Papa Johns Announces 300 Store Closures and Confirms 7% Workforce Cut
Papa Johns is making a sweeping reset as it heads deeper into 2026. The pizza chain confirmed it will close roughly 300 underperforming restaurants across North America while cutting about 7% of its corporate workforce. The announcement came during its fourth-quarter 2025 earnings update, where executives outlined a broader transformation plan aimed at stabilizing sales and improving profitability.
The company has faced ongoing pressure in its home market, with weaker comparable sales and softer consumer demand weighing on performance. Leadership described the coming year as another transition period, with restructuring efforts designed to streamline operations and strengthen the overall system.
While Papa Johns continues to invest in innovation and digital tools, executives made clear that cost discipline and restaurant optimization are now central to the strategy. The changes will unfold over the next two years, with most closures expected in 2026.
Why 300 Restaurants Are Shutting Down
Papa Johns has identified approximately 300 restaurants in North America that are not meeting brand expectations or lack a clear path to sustainable financial improvement. Many of these locations are franchise-owned and have been operating at negative unit-level profitability. Executives said a detailed review of the restaurant fleet led to the decision.
The company plans to close about 200 of those units in 2026 and the remaining 100 by the end of 2027. In some cases, leadership believes sales can be shifted to nearby locations, helping to strengthen average unit volumes and improve overall market performance.
According to company executives, the closures are expected to lift systemwide health by improving average sales volumes and profitability among the remaining restaurants. The move is positioned as a long-term play to create a more sustainable and competitive footprint in North America.
Corporate Layoffs and Cost-Cutting Measures
Alongside the store closures, Papa Johns confirmed it has reduced its corporate workforce by approximately 7% in this earning update. The cuts are part of a broader review of non-customer-facing expenses and organizational structure. Executives said the goal is to create more flexibility and redirect resources toward growth initiatives.
Leadership expects these efforts to generate at least $25 million in cost savings outside of marketing through 2027, with about $13 million projected to be realized in 2026. The restructuring will come with associated charges, which the company estimates will total between $16 million and $23 million over the next two years.
Executives described 2025 and 2026 as investment years focused on strengthening the foundation of the business. While the workforce reduction is significant, the company framed it as a necessary step to improve long-term efficiency and restore momentum.
Sales Pressure and What Comes Next
The restructuring follows a challenging period for Papa Johns in North America. In the fourth quarter, comparable sales in the region declined 5%, and the company expects North America comparable sales to fall another 2% to 4% in 2026. Revenue for the quarter dropped 6% year over year, and profits declined compared with the prior year.
To simplify operations, Papa Johns also plans to phase out its Papadias and Papa Bites menu platforms in North America in the second quarter of 2026. Executives acknowledged that removing these items may create short-term sales pressure but believe it will help improve operational focus and efficiency.
At the same time, the company is investing in new products and international expansion. International comparable sales rose in the fourth quarter, and Papa Johns expects to open up to 220 new restaurants internationally in 2026. Leadership says the combination of cost discipline, menu innovation and a leaner restaurant footprint is intended to position the brand for steadier growth beyond this transition period.
