On August 6, Papa John’s $PZZA ( ▼ 0.69% ) did what most public companies do when they’re in trouble after years of mismanagement. They throw shareholders overboard by eliminating the dividend.

Since they cut the dividend and reported bad results on Thursday, my investment has fallen 23%.

My average cost is $31.94 and the stock is now $24.47. I invested $876 in the company and now I’m down $205.

I have no plans on selling. Stocks fluctuate and Papa John’s can recover. Unless God says otherwise, I’ll hold forever or until I need the cash. I want to simplify investing. Just buy and hold.

I won’t buy any more shares though because they cut the dividend.

Don’t get me wrong. I understand Papa John’s had to cut the dividend. In the last 6 months, their free cash flow was $9.1 million and dividends were $30.9 million. They only have a measly $28 million of cash on their balance sheet. Right now, the company is in cash preservation mode.

The $47 per share offer from Irth Capital seems to be off the table. On the earnings call, the CEO Todd Penegor said offers need to be “actionable, provide certainty, and serve the best interest of our shareholders.”

To me, it sounds like the offer was either too low or had a lot of contingencies. The Board needs a strong offer that is certain to close.

I don’t expect an activist campaign from Irth Capital because their website says they’re “constructivist” investors. They collaborate with companies instead of fighting against them.

The main issue Papa John’s faces is declining sales from their North American stores.

North America same-restaurant sales declined 8.3% YoY due to lower traffic. Domino’s Pizza $DPZ ( ▼ 2.09% ) domestic same-restaurant sales grew 0.1%, which is not great, but it’s much better than Papa John’s.

It’s interesting that Papa John’s domestic company-owned restaurants did worse (-8.9%) than their franchisees (-8.2%).

I will monitor the divergence between corporate and franchisee performance over the next couple quarters. If corporate keeps doing worse, it might be a sign that the management team doesn’t know how to solve the problems Papa John’s is facing and they can’t help the franchisees.

The company expects North America comp sales to decline 6–8% and global sales to decline 2–4% in 2026.

They also reduced their projected 2026 Adjusted EBITDA from $200–$210 million to $180–$190 million.

Papa John’s international business is actually doing well. Comps grew 1.5% YoY vs a decline of 0.1% for Domino’s Pizza’s international business.

This is Papa John’s seventh straight quarter of positive international same-restaurant sales.

Papa John’s is in a dangerous position. If they don’t increase their transaction volume soon, they’ll have fewer sales to customers, fewer commissary sales to franchisees, less purchasing power with suppliers, fewer discounts they can pass on to franchisees, fewer profitable stores, and more store closures. They must avoid this deadly cycle.

Order count drives everything in the QSR business.

The company is searching for a permanent CFO. The last one left and became the CFO at American Eagle.

Other changes were made in the C-suite. These are the people helping to turn the company around.

Chris Lyn-Sue is the new Global Chief Marketing Officer. He used to be the General Manager of International.

Chris Phylactou will lead their international business. He used to be the Managing Director of U.K., Europe, and Canada.

John Matter is the new Global Chief Development Officer. He used to be the General Counsel.

Papa John’s collab with Toy Story did not help sales. These types of promotions do not create long-term customers. They create a short buzz, and often attract customers who already frequent the chain.

To improve their sales, Papa John’s must have great service, great food, great prices, and communicate their value to the public effectively.

On the call, they cited the following strategy:

There is room for Papa John’s to improve their unit economics. Their top 75% of franchisees average ~$125k profit per store, while Domino’s Pizza does ~$166k per store.

Although a 23% drop is not a big deal to me, there are lessons I should take from this investment.

With all the issues Papa John’s and the pizza industry are facing, it’s going to be difficult for Irth Capital to justify a $47 price to their investors and lenders. The price must be lower. I will run the numbers later and come up with my own estimate of Papa John’s value.

Remember to pray for the Bronx and its success.

“By the blessing of the upright a city is exalted, but by the mouth of the wicked it is overthrown.”
Proverbs 11:11 ESV

Matthew 5: The Beatitudes is inspired by Matthew 5 of the Bible. Visit Making It Straight to watch films based on the Bible and to purchase resources to help evangelize.