Papa John's Lays off 35 - Analyst Blog

Papa John’s International Inc. (PZZA) recently announced job cuts at its headquarters in Louisville. The company pared off 35 of its 600 employees, exposing its vulnerability to the crumbling economy.

However, Papa John’s and other fast-food restaurant chains such as McDonald’s Corp. (MCD), Burger King Holdings (BKC), Krispy Kreme Doughnuts (KKD), Yum! Brands (YUM) and Chipotle Mexican Grill (CMG) are faring better than casual and upscale dining restaurants, as cash-strapped consumers are trending towards lower-priced dining options.

However, on a wider perspective, rising job losses have weighed on the restaurant industry, as consumers have now become more sensitive towards economic conditions. The current data reveals that the U.S. unemployment rate jumped to 9.7% in August from 9.4% in July.

Papa John’s total revenues declined 2.4% to $276.6 million from $283.4 million during the second quarter. The quarterly earnings of 36 cents a share surpassed the Zacks Consensus Estimate of 34 cents, but fell 12.2% year over year from 41 cents delivered in the prior-year quarter.

Papa John’s operates and franchises pizza delivery and carryout restaurants in the U.S. and abroad. At the end of the second quarter, there were 3,418 restaurants operating in 50 states and 29 countries. Of these, 612 are company-owned and 2,806 are franchised.