4.9% forecast and signaled a major recovery for the brand,” reported Financial Content. “The primary engine behind this resurgence? A relentless focus on ‘deep value,’ anchored by the permanent expansion of its $5 meal deal, which has successfully lured back price-sensitive consumers who had previously retreated from rising menu prices.”
While Papa Johns’ bold new menu change may be welcomed by budget-conscious customers, experts warn it might not be enough to resolve the most significant challenges.
“The Oven-Toasted Sandwiches launch may support the key near term catalyst of stabilizing comparable sales, but it does not by itself resolve the biggest risk: ongoing pressure on profitability as labor, commodities, and marketing spend weigh on already low net margins,” writes Simply Wall St.
