# Papa Johns International Inc: Form 10-K for the period ended Dec 26, 2021

- Company: [Papa Johns International Inc](/companies/pzza.md) (CIK 901491)
- Form: 10-K
- Filed: 2022-02-24
- Accepted by EDGAR: Feb 24, 2022, 07:27 ET
- Period: 2021-12-26
- Accession: 0001558370-22-001836
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/901491/000155837022001836/pzza-20211226x10k.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/901491/000155837022001836/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2021-12-26.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Operating income | 12 months, 2020-12-28 to 2021-12-26 | $168.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 12 months, 2020-12-28 to 2021-12-26 | $19.2m | us-gaap:InterestExpense |
| Income tax | 12 months, 2020-12-28 to 2021-12-26 | $26.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 12 months, 2020-12-28 to 2021-12-26 | $120.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 12 months, 2020-12-28 to 2021-12-26 | $0.12 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 12 months, 2020-12-28 to 2021-12-26 | $0.12 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 12 months, 2020-12-28 to 2021-12-26 | 35,337,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 12 months, 2020-12-28 to 2021-12-26 | $184.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 12 months, 2020-12-28 to 2021-12-26 | $68.6m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 12 months, 2020-12-28 to 2021-12-26 | $40.4m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 12 months, 2020-12-28 to 2021-12-26 | $72.5m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2021-12-26 | $70.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2021-12-26 | $255.0m | us-gaap:AssetsCurrent |
| Total assets | at 2021-12-26 | $885.7m | us-gaap:Assets |
| Current liabilities | at 2021-12-26 | $287.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2021-12-26 | $1.05bn | us-gaap:Liabilities |
| Long-term debt | at 2021-12-26 | $480.7m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2021-12-26 | −$187.7m | us-gaap:StockholdersEquity |

## Business

As filed, 30,786 characters.

### General

Papa John’s International, Inc., a Delaware corporation (referred to as the “Company”, “Papa John’s” or in the first person notations of “we”, “us” and “our”), operates and franchises pizza delivery and carryout restaurants and, in certain international markets, dine-in and delivery restaurants under the trademark “Papa John’s”. Papa John’s began operations in 1984. At December 26, 2021, there were 5,650 Papa John’s restaurants in operation, consisting of 600 Company-owned and 5,050 franchised restaurants operating in 50 countries and territories. Our Company-owned restaurants include 188 restaurants operated under four joint venture arrangements. All of the 2,311 international restaurants are franchised.

### Strategy

We are committed to delivering on our brand promise “BETTER INGREDIENTS. BETTER PIZZA.®” and a business strategy designed to drive sustainable long-term, profitable growth.

We believe that using high quality ingredients leads to superior quality pizzas. Our original crust pizza dough is made from six simple ingredients and is fresh, never frozen. We also top our pizzas with real cheese made from mozzarella, pizza sauce made with vine-ripened tomatoes, and meat free of fillers. Our marketing and menu strategies emphasize the quality of our ingredients and our new product innovations to accelerate sales. One of our most recent menu innovations, the new Epic Stuffed Crust pizza, was officially launched in the first quarter of 2021 and has been one of our most successful launches to date. The Epic Stuffed Crust pizza, and other menu innovations like our recently announced New York Style pizza, along with Garlic Parmesan Crust, toasted handheld “Papadias” flatbread-style sandwiches and Jalapeno Popper Rolls launched in 2020, demonstrates our commitment to building new long-term sustainable menu products on which we can continue to innovate. These products form the foundation of our growing comparable sales and improving unit economics.

We utilize technology to deliver a better customer experience, improve operational efficiencies and inform our decision-making. Our loyalty program (“Papa Rewards”) and one-to-one marketing platforms help us retain loyal customers and attract new ones. As our loyalty program grows, it continues to deliver strategic benefits. Papa Rewards customers are significantly more profitable than non-loyalty customers since we are able to directly engage them with targeted personalized offers that drive higher frequency, ticket price and satisfaction. We also partner with top domestic delivery aggregators to meet customer demand for our products. Aggregators have also helped navigate the labor shortage that the Company is experiencing by providing supplemental delivery drivers, especially during peak times when our delivery teams are working at full capacity.

We continue to pursue a growth strategy by expanding our footprint, both domestically and internationally. In August 2021, we announced our expanded partnership with Drake Food Service International to open over 220 restaurants across Latin America, Spain, Portugal and the United Kingdom (“UK”) by 2025. In September 2021, we announced the Company's largest domestic development deal ever with Sun Holdings, who will open 100 new locations in high-growth markets in Texas and the South by 2029. Most recently, in January 2022, we announced a partnership with FountainVest Partners, one of Asia’s leading independent private equity firms, to open more than 1,350 new stores across South China by 2040, the largest franchisee development agreement in our history.

A large majority of Papa John’s restaurants are franchised. We believe a franchised model provides resiliency of earnings and presents us with an opportunity to enhance growth with less capital investment than a traditional company-operated restaurant model. We seek to attract and retain franchisees with experience in restaurant or retail operations and with the financial resources and management capabilities to open single or multiple locations. While each Papa John’s franchisee manages and operates its own restaurants and business, we devote significant resources to providing franchisees with assistance in restaurant operations, quality assurance, technology, training, marketing, site selection and restaurant design. Papa John’s franchise owners benefit from our award-winning brand, food service capabilities and the Papa John’s digital and delivery model.

### Segment Overview

Papa John’s has four defined reportable segments: Domestic Company-owned restaurants, North America commissaries (Quality Control Centers), North America franchising and International operations.

#### Domestic Company-owned Restaurants

The Domestic Company-owned restaurant segment consists of the operations of all domestic Company-owned restaurants (“domestic” is defined as the contiguous United States) and derives its revenues principally from retail sales of pizza, Papadias, and side items, including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages.

Of the total 3,339 North American restaurants open as of December 26, 2021, 600 units, or approximately 18%, were Company-owned. In 2021, the 579 domestic Company-owned restaurants included in the full year’s comparable restaurant base generated average annual unit sales of $1.3 million. We are committed to maintaining sound restaurant unit economics.

Operating Company-owned restaurants allows us to improve operations, training, marketing and quality standards for the benefit of the entire Papa John’s system.

#### North America commissary

The North America commissary segment comprises 11 full-service regional dough production and distribution Quality Control Centers (“QC Centers”) in the United States (“U.S.”), which supply pizza sauce, dough, food products, paper products, smallwares and cleaning supplies twice weekly to each traditional restaurant served. This system enables us to monitor and control product quality and consistency while lowering food and other costs. We also have one QC Center in Canada, which produces and distributes fresh dough. We evaluate the QC Center system capacity in relation to existing restaurants’ volumes and planned restaurant growth, and facilities are developed or upgraded as operational or economic conditions warrant. To ensure consistent food quality, each domestic franchisee is required to purchase dough and pizza sauce from our QC Centers and to purchase all other supplies from our QC Centers or other approved suppliers.

#### North America franchising

The North America franchising segment consists of our franchise sales and support activities and derives its revenues from the sale of franchise and development rights and the collection of royalties from our franchisees located in the United States and Canada. Our North American franchised restaurants, which included 2,384 restaurants in the full year’s comparable base for 2021, generated average annual unit sales of $1.1 million. These sales, while not included in the Company’s revenues, contribute to our royalty revenues, franchisee marketing fund contributions, and commissary revenue.

#### International

The International segment principally consists of distribution sales to franchised Papa John’s restaurants located in the UK and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our international franchisees. International franchisees are defined as all franchise operations outside of the United States and Canada. As of December 26, 2021, there were 2,311 international restaurants, all of which are franchised. The Company currently operates one international QC Center, which is in the UK. Other QC Centers outside the U.S. are operated by franchisees pursuant to license agreements or by other third parties.

#### All others

All other business units that do not meet the quantitative thresholds for determining reportable segments, which are not operating segments, we refer to as “all others”. These consist of operations that derive revenues from franchise contributions to our marketing funds and the sale, principally to Company-owned and franchised restaurants, of information systems and related services used in restaurant operations, including our point-of-sale system, online and other technology-based ordering platforms, and printing and promotional items.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Note 22” of “Notes to Consolidated Financial Statements” for financial information about our segments.

### Development

At December 26, 2021, there were 5,650 Papa John’s restaurants operating in 50 countries and territories, as follows:

| ​ ​ ​ | ​ Domestic Company-owned ​ | ​ ​ ​ | ​ Franchised North America ​ | ​ ​ ​ | ​ Total North America ​ | ​ ​ ​ | ​ International ​ | ​ ​ ​ | ​ System-wide ​ |
| --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Beginning - December 27, 2020 | 588 | ​ | 2,701 | ​ | 3,289 | ​ | 2,111 | ​ | 5,400 |
| Opened | 11 | ​ | 74 | ​ | 85 | ​ | 304 | ​ | 389 |
| Closed | - | ​ | (35) | ​ | (35) | ​ | (104) | ​ | (139) |
| Acquired | 1 | ​ | - | ​ | 1 | ​ | - | ​ | 1 |
| Sold | - | ​ | (1) | ​ | (1) | ​ | - | ​ | (1) |
| Ending - December 26, 2021 | 600 | ​ | 2,739 | ​ | 3,339 | ​ | 2,311 | ​ | 5,650 |
| Net unit growth | 12 | ​ | 38 | ​ | 50 | ​ | 200 | ​ | 250 |

Although most of our domestic Company-owned markets are well-penetrated, our Company-owned restaurant growth strategy is to continue to open domestic restaurants in existing markets as appropriate, thereby increasing consumer awareness and enabling us to take advantage of operational and marketing scale efficiencies. Our experience in developing markets indicates that market penetration through the opening of multiple restaurants in a particular market results in increased average restaurant sales in that market over time. We have co-developed domestic markets with some franchisees or divided markets among franchisees and will continue to use market co-development in the future, where appropriate.

### Franchise Program

We continue to attract qualified and experienced franchisees, whom we consider to be a vital part of our system’s continued growth. We believe our relationship with our franchisees is fundamental to the performance of our brand and we strive to maintain a collaborative relationship with our franchisees. Franchisees are approved on the basis of the applicant’s business background, restaurant operating experience and financial resources.

*North America Development and Franchise Agreements.* We enter into development agreements with our franchisees in North America for the opening of a specified number of restaurants within a defined period of time and specified geographic area. The franchise agreement is generally executed once a franchisee secures a location. Our current standard franchise agreement requires the franchisee to pay a royalty fee of 5% of sales, and the majority of our existing franchised restaurants have a 5% contractual royalty rate in effect. Incentives offered from time to time, including new store incentives, will reduce the contractual royalty rate paid. We provided financial assistance for traditional North America franchisees in 2020 and 2019 in the form of lower royalties, royalty-based service incentives, and targeted relief as well as additional contributions to Papa John’s Marketing Fund (“PJMF”). This temporary franchisee assistance program concluded in the third quarter of 2020.

Over the past several years, we have offered various development incentive programs for domestic franchisees to accelerate unit openings. Such incentives included the following for 2021 traditional openings: (1) waiver of all or part of the standard one-time franchise fee; (2) waiver of all or part of the 5% royalty fee for a period of time; (3) credit for new store equipment; and (4) credit to be applied toward a future food purchase, under certain circumstances. We believe development incentive programs have accelerated unit openings, and we expect to continue to utilize such development incentives.

Substantially all existing franchise agreements have an initial 10-year term with a 10-year renewal option. We have the right to terminate a franchise agreement for a variety of reasons, including a franchisee’s failure to make payments when due or failure to adhere to our operational policies and standards. Many state franchise laws limit our ability as a franchisor to terminate or refuse to renew a franchise.

*International Development and Franchise Agreements.* In international markets, we have either a development agreement or a master franchise agreement with a franchisee for the opening of a specified number of restaurants within a defined period of time and specified geographic area. Under a master franchise agreement, the franchisee has the right to sub-franchise a portion of the development to one or more sub-franchisees approved by us.

Our current standard international master franchise and development agreements provide for payment to us of a royalty fee of 5% of sales. For international markets with sub-franchise agreements, the effective sub-franchise royalty received by the Company is generally 3% of sales and the master franchisee generally receives a royalty of 2% of sales. The remaining terms applicable to the operation of individual restaurants are substantially equivalent to the terms of our domestic franchise agreement. Development agreements will be negotiated at other-than-standard terms for fees and royalties, and we may offer various development and royalty incentives to help drive unit growth and results.

*Franchise Operations.* All franchisees are required to operate their Papa John’s restaurants in compliance with our policies, standards and specifications, including matters such as menu items, ingredients, and restaurant design. Franchisees have full discretion in human resource practices, and generally have full discretion to determine the prices to be charged to customers, but we generally have the authority to set maximum price points for nationally advertised promotions.

*Franchisee Loans.* Selected domestic and international franchisees have borrowed funds from us, principally for the purchase of restaurants from us or other franchisees or, in certain international markets, for construction and development of new restaurants. Loans made to franchisees can bear interest at fixed or floating rates and in most cases are secured by the fixtures, equipment and signage of the restaurant and/or are guaranteed by the franchise owners. At December 26, 2021, net loans outstanding totaled $47.9 million. See “Note 2” of “Notes to Consolidated Financial Statements” for additional information.

### Marketing Programs

Our domestic marketing strategy consists of both national and local components. Our national strategy includes national advertising via television, print, direct mail, digital, mobile marketing and social media channels. Our digital marketing activities have increased significantly over the past several years in response to increasing customer use of online and mobile technology. Local advertising programs include television, radio, print, direct mail, store-to-door flyers, digital, mobile marketing and local social media channels.

Domestic Company-owned and franchised Papa John’s restaurants within a defined market may be required to join an area advertising cooperative (“Co-op”). Each member restaurant contributes a percentage of sales to the Co-op for market-wide programs, such as television, radio, digital and print advertising, and sports sponsorships. The rate of contribution and uses of the monies collected are determined by a majority vote of the Co-op’s members.

The restaurant-level and Co-op marketing efforts are supported by media, print, digital and electronic advertising materials that are produced by PJMF, our national marketing fund. PJMF is a consolidated nonstock corporation, designed to operate at break-even for the purpose of designing and administering advertising and promotional programs for all participating domestic restaurants. PJMF produces and buys air time for Papa John’s national television commercials and advertises the Company’s products through digital media including banner advertising, paid search-engine advertising, mobile marketing, social media advertising and marketing, text messaging, and email. PJMF also engages in other brand-building activities, such as consumer research and public relations activities. Domestic Company-owned and franchised Papa John’s restaurants are required to contribute a certain minimum percentage of sales to PJMF.

In international markets, our marketing focuses on reaching customers who live or work within a small radius of a Papa John’s restaurant. Our international markets use a combination of advertising strategies, including television, radio, print, digital, mobile marketing and local social media depending on the size of the local market.

### Human Capital

Our team members are critical to our success. As of December 26, 2021, we employed approximately 14,000 persons, of whom approximately 11,500 were team members at Company-owned restaurants, approximately 700 were management personnel at Company-owned restaurants, approximately 700 were corporate personnel and approximately 1,100 were QC Center and our print and promotions subsidiary personnel. Our team members are non-unionized, and most restaurant team members work part-time and are paid on an hourly basis.

Our franchisees are independent business owners, so their employees are not our employees and therefore are not included in our employee count. We estimate the total number of persons in the Papa John’s system, including our team members, franchisees and the team members of franchisees, was approximately 115,000 as of December 26, 2021.

#### Diversity, Equity and Inclusion

Our commitment to diversity, equity and inclusion is rooted in our belief that having a Papa John's family that fully reflects and celebrates the global nature of our brand is the right way to do business. After being recognized by Forbes in 2021 as one of America's Best Employers for Diversity, Papa John's joined Forbes' annual list of the World's Best employers. We were honored to rank #1 amongst all pizza companies and #2 in the entire restaurant category. Also, for the second year in a row, we received a score of 100 on the Human Rights Campaign Foundation’s 2022 Corporate Equality Index.

Creating an inclusive and diverse culture that supports and values team members is important to attracting and retaining talented, dedicated employees. We’re implementing initiatives to diversify our workforce and leadership pipeline, embed policies and practices that ensure fairness and instill and reward behaviors across the organization that foster belonging and increase employee engagement. Out of the 19 members of our Senior Leadership Team and Board of Directors, nine are female, three are Black, and one is Hispanic. We have also initiated multiple corporate initiatives over the past several years, including required unconscious bias training for team members, annual Diversity, Equity, and Inclusion training for all team members, the launch of The Papa John’s Foundation for Building Community, our Day of Service with Boys and Girls Clubs of America, and the creation of eight employee resource affinity groups.

#### Talent Attraction, Retention and Development

Our ability to attract and retain hourly employees in our restaurants has become more challenging, especially as the job market has become more competitive and COVID-19 related factors, especially the rapid spread of the Omicron variant, have prevented employees from being able to work due to illness or quarantine. While we expect the impact of Omicron to subside, we expect labor and inflationary cost challenges to be a continued priority focus for us in 2022. We continue to aspire to be the employer of choice in our industry, including through commitment to diversity and inclusion, and our investments in our team members. In 2021, we announced new hiring, referral and appreciation bonuses. We also made permanent the expanded health, wellness, paid time off and college tuition benefits that we rolled out during the pandemic, including free virtual healthcare visits for all part-time and full-time team members. We intend to continue making these kinds of investments to ensure we support our team members as they support our customers.

To help our team members succeed in their roles and to ensure consistent operational execution, we emphasize continuous training and development opportunities, including providing innovative tools and materials for the operational training and development of team members. Operations personnel complete our management training program and ongoing development programs, including multi-unit training, in which instruction is given on all aspects of our systems and operations. In addition, to further support our team members’ development, we have established our Dough & Degrees program, which allows our team members to earn a college degree for free or at a reduced tuition in partnership with Purdue University Global and the University of Maryland Global Campus. We also offer a tuition reimbursement program that provides another opportunity for our team members to advance their careers.

### Workplace Health and Safety

As part of the Company’s enterprise-wide safety management system, we invest in training, technology and people to protect both our customers and team members. All Papa John’s team members, from those at our corporate offices to those working in our warehouses and restaurants, receive annual safety training based on the requirements of their roles. Our QC Centers and restaurant operations undergo annual safety audits, as well as random safety checks by regional safety managers and field safety coordinators.

We have also taken steps to mitigate the impact of the COVID-19 pandemic on our team members and our customers by implementing extra health and safety measures across our business, including No Contact Delivery and enhanced cleaning and sanitization measures.

### Industry and Competition

The United States Quick Service Restaurant pizza (“QSR Pizza”) industry is mature and highly competitive with respect to price, service, location, food quality, customer loyalty programs and product innovation. The QSR Pizza category is largely fragmented, and competitors include a few large national chains and many smaller regional chains, as well as a large number of local independent pizza operators, any of which can utilize a growing number of food delivery services. Some of our competitors have been in existence for substantially longer periods than Papa John’s, have substantially greater resources than Papa John’s and can have higher levels of restaurant penetration and stronger, more developed brand awareness in markets where we compete. Competition from delivery aggregators and other food delivery concepts also continues to increase.

Internationally, the pizza delivery model is not as mature as the domestic market and presents a growth opportunity for Papa John’s. We believe demand from international consumers will continue to increase as the demand for pizza delivery and carryout continues. We continue to execute on our growth strategy and expand throughout the world.

With respect to the sale of franchises, we compete with many franchisors of restaurants and other business concepts. There is also active competition for management personnel, drivers and hourly team members, and attractive commercial real estate sites suitable for Papa John’s restaurants.

### Government Regulation

We, along with our franchisees, are subject to various federal, state, local and international laws affecting the operation of our respective businesses, including laws and regulations related to our marketing and advertising as well as the preparation and sale of food, food safety and menu labeling. Each Papa John’s restaurant is subject to licensing and regulation by a number of governmental authorities, which include zoning, health, safety, sanitation, building and fire agencies in the state or municipality in which the restaurant is located. Difficulties in obtaining, or the failure to obtain, required licenses or approvals could delay or prevent the opening of a new restaurant in a particular area. Our QC Centers are licensed and subject to regulation by state and local health and fire codes, and the operation of our trucks is subject to federal and state transportation regulations. We are also subject to federal and state environmental regulations. In addition, our domestic operations are subject to various federal and state laws governing such matters as minimum wage requirements, benefits, taxation, working conditions, citizenship requirements, and overtime.

We are subject to Federal Trade Commission (“FTC”) regulation and various state laws regulating the offer and sale of franchises. The laws of several states also regulate substantive aspects of the franchisor-franchisee relationship. The FTC requires us to furnish to prospective franchisees a franchise disclosure document containing prescribed information. State laws that regulate the franchisor-franchisee relationship presently exist in a significant number of states, and bills have been introduced in Congress from time to time that would provide for federal regulation of the U.S. franchisor-franchisee relationship in certain respects if such bills were enacted. State laws often limit, among other things, the duration and scope of non-competition provisions and the ability of a franchisor to terminate or refuse to renew a franchise. Some foreign countries also have disclosure requirements and other laws regulating franchising and the franchisor-franchisee relationship. National, state and local government regulations or initiatives, including health care legislation, “living wage,” or other current or proposed regulations, and increases in minimum wage rates affect Papa John’s as well as others within the restaurant industry. We are also subject to applicable laws in each non-U.S. jurisdiction in which we operate.

### Privacy and Data Protection

We are subject to privacy and data protection laws and regulations globally. The legal and regulatory landscape for privacy and data protection continues to evolve, and there has been an increase in attention given to privacy and data protection issues with the potential to impact our business. This includes recently enacted laws and regulations in the U.S. and in other countries which require notification to individuals and government authorities of breaches involving certain categories of personal information. Any changes in privacy and data protection laws or regulations could also adversely impact the way we use e-mail, text messages and other marketing techniques and could require changes in our marketing strategies. We have a privacy policy posted on our website at www.papajohns.com. The security of our financial data, customer information and other personal information is a priority for us.

### Trademarks, Copyrights and Domain Names

We protect our intellectual property through a combination of patents, copyrights, trademarks and trade secrets, foreign intellectual property laws, confidentiality agreements and other contractual provisions. We have also registered, and applied for the registration of, U.S. and international trademarks, service marks, domain names and copyrights. From time to time, we are made aware of the use by other persons in certain geographical areas of names and marks that are the same as or substantially similar to our marks. It is our policy to pursue registration of our marks whenever possible and to vigorously oppose any infringement of our marks.

We hold copyrights in authored works used in our business, including advertisements, packaging, training, website, and promotional materials. In addition, we have registered and maintain Internet domain names, including “papajohns.com,” and country code domains patterned as papajohns.cc, or a close variation thereof, with “.cc” representing a specific country code.

### Environmental Matters

We are not aware of any federal, state, local or international environmental laws or regulations that we expect to materially affect our earnings or competitive position or result in material capital expenditures. However, we cannot predict the effect of possible future environment legislation or regulations on our operations. During 2021, we had no material environmental compliance-related capital expenditures, and no such material expenditures are anticipated in 2022.

### Impact of COVID-19

Please refer to “Recent Business Matters” within “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of recent business developments, including the impact the COVID-19 pandemic is having on our business and results of operations and financial condition.

### Additional Information

All of our periodic and current reports filed with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), are available, free of charge, through our website located at www.papajohns.com. These reports include our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports. These reports are available through our website as soon as reasonably practicable after we electronically file them with the SEC. We also make available free of charge on our website our Corporate Governance Guidelines, Board Committee Charters, and our Code of Ethics, which applies to Papa John’s directors, officers and employees. Printed copies of such documents are also available free of charge upon written request to Investor Relations, Papa John’s International, Inc., P.O. Box 99900, Louisville, KY 40269-0900. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us, at www.sec.gov. The references to these website addresses do not constitute incorporation by reference of the information contained on the websites, which should not be considered part of this document.

## Risk factors

As filed, 53,557 characters.

We are subject to risks that could have a negative effect on our business, financial condition and results of operations. These risks could cause actual operating results to differ from those expressed in certain “forward-looking statements” contained in this Form 10-K as well as in other Company communications. You should carefully consider the following risk factors together with all other information included in this Form 10-K and our other publicly filed documents.

### Industry Risks

*We are subject to risks related to epidemic and pandemic outbreaks, including COVID-19, which may have a material adverse effect on our business, financial condition and results of operations.*

We are subject to risks related to the global COVID-19 pandemic, which has had, and is expected to continue to have, significant adverse impacts on economic and market conditions. In response to the pandemic, governments and other authorities around the world have imposed or re-imposed measures to attempt to control the spread of COVID-19, including restrictions on freedom of movement and business operations such as travel bans, social distancing requirements, including limitations on gatherings, shelter-in-place orders and quarantines, facial covering mandates and mandated business closures, which have resulted in significant changes in commercial activity and consumer behavior. We cannot predict when the effects of the pandemic will subside, how long there will be continuing resurgences of the virus or its variants, including the Delta and Omicron variants, or the effectiveness and uptake of vaccines and treatment therapies. To the extent that the COVID-19 pandemic continues or worsens, restrictions imposed by governments may not be lifted, or additional restrictions may be imposed. As a result, businesses such as our restaurants or QC Centers are subject to restrictions or other requirements intended to control the spread of COVID-19, including vaccine or testing mandates, and our employees may be prohibited from working, and our supply chains may be interrupted. It may be challenging to staff our QC Centers and restaurants and to obtain and process ingredients and raw materials to support our business needs. In addition, individuals have and may continue to become ill, quarantined or otherwise unable to work and/or travel due to health reasons, vaccine mandates or other governmental restrictions. Also, governments may impose other laws, regulations or taxes that could adversely impact our business, financial condition or results of operations.

The potential adverse effects of COVID-19 also could include, but may not be limited to, our ability to meet consumer demand through the continued availability of our workforce and our franchisees’ workforce; adverse impacts from new laws and regulations affecting our business; increased cyber risks and reliance on technology infrastructure to support our business and operations, including through remote-work protocols; fluctuations in foreign currency markets; credit risks of our customers and counterparties; and impairment of long-lived assets, the carrying value of goodwill or other indefinite-lived intangible assets. However, given the evolving health, economic, social, and governmental environments, the specific impact that COVID-19 could have on these risks remains uncertain.

Moreover, during the duration of the COVID-19 pandemic, we have experienced a significant increase in comparable sales and revenues. While we believe that as pandemic-related restrictions are lifted, we are benefitting from the increase in customers we have experienced due to our menu innovation, customer loyalty programs and our offerings of high-quality pizza and other menu items, we do not expect to be able to maintain the same level of annual growth rates in comparable sales and revenues in the future.

#### Our profitability may suffer as a result of intense competition in our industry.

The U.S. QSR Pizza industry is mature and highly competitive. Competition is based on price, service, location, food quality, brand recognition and loyalty, product innovation, effectiveness of marketing and promotional activity, use of technology, and the ability to identify and satisfy consumer preferences. We may need to reduce the prices for some of our products to respond to competitive and customer pressures, which may adversely affect our profitability. When commodity and other costs increase, we may be limited in our ability to increase prices. With the significant level of competition and the pace of innovation, we may be required to increase investment spending in several areas, particularly marketing and technology, which can decrease profitability.

In addition to competition with our larger competitors, we face competition from new competitors such as fast casual pizza concepts. We also face competitive pressures from an array of food delivery concepts and aggregators delivering for quick service or dine in restaurants, using new delivery technologies or delivering for competitors who previously did not have delivery capabilities, some of which may have more effective marketing. The emergence or growth of new competitors, in the pizza category or in the food service industry generally, may make it difficult for us to maintain or increase our market share and could negatively impact our sales and our system-wide restaurant operations. We also face increasing competition from other home delivery services and grocery stores that offer an increasing variety of prepped or prepared meals in response to consumer demand. As a result, our sales can be directly and negatively impacted by actions of our competitors, the emergence or growth of new competitors, consumer sentiment or other factors outside our control.

One of our competitive strengths is our “BETTER INGREDIENTS. BETTER PIZZA.®” brand promise. This means we may use ingredients that cost more than the ingredients some of our competitors may use. Because of our investment in higher-quality ingredients, we could have lower profit margins than some of our competitors if we are not able to establish a quality differentiator that resonates with consumers. Our sales may be particularly impacted as competitors increasingly emphasize lower-cost menu options.

*Changes in consumer preferences or discretionary consumer spending could adversely impact our results.*

Changes in consumer preferences and trends could negatively affect us (for example, changes in consumer perceptions of certain ingredients that could cause consumers to avoid pizza or some of its ingredients in favor of foods that are or are perceived as healthier, lower-calorie, or lower in carbohydrates or otherwise based on their ingredients or nutritional content). Preferences for a dining experience such as fast casual pizza concepts could also adversely affect our restaurant business and reduce the effectiveness of our marketing and technology initiatives. Also, our success depends to a significant extent on numerous factors affecting consumer confidence and discretionary consumer income and spending, such as general economic conditions, customer sentiment and the level of employment. Any factors that could cause consumers to spend less on food or shift to lower-priced products could reduce sales or inhibit our ability to maintain or increase pricing, which could adversely affect our operating results.

*Food safety and quality concerns may negatively impact our business and profitability.*

Incidents or reports of food- or water-borne illness or other food safety issues, investigations or other actions by food safety regulators, food contamination or tampering, employee hygiene and cleanliness failures, improper franchisee or employee conduct, or presence of communicable disease at our restaurants (both Company-owned and franchised), QC Centers, or suppliers could lead to product liability or other claims. If we were to experience any such incidents or reports, our brand and reputation could be negatively impacted. This could result in a significant decrease in customer traffic and could negatively impact our revenues and profits. Similar incidents or reports occurring at quick service restaurants unrelated to us could likewise create negative publicity, which could negatively impact consumer behavior towards us.

We rely on our domestic and international suppliers, as do our franchisees, to provide quality ingredients and to comply with applicable laws and industry standards. A failure of one of our domestic or international suppliers to meet our quality standards, or meet domestic or international food industry standards, could result in a disruption in our supply chain and negatively impact our brand and our results.

*Failure to preserve the value and relevance of our brand could have a negative impact on our financial results.*

Our results depend upon our ability to differentiate our brand and our reputation for quality. Damage to our brand or reputation could negatively impact our business and financial results. Our brand has been highly rated in certain U.S. surveys, and we strive to build the value of our brand as we develop international markets.

Consumer perceptions of our brand are affected by a variety of factors, such as the nutritional content and preparation of our food, the quality of the ingredients we use, our corporate culture, our policies and systems related to diversity, equity and inclusion, our business practices, our engagement in local communities and the manner in which we source the commodities we use.

Consumer acceptance of our offerings is subject to change for a variety of reasons, and some changes can occur rapidly. Consumer perceptions may also be affected by third parties, including former employees and executives, presenting or promoting adverse commentary or portrayals of our industry, our brand, our suppliers or our franchisees, or otherwise making statements, disclosing information or taking actions that could damage our reputation. If we are unsuccessful in managing incidents that erode consumer trust or confidence, particularly if such incidents receive considerable publicity or result in litigation, our brand value and financial results could be negatively impacted.

*Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could adversely impact our business.*

In recent years, there has been a marked increase in the use of social media platforms, including blogs, chat platforms, social media websites, and other forms of internet-based communications that allow individuals access to a broad audience of consumers and other persons. The rising popularity of social media and other consumer-oriented technologies has increased the speed and accessibility of information dissemination. The dissemination of negative information via social media could harm our business, brand, reputation, marketing partners, financial condition, and results of operations, regardless of the information’s accuracy.

In addition, we frequently use social media to communicate with consumers and the public in general. Failure to use social media effectively could lead to a decline in brand value and revenue. Other risks associated with the use of social media include improper disclosure of proprietary information, negative comments about our brand, exposure of personally identifiable information, fraud, hoaxes or malicious dissemination of false information.

#### Our franchise business model presents a number of risks.

Our success increasingly relies on the financial success and cooperation of our franchisees, yet we have limited influence over their operations. Our franchisees manage their businesses independently, and therefore are responsible for the day-to-day operation of their restaurants. The revenues we realize from franchised restaurants are largely dependent on the ability of our franchisees to maintain or grow their sales. If our franchisees do not maintain or grow sales, our revenues and margins could be negatively affected. Also, if sales trends worsen for franchisees, especially in emerging markets and/or high-cost markets, their financial results may deteriorate, which could result in, among other things, required financial support from us, higher numbers of restaurant closures, reduced numbers of restaurant openings, delayed or reduced payments to us, or increased franchisee assistance, which reduces our revenues.

Our success also increasingly depends on the willingness and ability of our franchisees to remain aligned with us on operating, promotional and marketing plans. Franchisees’ ability to continue to grow is also dependent in large part on the availability of franchisee funding at reasonable interest rates and may be negatively impacted by the financial markets in general or by the creditworthiness of our franchisees. Our operating performance could also be negatively affected if our franchisees experience food safety or other operational problems or project an image inconsistent with our brand and values, particularly if our contractual and other rights and remedies are limited, costly to exercise or subjected to litigation. If franchisees do not successfully operate restaurants in a manner consistent with our required standards, the brand’s image and reputation could be harmed, which in turn could hurt our business and operating results.

*We may be adversely impacted by increases in the cost of food ingredients and other costs.*

We are exposed to fluctuations in prices of commodities. An increase in the cost or sustained high levels of the cost of cheese or other commodities could adversely affect the profitability of our system-wide restaurant operations, particularly if we are unable to increase the selling price of our products to offset increased costs. We have recently experienced inflation in commodities prices, including food ingredients, which has increased our operating expenses. Cheese, representing our largest food cost, and other commodities can be subject to significant cost fluctuations due to weather, availability, global demand and other factors that are beyond our control. Additionally, increases in labor, mileage, insurance, fuel, and other costs could adversely affect the profitability of our restaurant and QC Center businesses. Many of the factors affecting costs in our system-wide restaurant operations are beyond our control, and we may not be able to adequately mitigate these costs or pass along these costs to our customers or franchisees, given the significant competitive pricing pressures we face.

*Changes in privacy or data protection laws could adversely affect our ability to market our products effectively.*

We rely on a variety of direct marketing techniques, including email, text messages and postal mailings. Any future restrictions in federal, state or foreign laws regarding marketing and solicitation or domestic or international data protection laws that govern these activities could adversely affect the continuing effectiveness of email, text messages and postal mailing techniques and could force changes in our marketing strategies. If this occurs, we may need to develop alternative marketing strategies, which may not be as effective and could impact the amount and timing of our revenues.

*Our international operations are subject to increased risks and other factors that may make it more difficult to achieve or maintain profitability or meet planned growth rates.*

Our international operations could be negatively impacted by volatility and instability in international economic, political, security or health conditions in the countries in which the Company or our franchisees operate, especially in emerging markets. In addition, there are risks associated with differing business and social cultures and consumer preferences. We may face limited availability for restaurant locations, higher location costs and difficulties in franchisee selection and financing. We may be subject to difficulties in sourcing and importing high-quality ingredients (and ensuring food safety) in a cost-effective manner, hiring and retaining qualified team members, marketing effectively and adequately investing in information technology, especially in emerging markets.

Our international operations are also subject to additional risk factors, including import and export controls, compliance with anti-corruption and other foreign laws, difficulties enforcing intellectual property and contract rights in foreign jurisdictions, and the imposition of increased or new tariffs or trade barriers. We intend to continue to expand internationally, which would make the risks related to our international operations more significant over time.

Our international restaurants’ results, which are completely franchised, depend heavily on the operating capabilities and financial strength of our franchisees. Any changes in the ability of our franchisees to run their stores profitably in accordance with our operating standards, or to effectively sub-franchise restaurants, could result in brand damage, a higher number of restaurant closures and a reduction in the number of new restaurant openings.

Sales made by our franchisees in international markets and certain loans we provide to such franchisees are denominated in their local currencies, and fluctuations in the U.S. dollar occur relative to the local currencies. Accordingly, changes in currency exchange rates will cause our revenues, investment income and operating results to fluctuate. We have not historically hedged our exposure to foreign currency fluctuations. Our international revenues and earnings may be adversely impacted as the U.S. dollar rises against foreign currencies because the local currency will translate into fewer U.S. dollars. Additionally, the value of certain assets or loans denominated in local currencies may deteriorate. Other items denominated in U.S. dollars, including product imports or loans, may also become more expensive, putting pressure on franchisees’ cash flows.

We are subject to risks and uncertainties associated with the United Kingdom’s withdrawal from the European Union (referred to as “Brexit”), including implications for the free flow of labor and goods in the United Kingdom and the European Union and other financial, legal, tax and trade implications.

#### Adverse global economic conditions subject us to additional risk.

Our financial condition and results of operations are impacted by global markets and economic conditions over which neither we nor our franchisees have control. An economic downturn, including deterioration in the economic conditions in the U.S. or international markets where we compete, may result in a reduction in the demand for our products, longer payment cycles, slower adoption of new technologies and increased price competition.

Poor economic conditions may adversely affect the ability of our franchisees to pay royalties or amounts owed and could also disrupt our business and adversely affect our results. Higher inflation, and a related increase in costs, including rising interest rates, could also impact our franchisees and their ability to open new restaurants or operating existing restaurants profitability.

*Higher labor costs, increased competition for qualified team members and ensuring adequate staffing in our restaurants and QC Centers increase the cost of doing business. Additionally, changes in employment and labor laws, including health care legislation and minimum wage increases, could increase costs for our system-wide operations.*

Our success depends in part on our and our franchisees’ ability to recruit, motivate, train and retain a qualified workforce to work in our restaurants in an intensely competitive environment. Our ability to attract and retain hourly employees in our restaurants has recently become more challenging, especially as the job market has become more competitive, and we expect staffing and labor challenges to continue into 2022. Increased costs associated with recruiting, motivating and retaining qualified employees to work in Company-owned and franchised restaurants, which have stemmed in part from the labor shortage experienced by the QSR industry in 2021, have had, and may in the future have, a negative impact on our Company-owned restaurant margins and the margins of franchised restaurants. Competition for qualified drivers for both our restaurants and supply-chain function also continues to increase as more companies compete for drivers or enter the delivery space, including third party aggregators. Additionally, economic actions, such as boycotts, protests, work stoppages or campaigns by labor organizations, could adversely affect us (including our ability to recruit and retain talent) or our franchisees and suppliers. Social media may be used to foster negative perceptions of employment with our Company in particular or in our industry generally, and to promote strikes or boycotts.

We are also subject to federal, state and foreign laws governing such matters as minimum wage requirements, overtime compensation, benefits, working conditions, citizenship requirements and discrimination and family and medical leave and employee related litigation. Labor costs and labor-related benefits are primary components in the cost of operation of our restaurants and QC Centers. Labor shortages, increased employee turnover and health care mandates could increase our system-wide labor costs.

A significant number of hourly personnel are paid at rates close to the federal and state minimum wage requirements. Accordingly, the enactment of additional state or local minimum wage increases above federal wage rates or regulations related to exempt employees has increased and could continue to increase labor costs for our domestic system-wide operations. A significant increase in the federal minimum wage requirement could adversely impact our financial condition and results of operations.

*We rely on information technology to operate our businesses and maintain our competitiveness, and any failure to invest in or adapt to technological developments or industry trends could harm our business.*

We rely heavily on information systems, including digital ordering solutions, through which over half of our domestic sales originate. We also rely heavily on point-of-sale processing in our Company-owned and franchised restaurants for data collection and payment systems for the collection of cash, credit and debit card transactions, and other processes and procedures. Our ability to efficiently and effectively manage our business depends on the reliability and capacity of these technology systems. In addition, we anticipate that consumers will continue to have more options to place orders digitally, both domestically and internationally. We plan to continue to invest in enhancing and improving the functionality and features of our information technology systems. However, we cannot ensure that our initiatives will be beneficial to the extent, or within the timeframes, expected or that the estimated improvements will be realized as anticipated or at all. Our failure to adequately invest in new technology and adapt to technological developments and industry trends, particularly our digital ordering capabilities, could result in a loss of customers and related market share. Notwithstanding adequate investment in new technology, our marketing and technology initiatives may not be successful in improving our comparable sales results. Additionally, we are in an environment where the technology life cycle is short and consumer technology demands are high, which requires continued reinvestment in technology that will increase the cost of doing business and will increase the risk that our technology may not be customer-centric or could become obsolete, inefficient or otherwise incompatible with other systems.

We rely on our international franchisees to maintain their own point-of-sale and online ordering systems, which are often purchased from third-party vendors, potentially exposing international franchisees to more operational risk, including cyber and data privacy risks and governmental regulation compliance risks.

### Company Risks

*Our reorganization activities may increase our expenses, may not be successful, and may adversely impact employee hiring and retention.*

On September 17, 2020, we announced plans to open an office in Atlanta, Georgia, which opened in October 2021. As a result, we have incurred and may continue to incur certain non-recurring corporate reorganization costs, and these expenses have impacted and could adversely impact our results of operations during the relevant periods and reduce our cash position. Additionally, our ability to achieve the anticipated benefits of our corporate reorganization are subject to assumptions and uncertainties. If we do not realize the anticipated benefits from these measures, or if we incur costs greater than anticipated, our financial condition and operating results may be adversely affected.

In addition, turnover in our corporate office support teams due to certain functions relocating to our office in Georgia could distract our employees, decrease employee morale, harm our reputation, and negatively impact the overall performance of our corporate support teams. As a result of these or other similar risks, our business, results of operations and financial condition may be adversely affected.

*We may not be able to effectively market our products or maintain key marketing partnerships.*

The success of our business depends on the effectiveness of our marketing and promotional plans. We may not be able to effectively execute our national or local marketing plans, particularly if we experienced lower sales that would result in reduced levels of marketing funds. We may be required to expend additional funds to effectively improve consumer sentiment and sales, and we may also be required to engage in additional activities to retain customers or attract new customers to the brand. Such marketing expenses and promotional activities, which could include discounting our products, could adversely impact our results.

Persons or marketing partners who endorse our products could take actions that harm their reputations, which could also cause harm to our brand. From time to time, in response to changes in the business environment and the audience share of marketing channels, we expect to reallocate marketing resources across social media and other channels. That reallocation may not be effective or as successful as the marketing and advertising allocations of our competitors, which could negatively impact the amount and timing of our revenues.

*We may not be able to execute our strategy or achieve our planned growth targets, which could negatively impact our business and our financial results.*

Our growth strategy depends on our and our franchisees’ ability to open new restaurants and to operate them on a profitable basis. We expect substantially all of our international unit growth and much of our domestic unit growth to be franchised units. Accordingly, our profitability increasingly depends upon royalty revenues from franchisees. If our franchisees are not able to operate their businesses successfully under our franchised business model, our results could suffer. Additionally, we may fail to attract new qualified franchisees or existing franchisees may close underperforming locations. Planned growth targets and the ability to operate new and existing restaurants profitably are affected by economic, regulatory and competitive conditions and consumer buying habits. A decrease in sales, or increased commodity or operating costs, including, but not limited to, employee compensation and benefits or insurance costs, could slow the rate of new store openings or increase the number of store closings. Our business is susceptible to adverse changes in local, national and global economic conditions, which could make it difficult for us to meet our growth targets. Additionally, we or our franchisees may face challenges securing financing, finding suitable store locations at acceptable terms or securing required domestic or foreign government permits and approvals. Declines in comparable sales, net store openings and related operating profits can impact our stock price. If we do not continue to grow future sales and operating results and meet our related growth targets or external expectations for net restaurant openings or our other strategic objectives in the future, our stock price could decline.

Our franchisees remain dependent on the availability of financing to remodel or renovate existing locations, upgrade systems and enhance technology, or construct and open new restaurants. From time to time, the Company may provide financing to certain franchisees and prospective franchisees in order to mitigate store closings, allow new units to open, or complete required upgrades. If we are unable or unwilling to provide such financing, which is a function of, among other things, a franchisee’s creditworthiness, the number of new restaurant openings may be slower or the rate of closures may be higher than expected and our results of operations may be adversely impacted. To the extent we provide financing to franchisees, our results could be negatively impacted by negative performance of these franchisee loans.

*Our dependence on a sole supplier or a limited number of suppliers for some ingredients could result in disruptions to our business.*

Domestic restaurants purchase substantially all food and related products from our QC Centers. We are dependent on Leprino Foods Dairy Products Company (“Leprino”) as our sole supplier for mozzarella cheese, one of our key ingredients. Leprino, one of the major pizza category suppliers of cheese in the United States, currently supplies all of our mozzarella cheese domestically and substantially all of our mozzarella cheese internationally. We also depend on a sole source for our supply of certain desserts and garlic sauce, which constitute less than 10% of our domestic Company-owned restaurant sales. While we have no other sole sources of supply for key ingredients or menu items, we do source other key ingredients from a limited number of suppliers. Alternative sources of mozzarella cheese, desserts, other key ingredients or menu items may not be available on a timely basis or may not be available on terms as favorable to us as under our current arrangements.

*Increase in ingredient and other operating costs, including those caused by weather, climate change, COVID-19 and food safety, could adversely affect our results of operations.*

Our Company-owned and franchised restaurants could also be harmed by supply chain interruptions including those caused by factors beyond our control or the control of our suppliers. We experienced limited interruptions in our supply chain in 2021. However, prolonged disruption in the supply of products from or to our QC Centers due to weather, climate change, natural disasters, COVID-19, crop disease, food safety incidents, regulatory compliance, labor dispute or interruption of service by carriers could increase costs, limit the availability of ingredients critical to our restaurant operations and have a significant impact on results. Increasing weather volatility or other long-term changes in global weather patterns, including related to global climate change, could have a significant impact on the price or availability of some of our ingredients. In particular, adverse weather or crop disease affecting the California tomato crop could disrupt the supply of pizza sauce to our and our franchisees’ restaurants. Insolvency of key suppliers could also cause similar business interruptions and negatively impact our business.

*We rely on third parties for certain business processes and services, and failure or inability of such third-party vendors to perform subjects us to risks, including business disruption and increased costs.*

We depend on the performance of suppliers, aggregators and other third parties in our business operations. Third-party business processes we utilize include information technology, gift card authorization and processing, other payment processing, benefits, and other accounting and business services. We conduct third-party due diligence and seek to obtain contractual assurance that our vendors will maintain adequate controls, such as adequate security against data breaches. However, the failure of our suppliers to maintain adequate controls or comply with our expectations and standards could have a material adverse effect on our business, financial condition, and operating results.

*Changes in purchasing practices by our domestic franchisees could harm our commissary business.*

Although our domestic franchisees currently purchase substantially all food products from our QC Centers, the only required QC Center purchases by franchisees are pizza sauce, dough and other items we may designate as proprietary or integral to our system. Any changes in purchasing practices by domestic franchisees, such as seeking alternative approved suppliers of ingredients or other food products, could adversely affect the financial results of our QC Centers and the Company.

*Our current insurance may not be adequate and we may experience claims in excess of our reserves.*

Our insurance programs for workers’ compensation, owned and non-owned automobiles, general liability, property, and health insurance coverage provided to our employees are funded by the Company up to certain retention levels under our retention programs. Retention limits generally range up to $1.0 million. These insurance programs may not be adequate to protect us, and it may be difficult or impossible to obtain additional coverage or maintain current coverage at a reasonable cost. We also have experienced claims volatility and high costs for our insurance programs. We estimate loss reserves based on historical trends, actuarial assumptions and other data available to us, but we may not be able to accurately estimate reserves. If we experience claims in excess of our projections, our business could be negatively impacted. Our franchisees could be similarly impacted by higher claims experience, hurting both their operating results and/or limiting their ability to maintain adequate insurance coverage at a reasonable cost.

### Risks Related to our Indebtedness

*We have incurred substantial debt obligations, which could adversely affect our financial condition, and we may be able to incur substantially more indebtedness, including secured debt, and take other actions that could further exacerbate the risks associated with our substantial indebtedness or affect our ability to satisfy our obligations under our indebtedness.*

Our outstanding debt as of December 26, 2021 was $490.0 million, which was comprised of $400.0 million outstanding under our 3.875% senior notes due 2029 (the “Notes”) and $90.0 million under our revolving credit facility (the “PJI Revolving Facility”) that forms part of our amended and restated credit agreement (the “Amended Credit Agreement”). We had approximately $510.0 million of remaining availability under the PJI Revolving Facility as of December 26, 2021.

Our substantial level of indebtedness could have important consequences, including the following:

- require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, growth opportunities, acquisitions and other general corporate purposes;
- increase our vulnerability to and limit our flexibility in planning for, or reacting to, changes in our business, the industry in which we operate, regulatory and economic conditions;
- expose us to the risk of increased interest rates as borrowings under our Amended Credit Agreement will be subject to variable rates of interest;
- increase our vulnerability to a downgrade of our credit rating, which could adversely affect our cost of funds, liquidity and access to capital markets;
- place us at a competitive disadvantage compared to our competitors that have less debt; and
- limit our ability to borrow additional funds.

We expect to fund our expenses and to pay the principal of and interest on our indebtedness from cash flow from operations. Our ability to meet our expenses and to pay principal of and interest on our indebtedness when due thus depends on our future performance, which will be affected by financial, business, economic and other factors. We will not be able to control many of these factors, such as economic conditions in the markets where we operate and pressure from competitors.

In addition, subject to restrictions in the agreements governing our existing and future indebtedness, we may be able to incur substantially more indebtedness in the future, resulting in higher leverage. The Indenture and the Amended Credit Agreement allow us to incur additional indebtedness, including secured debt. Such additional indebtedness may be substantial. Our ability to recapitalize, incur additional debt and take a number of other actions that are not prohibited by the Indenture or the Amended Credit Agreement could have the effect of exacerbating the risks associated with our substantial indebtedness or diminishing our ability to make payments on our indebtedness when due, which would reduce the availability of cash flow to fund acquisitions, working capital, capital expenditures, other growth opportunities and other general corporate purposes.

*The agreements governing our debt, including the Indenture governing our Notes and the Amended Credit Agreement, contain various covenants that impose restrictions on us.*

The Indenture and the Amended Credit Agreement impose operating and financial restrictions on our activities. In particular, such agreements limit or prohibit our ability to, among other things:

- incur additional indebtedness;
- make certain investments;
- sell assets, including capital stock of certain subsidiaries;
- declare or pay dividends, repurchase or redeem stock or make other distributions to stockholders;
- consolidate, merge, liquidate or dissolve;
- enter into transactions with our affiliates; and
- incur liens.

In addition, our Amended Credit Agreement requires us to maintain compliance with specified leverage ratios under certain circumstances. Our ability to comply with these provisions may be affected by events beyond our control, and these provisions could limit our ability to plan for or react to market conditions, meet capital needs or otherwise conduct our business activities and plans.

These restrictions on our ability to operate our business could seriously harm our business by, among other things, limiting our ability to take advantage of financing, merger and acquisition and other corporate opportunities.

Furthermore, various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants. Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default or cross-acceleration provisions. Such a default would permit lenders to accelerate the maturity of the debt under these agreements and to foreclose upon any collateral securing the debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing. We cannot assure you that we will be granted waivers or amendments to these agreements if for any reason we are unable to comply with these agreements or that we will be able to refinance our debt on terms acceptable to us, or at all.

*We are exposed to variable interest rates under our Amended Credit Agreement, and increases in interest rates would also increase our debt service costs and could materially impact our profitability.*

We are exposed to variable interest rates under the Amended Credit Agreement. We have entered into interest rate swaps that fix a significant portion of our variable interest rate risk. However, by using a derivative instrument to hedge exposures to changes in interest rates, we also expose ourselves to credit risk. Credit risk is due to the possible failure of the counterparty to perform under the terms of the derivative contract.

### General Risks

*Natural disasters, hostilities, social unrest, severe weather and other catastrophic events may disrupt our operations or supply chain.*

The occurrence of a natural disaster, hostilities, cyber-attack, social unrest, terrorist activity, outbreak of epidemic, pandemic or other contagious disease, power outages, severe weather (such as tornados, hurricanes, blizzards, ice storms, floods, heat waves, etc.) or other catastrophic events may disrupt our operations or supply chain and result in the closure of our restaurants (Company-owned or franchised), our corporate offices, any of our QC Centers or the facilities of our suppliers, and can adversely affect consumer spending, consumer confidence levels and supply availability and costs, any of which could materially adversely affect our results of operations.

#### Increasingly complex laws and regulations could adversely affect our business.

We operate in an increasingly complex regulatory environment, and the cost of regulatory compliance is increasing. Our failure, or the failure of any of our franchisees, to comply with applicable U.S. and international labor, health care, food, health and safety, consumer protection, anti-bribery and corruption, competition, environmental and other laws may result in civil and criminal liability, damages, fines and penalties. Enforcement of existing laws and regulations, changes in legal requirements, and/or evolving interpretations of existing regulatory requirements may result in increased compliance costs and create other obligations, financial or otherwise, that could adversely affect our business, financial condition or operating results. Increased regulatory scrutiny of food matters and product marketing claims, and increased litigation and enforcement actions may increase compliance and legal costs and create other obligations that could adversely affect our business, financial condition or operating results. Governments may also impose requirements and restrictions that impact our business. For example, some local government agencies have implemented ordinances that restrict the sale of certain food or drink products.

Compliance with new or additional domestic and international government laws or regulations, including the European Union General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act (“CCPA”) which could increase costs for compliance. These laws and regulations are increasing in complexity and number, change frequently and increasingly conflict among the various countries in which we operate, which has resulted in greater compliance risk and costs. If we fail to comply with these laws or regulations, we could be subject to reputational damage and significant litigation, monetary damages, regulatory enforcement actions or fines in various jurisdictions. For example, a failure to comply with the GDPR could result in fines up to the greater of €20 million or 4% of annual global revenues.

There also has been increased stakeholder focus, including by U.S. and foreign governmental authorities, investors, media and nongovernmental organizations, on environmental sustainability matters, such as climate change, the reduction of greenhouse gases and water consumption. Legislative, regulatory or other efforts to combat climate change or other environmental concerns could result in future increases in taxes, restrictions on or increases in the costs of supplies, transportation and utilities, any of which could increase our operating costs and those of our franchisees, and necessitate future investments in facilities and equipment. These risks also include the increased pressure to make commitments, set targets, or establish additional goals to take actions to meet them, which could expose us and our franchisees to market, operational, execution and reputational costs or risks. Conversely, if we are not effective in addressing social and environmental sustainability matters, consumer trust and investor confidence in our Company may suffer.

*Disruptions of our critical business or information technology systems could harm our ability to compete and conduct our business.*

Our critical business and information technology systems have in the past and could in the future be damaged or interrupted by power loss, various technological failures, user errors, cyber-attacks, ransomware sabotage or acts of God. In particular, the Company and our franchisees have experienced occasional interruptions of our digital ordering solutions, which make online ordering unavailable or slow to respond, negatively impacting sales and the experience of our customers. If our digital ordering solutions do not perform with adequate speed and security, our customers may be less inclined to return to our digital ordering solutions.

Part of our technology infrastructure, such as our domestic point-of-sale system, is specifically designed for us and our operational systems, which could cause unexpected costs, delays or inefficiencies when infrastructure upgrades are needed or prolonged and widespread technological difficulties occur. Significant portions of our technology infrastructure, particularly in our digital ordering solutions, are provided by third parties, and the performance of these systems is largely beyond our control. Occasionally, we have experienced or could experience temporary disruptions in our business due to third-party systems failing to adequately perform. Failure to manage future failures of these systems, particularly as our online sales grow, could harm our business and the satisfaction of our customers. Such third-party systems could be disrupted either through system failure or if third party vendor patents and contractual agreements do not afford us protection against similar technology. In addition, we may not have or be able to obtain adequate protection or insurance to mitigate the risks of these events or compensate for losses related to these events, which could damage our business and reputation and be expensive and difficult to remedy or repair.

*Failure to maintain the integrity of internal or customer data could result in damage to our reputation, loss of sales, and/or subject us to litigation, penalties or significant costs.*

We are subject to a number of privacy and data protection laws and regulations. We collect and retain large volumes of internal and customer data, including credit card data and other personally identifiable information of our employees and customers housed in the various information systems we use. Constantly changing information security threats, particularly persistent cyber security threats, pose risks to the security of our systems and networks, and the confidentiality, availability and integrity of our data and the availability and integrity of our critical business functions. As techniques used in cyber-attacks evolve, we may not be able to timely detect threats or anticipate and implement adequate security measures. The integrity and protection of the customer, employee, franchisee and Company data are critical to us. Our information technology systems and databases, and those provided by our third-party vendors, including international vendors, have been and will continue to be subject to computer viruses, malware attacks, unauthorized user attempts, phishing and denial of service and other malicious cyber-attacks. The failure to prevent fraud or security breaches or to adequately invest in data security could harm our business and revenues due to the reputational damage to our brand. Such a breach could also result in litigation, regulatory actions, penalties, and other significant costs to us and have a material adverse effect on our financial results. These costs could be significant and well in excess of, or not covered by, our cyber insurance coverage.

*We have been and will continue to be subject to various types of investigations and litigation, including collective and class action litigation, which could subject us to significant damages or other remedies.*

We are subject to the risk of investigations and litigation from various parties, including vendors, customers, franchisees, state and federal agencies, stockholders and employees. From time to time, we are involved in a number of lawsuits, claims, investigations, and proceedings consisting of securities, antitrust, intellectual property, employment, consumer, personal injury, corporate governance, commercial and other matters arising in the ordinary course of business.

We have been subject to claims in cases containing collective and class action allegations. Plaintiffs in these types of lawsuits often seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss and defense costs relating to such lawsuits may not be accurately estimated. Litigation trends involving personal injury, employment law, intellectual property and the relationship between franchisors and franchisees may increase our cost of doing business. We evaluate all of the claims and proceedings involving us to assess the expected outcome, and where possible, we estimate the amount of potential losses to us. In many cases, particularly collective and class action cases, we may not be able to estimate the amount of potential losses and/or our estimates may prove to be insufficient. These assessments are made by management based on the information available at the time made and require the use of a significant amount of judgment, and actual outcomes or losses may materially differ. Regardless of whether any claims against us are valid, or whether we are ultimately held liable, such litigation may be expensive to defend and may divert resources away from our operations and negatively impact earnings. Further, we may not be able to obtain adequate insurance to protect us from these types of litigation matters or extraordinary business losses.

We may be subject to harassment or discrimination claims and legal proceedings. Our Code of Ethics and Business Conduct policies prohibit harassment and discrimination in the workplace, in sexual or in any other form. To monitor and enforce these policies, we have ongoing programs for workplace training and compliance, and we investigate and take disciplinary action with respect to alleged violations. Nevertheless, actions by our team members could violate those policies. Franchisees and suppliers are also required to comply with all applicable laws and govern themselves with integrity. Any violations (or perceptions thereof) by our franchisees or suppliers could have a negative impact on consumer perceptions of us and our business and create reputational or other harm to the Company.

W*e may not be able to adequately protect our intellectual property rights, which could negatively affect our results of operations.*

We depend on the Papa John’s brand name and rely on a combination of trademarks, service marks, copyrights, and similar intellectual property rights to protect and promote our brand. We believe the success of our business depends on our continued ability to exclusively use our existing marks to increase brand awareness and further develop our brand, both domestically and abroad. We may not be able to adequately protect our intellectual property rights, and we may be required to pursue litigation to prevent consumer confusion and preserve our brand’s high-quality reputation. Litigation could result in high costs and diversion of resources, which could negatively affect our results of operations, regardless of the outcome.

#### We may be subject to impairment charges.

Impairment charges are possible due to the nature and timing of decisions we make about underperforming assets or markets, or if previously opened or acquired restaurants perform below our expectations. This could result in a decrease in our reported asset value and reduction in our net income.

#### We operate globally and changes in tax laws could adversely affect our results.

We operate globally and changes in tax laws could adversely affect our results. We have international operations and generate substantial revenues and profits in foreign jurisdictions. The domestic and international tax environments continue to evolve as a result of tax changes in various jurisdictions in which we operate and changes in the tax laws in certain countries, including the United States, could impact our future operating results. A significant increase in the U.S. corporate tax rate could negatively impact our financial results.

## Properties

As filed, 4,715 characters.

As of December 26, 2021, there were 5,650 Papa John’s restaurants worldwide. The following tables provide the locations of our restaurants. We define “North America” as the United States and Canada and “domestic” as the contiguous United States.

### North America Restaurants:

| ​ ​ ​ | ​ ​ Company (1) | ​ ​ Franchised | ​ Total |
| --- | ---: | ---: | ---: |
| Alabama | 3 | 83 | 86 |
| Alaska | — | 11 | 11 |
| Arizona | — | 69 | 69 |
| Arkansas | — | 26 | 26 |
| California | — | 179 | 179 |
| Colorado | — | 46 | 46 |
| Connecticut | — | 5 | 5 |
| Delaware | — | 17 | 17 |
| District of Columbia | — | 10 | 10 |
| Florida | 39 | 254 | 293 |
| Georgia | 86 | 100 | 186 |
| Hawaii | — | 14 | 14 |
| Idaho | — | 13 | 13 |
| Illinois | 8 | 73 | 81 |
| Indiana | 44 | 93 | 137 |
| Iowa | — | 24 | 24 |
| Kansas | 16 | 19 | 35 |
| Kentucky | 42 | 64 | 106 |
| Louisiana | — | 60 | 60 |
| Maine | — | 3 | 3 |
| Maryland | 60 | 42 | 102 |
| Massachusetts | — | 7 | 7 |
| Michigan | — | 33 | 33 |
| Minnesota | — | 35 | 35 |
| Mississippi | — | 33 | 33 |
| Missouri | 41 | 27 | 68 |
| Montana | — | 9 | 9 |
| Nebraska | — | 13 | 13 |
| Nevada | — | 25 | 25 |
| New Hampshire | — | 3 | 3 |
| New Jersey | — | 53 | 53 |
| New Mexico | — | 16 | 16 |
| New York | — | 85 | 85 |
| North Carolina | 101 | 81 | 182 |
| North Dakota | — | 9 | 9 |
| Ohio | — | 161 | 161 |
| Oklahoma | — | 37 | 37 |
| Oregon | — | 14 | 14 |
| Pennsylvania | — | 83 | 83 |
| Rhode Island | — | 3 | 3 |
| South Carolina | 8 | 78 | 86 |
| South Dakota | — | 13 | 13 |
| Tennessee | 36 | 79 | 115 |
| Texas | 90 | 215 | 305 |
| Utah | — | 30 | 30 |
| Virginia | 26 | 118 | 144 |
| Washington | — | 43 | 43 |
| West Virginia | — | 23 | 23 |
| Wisconsin | — | 24 | 24 |
| Wyoming | — | 9 | 9 |
| Total U.S. Papa John’s Restaurants | 600 | 2,564 | 3,164 |
| Canada | — | 175 | 175 |
| Total North America Papa John’s Restaurants | 600 | 2,739 | 3,339 |

(1) Company-owned Papa John’s restaurants include restaurants owned by majority-owned subsidiaries. There were 188 such restaurants at December 26, 2021 (60 in Maryland, 90 in Texas, 26 in Virginia, and 12 in Georgia).

### International Restaurants:

| ​ ​ | ​ | ​ Franchised |
| --- | --- | ---: |
| Azerbaijan |  | 12 |
| Bahrain |  | 18 |
| Belarus |  | 20 |
| Bolivia |  | 5 |
| Cambodia | ​ | 5 |
| Cayman Islands |  | 2 |
| Chile |  | 135 |
| China |  | 226 |
| Colombia |  | 55 |
| Costa Rica |  | 40 |
| Cyprus |  | 7 |
| Dominican Republic |  | 19 |
| Ecuador |  | 24 |
| Egypt |  | 64 |
| El Salvador |  | 31 |
| France |  | 5 |
| Germany | ​ | 13 |
| Guam |  | 3 |
| Guatemala |  | 25 |
| Iraq |  | 1 |
| Ireland |  | 79 |
| Israel |  | 15 |
| Kazakhstan |  | 6 |
| Kuwait |  | 30 |
| Kyrgyzstan |  | 3 |
| Mexico |  | 68 |
| Morocco | ​ | 4 |
| Netherlands |  | 32 |
| Nicaragua |  | 4 |
| Oman |  | 11 |
| Pakistan | ​ | 15 |
| Panama |  | 27 |
| Peru |  | 46 |
| Philippines |  | 15 |
| Poland |  | 7 |
| Portugal | ​ | 3 |
| Puerto Rico |  | 26 |
| Qatar |  | 38 |
| Russia |  | 186 |
| Saudi Arabia |  | 7 |
| South Korea |  | 219 |
| Spain |  | 82 |
| Trinidad |  | 9 |
| Tunisia |  | 10 |
| Turkey |  | 60 |
| United Arab Emirates |  | 66 |
| United Kingdom |  | 507 |
| Venezuela |  | 26 |
| Total International Papa John’s Restaurants | ​ | 2,311 |

Most Papa John’s Company-owned restaurants are located in leased space. The initial term of most domestic restaurant leases is five years with most leases providing for one or more options to renew for at least one additional term. Generally, the leases are triple net leases, which require us to pay all or a portion of the cost of insurance, taxes and utilities. As a result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are also contingently liable for payment of approximately 70 domestic leases.

Our corporate office in Atlanta, Georgia, is located in a leased space. Nine of our 12 North America QC Centers are located in leased spaces, with the remaining three QC centers located in buildings we own. Our corporate office and our printing operations located in Louisville, KY are in buildings owned by us. We also maintain a Company-owned office and a full-service QC Center outside of London, United Kingdom (“UK”), where our international operations are managed.

At December 26, 2021, we leased and subleased approximately 425 Papa John’s restaurant sites to franchisees in the UK. The initial lease terms on the franchised sites in the UK are generally 15 years. The initial lease terms of the franchisee subleases are generally five to ten years. See “Note 3” of “Notes to Consolidated Financial Statements” for additional information.

## Legal proceedings

As filed, 166 characters.

The information contained in “Note 19, Litigation, Commitments and Contingencies” of “Notes to Consolidated Financial Statements” is incorporated by reference herein.

## Management's discussion and analysis

As filed, 60,137 characters.

### Introduction

Papa John’s International, Inc. (referred to as the “Company,” “Papa John’s” or in the first-person notations of “we,” “us” and “our”) began operations in 1984. At December 26, 2021, there were 5,650 Papa John’s restaurants in operation, consisting of 600 Company-owned and 5,050 franchised restaurants. Our revenues are derived from retail sales of pizza and other food and beverage products to the general public by Company-owned restaurants, franchise royalties, and sales of franchise and development rights. Additionally, approximately 47% of our North America revenues in each of the last two fiscal years were derived from sales to franchisees of various items including food and paper products from our domestic Quality Control Centers (“QC Centers”), operation of our international QC Center in the United Kingdom (“UK”), contributions received by Papa John’s Marketing Fund (“PJMF”) which is our national marketing fund, printing and promotional items and information systems equipment, and software and related services. We believe that in addition to supporting both Company and franchised profitability and growth, these activities contribute to product quality and consistency throughout the Papa John’s system.

### Recent Business Matters

In 2021, the Company focused on executing strategic priorities and building a foundation for long-term success, including the specific items described below.

*Growth Strategy*. The Company delivered its tenth consecutive quarter of system-wide sales growth and continues to expand both domestically and internationally, as evidenced by our comparable sales and restaurant unit growth. Our two-year comparable sales increases were 29.4% in North America and 25.6% internationally, driven by menu innovation and customer retention. Product innovation is an important part of our plan to continue building sales and also represents our platform for longer-term strategy and opportunity. Additionally, our expanding development pipeline is on track to be a key long-term growth driver. In 2021, we announced one of our largest domestic development deals to open 100 new locations in high growth markets in Texas and the South by 2029. We also announced our expanded partnership with Drake Food Service International to open over 220 Papa John’s restaurants internationally by 2025, and most recently announced a partnership with FountainVest Partners to open more than 1,350 new stores across South China by 2040, the largest franchisee development agreement in Papa John’s history. We plan to continue focusing on our strategic innovative products and restaurant development across our platforms to drive sustainable growth this year and beyond.

*Capital Allocation Strategy.* During 2021, we executed on key components of our capital structure and allocation strategy by aligning our capital structure to support the long-term growth potential of the Company. During the fourth quarter of 2021, we announced a $425.0 million share repurchase program. Earlier in the year, we issued $400.0 million of 3.875% senior notes which will mature on September 15, 2029 and concurrently refinanced our revolving credit facility. We also increased our annual dividend rate and completed the repurchase and conversion of all of our Series B Convertible Preferred Stock (the “Series B Preferred Stock”). This strategic capital realignment will allow us to deliver on our broader growth strategy and provide ongoing value to our shareholders.

*Coronavirus (“COVID-19”) and Related Market Impact.* The COVID-19 outbreak has presented evolving risks and developments domestically and internationally, as well as new opportunities for our business. Our delivery and carryout model positioned us to continue to experience strong demand for our products. Increased demand partly driven by changes in consumer behavior during the pandemic contributed to our strong comparable sales growth during 2021 and 2020. To ensure we can continue to meet the demand of our customers, we continue to monitor our supply chain and labor force availability. We have recently experienced inflation in commodities prices, including food ingredients, which has increased our operating expenses. Our ability to attract and retain hourly employees in our restaurants has also become more challenging, especially as the job market has become more competitive. We have continued to address labor shortages during 2021 through new hiring, referral and appreciation bonuses in the Company’s corporate restaurants and supply chain, holding national recruiting events, supplementing delivery drivers with delivery aggregator partnerships as needed and technology advancements. We expect labor and inflationary cost challenges, including the impact on store development, to be a continued priority focus for us in 2022. We continue to monitor the progression of the COVID-19 pandemic and state, local and federal government regulatory and public health responses thereto, including the federal

Occupational Health and Safety Administration’s efforts to implement a nationwide vaccine requirement for large employers.

We believe the pandemic has accelerated our efforts to innovate and bring new customers to the Papa John’s system. While we believe that as the pandemic-related restrictions are lifted, we will benefit in the long-term from the increase in customers we have experienced during the duration of the pandemic due to our menu innovation, customer loyalty program and our offerings of high-quality pizza and other menu items, we do not expect to be able to maintain the same level of annual growth rates in comparable sales and revenues in the future.

*Strategic Corporate Reorganization for Long-term Growth.* Our corporate office in Atlanta, Georgia located in Three Ballpark Center at The Battery Atlanta opened in October 2021. The Atlanta office is part of a broader strategic reorganization of corporate functions reflecting the Company’s ongoing transformation into a brand and culture that can effectively and efficiently deliver on the Company’s purpose, values and strategic business priorities. Affected employees who did not relocate to Atlanta were offered a separation package. As a result, we incurred certain one-time corporate reorganization costs of approximately $19.1 million related to employee severance and transition, recruitment and relocation and other third-party costs from the fourth quarter of 2020 through 2021. Of that amount, we incurred costs of approximately $13.1 million in 2021 and $6.0 million in 2020. Looking forward to 2022, our one-time corporate reorganization costs are substantially complete and we do not anticipate that any significant remaining reorganization costs will be incurred. See “Items Impacting Comparability; Non-GAAP Measures” for additional information.

### Presentation of Financial Results

### Critical Accounting Policies and Estimates

The results of operations are based on our Consolidated Financial Statements, which were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The preparation of Consolidated Financial Statements requires management to select accounting policies for critical accounting areas as well as estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements. The Company’s significant accounting policies, including recently issued accounting pronouncements, are more fully described in “Note 2” of “Notes to Consolidated Financial Statements.” A number of our significant accounting policies are critical due to the fact that they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. Significant changes in assumptions and/or conditions in our critical accounting policies could materially impact the operating results.

#### Allowance for Credit Losses on Franchisee Notes Receivable

The Company has provided financing (recorded as notes receivable) to select domestic and international franchisees principally for use in the construction and development of their restaurants and for the purchase of restaurants from the Company or other franchisees. Most notes receivable bear interest at fixed or floating rates and are generally secured by the assets of each restaurant and the ownership interests in the franchise. The Company has also provided long-term financing to certain franchisees with royalty payment plans.

The Company establishes an allowance for credit losses on franchisee notes receivables when it is more likely than not that some portion or all of the balance will not be realized. The allowance for credit losses on notes receivable is highly judgmental and subjective based on management’s judgments of each franchisee’s economic performance and future market conditions. The Company considers each individual note receivable separately for evaluation of its allowance for credit losses which represent specific reserve calculations, except for certain notes receivable issued related to equipment development incentives where a general portfolio reserve exists supported by historical write-off experiences. Included in the terms of the notes receivable agreements, the Company is provided collateral rights of the franchisee’s stores (e.g., underlying franchise business, property and equipment) and personal guarantees from the operators to recover the carrying value of the outstanding note receivable in the event collectability concerns arise. As a result, the Company also considers the fair value of the underlying collateral rights (e.g., underlying franchisee business, property and equipment) and any guarantees when assessing the allowance for credit losses (which may require third-party valuations of fair value). Further, the Company also considers overall franchisee credit quality, which is monitored through the timing of payments compared to the prescribed payment terms and known facts regarding the financial condition of the franchisee or customer, including metrics such as comparable store sales of the franchisees operations and weekly per store sales averages. Notes receivable balances are charged off against the allowance after recovery efforts have ceased.

Franchisee notes receivable was $49.4 million with an allowance for credit losses of $1.5 million as of December 26, 2021 compared to $51.1 million with an allowance for credit losses of $3.2 million as of December 27, 2020.

#### Insurance Reserves

Our insurance programs for workers’ compensation, owned and non-owned automobiles, general liability and property insurance coverage provided to our employees are funded by the Company up to certain retention. Retention limits range up to $1.0 million. We record the liability for losses based upon undiscounted estimates of the liability for claims incurred and for events that have occurred but have not been reported using certain third-party actuarial projections and our historical claims loss experience.

As of December 26, 2021, our insurance reserves were $88.1 million as compared to $82.0 million at December 27, 2020. Our insurance reserves primarily relate to auto liability and workers’ compensation claims and includes the gross up of claims above our retention levels, with a corresponding receivable recorded in Prepaid and other current assets and Other assets on the Consolidated Balance Sheets. The insurance reserves represent the mid-point of the range as determined by our actuarial analysis, which considered various actuarial valuation methodologies. The determination of the recorded insurance reserves is highly complex due to the significant uncertainty in the potential value of reported claims and the number and potential value of incurred but not reported claims.

#### Income Tax Accounts and Tax Reserves

Papa John’s is subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining Papa John’s provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable and those deferred. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax attribute carryforwards (e.g., net operating losses, capital losses, and foreign tax credits). The effect on deferred taxes of changes in tax rates is recognized in the period in which the new tax rate is enacted.

Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts we expect to realize and were $28.6 million and $23.0 million as of December 26, 2021 and December 27, 2020, respectively. The determination as to whether a deferred tax asset will be realized is based on the evaluation of historical profitability, future market growth, future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. The Company assesses deferred taxes and the adequacy or need for a valuation allowance on a quarterly basis.

Tax authorities periodically audit the Company. We record reserves and related interest and penalties for identified exposures as income tax expense. We evaluate these issues and adjust for events, such as statute of limitations expirations, court rulings or audit settlements, which may impact our ultimate payment for such exposures.

In the event the Company is unable to generate future taxable income, there is a material change in the actual effective tax rates, the time period within which the underlying temporary differences become taxable or deductible, or if the tax laws change unfavorably, then we could be required to increase the valuation allowance against deferred tax assets, resulting in an increase in income tax expense and the effective tax rate. Each change of income tax expense of $1.5 million would impact the fiscal 2021 effective tax rate by one percentage point. See “Note 17” of “Notes to Consolidated Financial Statements” for additional information.

### Global Restaurant Sales and Unit Information

“Comparable sales” represents the change in year-over-year sales for the same base of restaurants for the same fiscal periods. “Global system-wide restaurant sales” represents total restaurant sales for all company-owned and franchised stores open during the comparable periods, and “Global system-wide restaurant sales growth” represents the change in total system restaurant sales year-over-year. We believe North America, international and global restaurant and comparable sales growth and Global system-wide restaurant sales information is useful in analyzing our results since our franchisees pay royalties and marketing fund contributions that are based on a percentage of franchise sales. Comparable sales and Global system-wide restaurant sales results for restaurants operating outside of the United States are reported on a constant dollar basis, which excludes the impact of foreign currency translation. Franchise sales also generate commissary revenue in the United States and in certain international markets. Franchise restaurant and comparable sales growth information is also useful for comparison to industry trends and evaluating the strength of our brand. Management believes the presentation of franchise restaurant sales growth, excluding the impact of foreign currency, provides investors with useful information regarding underlying sales trends and the impact of new unit growth without being impacted by swings in the external factor of foreign currency. Franchise restaurant sales are not included in the Company’s revenues.

| ​ ​ ​ Comparable sales growth: | ​ ​ | ​ Year Ended December 26, 2021 ​ | ​ ​ | ​ ​ ​ | ​ December 27, 2020 ​ | ​ ​ |
| --- | --- | --- | ---: | --- | --- | ---: |
| Domestic Company-owned restaurants | ​ | ​ | 11.3% | ​ | ​ | 14.2% |
| North America franchised restaurants | ​ | ​ | 12.0% | ​ | ​ | 18.6% |
| North America restaurants | ​ | ​ | 11.8% | ​ | ​ | 17.6% |
| International restaurants | ​ | ​ | 13.0% | ​ | ​ | 12.6% |
| Total comparable sales growth | ​ | ​ | 12.1% | ​ | ​ | 16.3% |
| **System-wide restaurant sales growth:** | ​ | ​ | ​ | ​ | ​ | ​ |
| (excluding the impact of foreign currency) | ​ | ​ | ​ | ​ | ​ | ​ |
| Domestic Company-owned restaurants | ​ | ​ | 11.1% | ​ | ​ | 7.5% |
| North America franchised restaurants | ​ | ​ | 13.0% | ​ | ​ | 18.7% |
| North America restaurants | ​ | ​ | 12.6% | ​ | ​ | 16.0% |
| International restaurants | ​ | ​ | 24.4% | ​ | ​ | 15.5% |
| Total global system-wide restaurant sales growth | ​ | ​ | 15.4% | ​ | ​ | 15.9% |

| ​ Restaurant Progression ​ North America Company-owned: | ​ ​ | ​ Year Ended December 26, 2021 ​ | ​ ​ | ​ ​ | ​ December 27, 2020 ​ | ​ ​ |
| --- | --- | --- | ---: | --- | --- | ---: |
| Beginning of period | ​ |  | 588 | ​ |  | 598 |
| Opened | ​ |  | 11 | ​ |  | 2 |
| Closed | ​ |  | — | ​ |  | (12) |
| Acquired | ​ |  | 1 | ​ |  | — |
| End of period | ​ |  | 600 | ​ |  | 588 |
| North America franchised: | ​ | ​ | ​ | ​ | ​ | ​ |
| Beginning of period | ​ |  | 2,701 | ​ |  | 2,690 |
| Opened | ​ |  | 74 | ​ |  | 62 |
| Closed | ​ |  | (35) | ​ |  | (51) |
| Sold | ​ | ​ | (1) | ​ | ​ | — |
| End of period | ​ |  | 2,739 | ​ |  | 2,701 |
| International franchised: | ​ | ​ | ​ | ​ | ​ | ​ |
| Beginning of period | ​ |  | 2,111 | ​ |  | 2,107 |
| Opened | ​ |  | 304 | ​ |  | 156 |
| Closed | ​ |  | (104) | ​ |  | (152) |
| End of period | ​ |  | 2,311 | ​ |  | 2,111 |
| Total restaurants – end of period | ​ |  | 5,650 | ​ |  | 5,400 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Full year net store growth | ​ |  | 250 | ​ | ​ | 5 |

32

### Fiscal Year

Our fiscal year ends on the last Sunday in December of each year. All fiscal years presented in the accompanying Consolidated Financial Statements consist of 52 weeks.

### Results of Operations

#### 2021 Compared to 2020

This section of this Annual Report on Form 10-K generally discusses fiscal 2021 and 2020 items and year-to-year comparisons between fiscal 2021 and 2020. Discussion of 2019 items and year-to-year comparisons between fiscal 2020 and 2019 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on From 10-K for the fiscal year ended December 27, 2020.

The following table sets forth the various components of the Consolidated Statements of Operations expressed as a percentage of total revenues, except operating costs which are expressed as a percentage of the associated revenue component.

*($ in thousands)*

| ​ ​ ​ ​ Revenues: | ​ ​ ​ ​ ​ ​ | ​ ​ Year Ended December 26, 2021 ​ ​ ​ ​ | ​ ​ ​ ​ | ​ % of Related Revenues ​ | ​ ​ ​ ​ ​ | ​ ​ December 27, 2020 ​ ​ ​ | ​ ​ ​ ​ | ​ % of Related Revenues ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ Increase (Decrease) ​ |
| --- | --- | --- | --- | ---: | --- | --- | --- | ---: | --- | --- | ---: |
| Domestic Company-owned restaurant sales | ​ | $778,323 | ​ | ​ | ​ | $700,757 | ​ | ​ | ​ | ​ | ​ |
| North America franchise royalties and fees | ​ | ​ 129,310 | ​ | ​ | ​ | ​ 96,732 | ​ | ​ | ​ | ​ | ​ |
| North America commissary revenues | ​ | ​ 761,305 | ​ | ​ | ​ | ​ 680,793 | ​ | ​ | ​ | ​ | ​ |
| International revenues | ​ | ​ 150,771 | ​ | ​ | ​ | ​ 123,963 | ​ | ​ | ​ | ​ | ​ |
| Other revenues | ​ | ​ 248,712 | ​ | ​ | ​ | ​ 210,989 | ​ | ​ | ​ | ​ | ​ |
| **Total revenues** | ​ | ​ 2,068,421 | ​ | ​ | ​ | ​ 1,813,234 | ​ | ​ | ​ | ​ | ​ |
| **Costs and expenses:** | ​ | ​ ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ |
| Operating costs (excluding depreciation and amortization shown separately below): | ​ | ​ ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ |
| Domestic Company-owned restaurant expenses | ​ | ​ 621,871 | ​ | 79.9% | ​ | ​ 563,799 | ​ | 80.5% | ​ | ​ | (0.6)% |
| North America commissary expenses | ​ | ​ 703,622 | ​ | 92.4% | ​ | ​ 630,937 | ​ | 92.7% | ​ | ​ | (0.3)% |
| International expenses | ​ | ​ 87,286 | ​ | 57.9% | ​ | ​ 73,994 | ​ | 59.7% | ​ | ​ | (1.8)% |
| Other expenses | ​ | ​ 226,320 | ​ | 91.0% | ​ | ​ 200,304 | ​ | 94.9% | ​ | ​ | (3.9)% |
| General and administrative expenses | ​ | ​ 212,265 | ​ | 10.3% | ​ | ​ 204,242 | ​ | 11.3% | ​ | ​ | (1.0)% |
| Depreciation and amortization | ​ | ​ 48,816 | ​ | 2.4% | ​ | ​ 49,705 | ​ | 2.7% | ​ | ​ | (0.3)% |
| Total costs and expenses | ​ | ​ 1,900,180 | ​ | 91.9% | ​ | ​ 1,722,981 | ​ | 95.0% | ​ | ​ | (3.1)% |
| Operating income | ​ | ​ 168,241 | ​ | 8.1% | ​ | ​ 90,253 | ​ | 5.0% | ​ | ​ | 3.1% |
| Investment income | ​ | ​ 1,912 | ​ | 0.1% | ​ | ​ 2,131 | ​ | 0.1% | ​ | ​ | 0.0% |
| Interest expense | ​ | ​ (19,205) | ​ | (0.9)% | ​ | ​ (17,022) | ​ | (0.9)% | ​ | ​ | 0.0% |
| Income before income taxes | ​ | $150,948 | ​ | 7.3% | ​ | $75,362 | ​ | 4.2% | ​ | ​ | 3.1% |

#### Revenues

Consolidated revenues increased $255.2 million, or 14.1%, to $2.07 billion in 2021, compared to $1.81 billion in 2020.

Domestic Company-owned restaurant sales increased $77.6 million, or 11.1%, in 2021. The increase was primarily due to positive comparable sales of 11.3%, which were positively impacted by new product innovation, including the successful launch of our new Epic Stuffed Crust pizza in the first quarter of 2021, and due to higher demand that has been sustained during the pandemic, which was not reflected in the first quarter of 2020.

North America franchise royalties and fees increased $32.6 million, or 33.7%, in 2021. The increase was primarily due to positive comparable sales of 12.0% and a higher effective royalty rate from higher franchise royalties of $14.3 million in 2021 as a result of ending our temporary franchise assistance program in the third quarter of 2020. The franchise assistance program was above and beyond the level of franchise assistance the Company would incur in the ordinary course of its business.

North America franchise restaurant sales increased 13.0% to $2.8 billion for 2021 compared to prior year. North America franchise restaurant sales are not included in Company revenues; however, our North America franchise royalties are derived from these sales.

North America commissary revenues increased $80.5 million, or 11.8%, primarily due to higher volumes and higher pricing from higher commodities costs.

International revenues increased $26.8 million, or 21.6% in 2021 primarily due to higher royalties from increased equivalent units and higher comparable sales of 13.0%. International revenues also increased $8.1 million in 2021 due to favorable foreign exchange rates. “Equivalent units” represents the number of restaurants open at the beginning of a given period, adjusted for restaurants opened, closed, acquired or sold during the period on a weighted average basis.

International franchise restaurant sales increased 24.4% to $1.2 billion in 2021, excluding the impact of foreign currency, primarily due to increases in comparable sales and net new restaurant openings. International franchise restaurant sales are not included in Company revenues; however, our international royalty revenue is derived from these sales.

Other revenues, which primarily includes our national marketing funds, online and mobile ordering business and our wholly-owned print and promotions subsidiary, increased $37.7 million, or 17.9% in 2021 primarily due to higher marketing fund revenues from an increase in franchise sales and higher revenues from our technology platform, including our mobile ordering business which benefited from increased restaurant sales.

#### Costs and Expenses

Total costs and expenses were approximately $1.90 billion, or 91.9% of total revenues in 2021, as compared to $1.7 billion, or 95.0% of total revenues for the prior year. The decrease in total costs and expenses, as a percentage of revenues, were primarily due to the following:

Domestic Company-owned restaurant expenses were $621.9 million or 79.9% of related revenues in 2021, compared to expenses of $563.8 million, or 80.5% of related revenues for the prior year. The 0.6% decrease in expenses, as a percentage of revenues, was primarily due to leveraging fixed costs on higher revenues, partially offset by higher commodity and labor costs.

North America commissary expenses were $703.6 million, or 92.4% of related revenues in 2021, compared to $630.9 million, or 92.7% of related revenues, for the prior year. The 0.3% decrease in expenses, as a percentage of revenues, was primarily due to leveraging fixed costs on higher revenues.

International expenses were $87.3 million, or 57.9% of related revenues, for 2021 compared to $74.0 million, or 59.7% of related revenues for the prior year. The 1.8% decrease in expenses as a percentage of revenues was primarily due to lower operating costs on higher royalties from a 13.0% increase in comparable sales for 2021 and the favorable impact of foreign currency exchange rates in 2021.

Other expenses were $226.3 million, or 91.0% of related revenues in 2021, as compared to $200.3 million, or 94.9% of related revenues for the prior year. The 3.9% decrease in expenses, as a percentage of related revenues, was primarily due to higher margins from our technology platform, including our mobile ordering business.

General and administrative (“G&A”) expenses were $212.3 million, or 10.3% of revenues for 2021 compared to $204.2 million, or 11.3% of revenues for 2020. G&A expenses consisted of the following (dollars in thousands):

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Year Ended ​ December 26, ​ 2021 | ​ ​ ​ | ​ ​ ​ December 27, ​ 2020 |
| --- | --- | ---: | --- | ---: |
| Administrative expenses (a) | ​ | $199,452 | ​ | $185,202 |
| Special items (b) | ​ | ​ 13,094 | ​ | ​ 5,985 |
| Other general expenses (c) | ​ | ​ (281) | ​ | ​ 13,055 |
| General and administrative expenses | ​ | $212,265 | ​ | $204,242 |

(a) The increase in administrative expenses of $14.3 million for the year ended December 26, 2021 compared to prior year was primarily due to higher professional and legal fees and travel and labor costs.

(b) Represents $13.1 million and $6.0 million in strategic reorganization costs for the years ended December 26, 2021 and December 27, 2020, respectively, associated with the opening of our new office in Atlanta, Georgia. See “Note 16” of “Notes to Consolidated Financial Statements” for additional information.

(c) The decrease in other general expenses of $13.3 million in 2021 was primarily due to discretionary marketing fund investments of $15.0 million which was part of our temporary franchisee assistance program that concluded in the third quarter of 2020.

See “Items Impacting Comparability; Non-GAAP Measures” for additional information regarding the Special items.

*Depreciation and amortization.* Depreciation and amortization expense was $48.8 million, or 2.4% of revenues in 2021, as compared to $49.7 million, or 2.7% of revenues for 2020. The 0.3% decrease is primarily due to higher revenues in 2021.

#### Operating Income by Segment

Operating income is summarized in the following table on a reporting segment basis. Operating income increased approximately $78.0 million for the year ended December 26, 2021 as compared to the prior year. Alongside the GAAP operating income data, we have included “adjusted” operating income to exclude Special items. Special items in 2021 and 2020 consist of strategic corporate reorganization costs associated with our corporate office in Atlanta, Georgia. The reconciliation of GAAP to non-GAAP financial results, as well as the Special items, are included in “Items Impacting Comparability; Non-GAAP Measures.” We believe these non-GAAP measures are important for comparability purposes.

*(In thousands)*

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Year Ended Reported Dec. 26, 2021 ​ ​ | ​ ​ ​ | ​ ​ Special items in 2021 ​ ​ | ​ ​ ​ | ​ ​ Adjusted Dec. 26, 2021 ​ ​ | ​ ​ | ​ ​ Reported Dec. 27, 2020 ​ ​ | ​ ​ ​ | ​ ​ Special items in 2020 ​ ​ | ​ ​ ​ | ​ ​ Adjusted Dec. 27, 2020 ​ ​ | ​ ​ ​ | ​ ​ Adjusted Increase (Decrease) ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Domestic Company-owned restaurants | ​ | $49,628 | ​ | $— | ​ | $49,628 | ​ | $37,049 | ​ | $— | ​ | $37,049 | ​ | $12,579 |
| North America franchising | ​ | ​ 120,949 | ​ | ​ — | ​ | ​ 120,949 | ​ | ​ 89,801 | ​ | ​ — | ​ | ​ 89,801 | ​ | ​ 31,148 |
| North America commissaries | ​ | ​ 39,873 | ​ | — | ​ | 39,873 | ​ | ​ 33,185 | ​ | — | ​ | 33,185 | ​ | 6,688 |
| International | ​ | ​ 34,896 | ​ | ​ — | ​ | ​ 34,896 | ​ | ​ 24,034 | ​ | ​ — | ​ | ​ 24,034 | ​ | ​ 10,862 |
| All others | ​ | ​ 17,704 | ​ | ​ — | ​ | ​ 17,704 | ​ | ​ 7,043 | ​ | ​ — | ​ | ​ 7,043 | ​ | ​ 10,661 |
| Unallocated corporate expenses | ​ | ​ (94,114) | ​ | ​ 13,094 | ​ | ​ (81,020) | ​ | ​ (100,069) | ​ | ​ 5,985 | ​ | ​ (94,084) | ​ | ​ 13,064 |
| Elimination of intersegment (profits) | ​ | ​ (695) | ​ | ​ — | ​ | ​ (695) | ​ | ​ (790) | ​ | ​ — | ​ | ​ (790) | ​ | ​ 95 |
| **Total** | ​ | $168,241 | ​ | $13,094 | ​ | $181,335 | ​ | $90,253 | ​ | $5,985 | ​ | $96,238 | ​ | $85,097 |

The increase in operating income, excluding Special items, of $85.1 million, or 88.4% in 2021 compared to 2020 was primarily due to the following:

- Domestic Company-owned restaurants increased $12.6 million in 2021 primarily due to higher profits from comparable sales increases of 11.3%, partially offset by higher commodities and labor costs.
- North America franchising increased $31.1 million in 2021 primarily due to higher comparable sales of 12.0% and a higher effective royalty rate from higher franchise royalties of $14.3 million driven by the conclusion of our temporary royalty reduction program in the third quarter of 2020. This temporary royalty support was above and beyond the level of franchise assistance the Company would incur in the ordinary course of its business.
- North America commissaries increased $6.7 million in 2021 primarily due to higher profits from higher volumes.
- International increased approximately $10.9 million in 2021 primarily due to higher royalty revenue from comparable sales of 13.0% and increased equivalent units.
- All Others, which primarily includes our online and mobile ordering business and our marketing funds, increased $10.7 million in 2021 primarily due to higher revenues from our technology platform, including our mobile ordering business.
- Unallocated corporate expenses decreased approximately $13.1 million in 2021 primarily due to our discretionary marketing fund investments of $15.0 million in 2020 which was part of our previously announced franchise assistance program that concluded in the third quarter of 2020. This decrease was partially offset by higher travel and labor costs.

*Interest expense*. Interest expense increased approximately $2.2 million for the year ended December 26, 2021 primarily due to higher interest rate for our senior notes and higher average outstanding debt on our revolving credit facility drawn to partially fund the repurchase and conversion of our Series B Preferred Stock. Total debt outstanding was $490.0 million and $350.0 million as of December 26, 2021 and December 27, 2020, respectively.

*Income before income taxes.* Income before income taxes was $150.9 million in 2021, compared to $75.4 million in 2020, or an increase of $75.5 million due to the reasons discussed above.

*Income tax expense.* The effective income tax rate was 17.2% for 2021, compared to 19.6% for 2020. The effective rate was lower in 2021 due to the finalization of our 2020 federal income tax return, which resulted in a $2.7 million benefit to income tax expense. The rate also included excess tax benefits from stock option exercise and restricted shares vesting activity. The following compares income tax expense for 2021 and 2020:

| ​ ​ ​ ​ | ​ ​ ​ Year Ended December 26, 2021 ​ ​ | ​ ​ ​ | ​ ​ December 27, 2020 ​ ​ |
| --- | ---: | --- | ---: |
| Income before income taxes | $150,948 | ​ | $75,362 |
| Income tax expense | $25,993 | ​ | $14,748 |
| Effective tax rate | ​ 17.2% | ​ | ​ 19.6% |

See “Items Impacting Comparability; Non-GAAP Measures” and “Note 7” and “Note 17” of “Notes to Consolidated Financial Statements,” for additional information.

*Diluted earnings per share.* Diluted earnings per common share was $0.12 for 2021 compared to diluted earnings per common share of $1.28 in 2020, representing a decrease of $1.16. Excluding Special items, adjusted diluted earnings per common share was $3.51 in 2021, compared to $1.40 in 2020, representing an increase of $2.11. Diluted earnings per common share for the year ended December 26, 2021 included $3.10 from a reduction in net income attributable to common shareholders related to the repurchase and conversion of all shares of previously outstanding Series B Preferred Stock during the second quarter. This reduction reflects the excess of the one-time cash payment over the carrying value of the Series B Preferred Stock. See “Note 6” and “Note 7” of “Notes to Consolidated Financial Statements” for additional information.

### Items Impacting Comparability; Non-GAAP Measures

The table below reconciles our GAAP financial results to our adjusted financial results, which are non-GAAP measures (collectively defined as “Special items”). We present these non-GAAP measures because we believe the Special items impact the comparability of our results of operations. See “Note 6”, “Note 16”, and “Note 17” of “Notes to Consolidated Financial Statements,” for additional information about the Special items.

*(In thousands, except per share amounts)*

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Year Ended Dec. 26, 2021 (Note) | ​ ​ ​ | ​ ​ Dec. 27, 2020 ​ ​ |
| --- | --- | --- | --- | --- |
| GAAP operating income | ​ | $168,241 | ​ | $90,253 |
| Strategic corporate reorganization costs (1) | ​ | ​ 13,094 | ​ | ​ 5,985 |
| Adjusted operating income | ​ | $181,335 | ​ | $96,238 |
| ​ | ​ | ​ ​ | ​ | ​ ​ |
| GAAP net income attributable to common shareholders | ​ | $4,073 | ​ | $41,737 |
| Strategic corporate reorganization costs (1) | ​ | ​ 13,094 | ​ | ​ 5,985 |
| Repurchase and conversion of Series B Preferred Stock (2) | ​ | ​ 109,852 | ​ | ​ — |
| Tax effect of strategic corporate reorganization costs (3) | ​ | ​ (2,946) | ​ | ​ (1,346) |
| Two-class impact for Non-GAAP adjustment to net income (4) | ​ | ​ — | ​ | ​ (662) |
| Adjusted net income attributable to common shareholders | ​ | $124,073 | ​ | $45,714 |
| ​ | ​ | ​ ​ | ​ | ​ ​ |
| GAAP diluted earnings per common share | ​ | $0.12 | ​ | $1.28 |
| Strategic corporate reorganization costs (1) | ​ | ​ 0.37 | ​ | ​ 0.18 |
| Repurchase and conversion of Series B Preferred Stock (2) | ​ | ​ 3.10 | ​ | ​ — |
| Tax effect of strategic corporate reorganization costs (3) | ​ | ​ (0.08) | ​ | ​ (0.04) |
| Two-class impact for Non-GAAP adjustment to net income (4) | ​ | ​ — | ​ | ​ (0.02) |
| Adjusted diluted earnings per common share | ​ | $3.51 | ​ | $1.40 |

(Note) The above table does not include the impact of the allocation of undistributed earnings to participating securities for Special items in 2021.

(1) Represents strategic corporate reorganization costs associated with our new office in Atlanta, Georgia.

(2) Represents the one-time charge related to the repurchase and conversion of all shares of Series B Preferred Stock and includes related professional fees incurred as part of the transaction.

(3) The tax effect for strategic corporate reorganization costs was calculated by applying the marginal tax rate of 22.5% for 2021 and 2020, respectively. There was no tax effect on the repurchase and conversion of the Series B Preferred Stock as the one-time charge was non-deductible for tax purposes.

(4) Represents an adjustment to the allocation of undistributed earnings to participating securities for the strategic corporate reorganization costs.

The non-GAAP adjusted results shown above and within this document, which exclude the Special items, should not be construed as a substitute for or a better indicator of the Company’s performance than the Company’s GAAP results. Management believes presenting certain financial information excluding the Special items is important for purposes of comparing our historical operating results and providing transparency in how we evaluate our operating performance. Management uses these metrics to evaluate the Company’s underlying operating performance and to analyze trends.

In addition, we present free cash flow in this report, which is a non-GAAP measure. Please see “Liquidity and Capital Resources – Free Cash Flow” for a discussion of why we believe free cash flow provides useful information regarding our financial condition and results of operations, and a reconciliation of free cash flow to the most directly comparable GAAP measure.

The presentation of the non-GAAP measures in this report is made alongside the most directly comparable GAAP measures.

### Liquidity and Capital Resources

#### Cash Flows

The table below summarizes our cash flows from continuing operations for each of the last two fiscal years (in thousands):

| ​ ​ Total cash provided by (used in): | ​ ​ ​ | ​ ​ 2021 ​ ​ | ​ ​ ​ | ​ ​ 2020 ​ ​ |
| --- | --- | ---: | --- | ---: |
| Operating activities | ​ | $184,675 | ​ | $186,439 |
| Investing activities | ​ | ​ (63,512) | ​ | ​ (41,071) |
| Financing activities | ​ | ​ (180,526) | ​ | ​ (43,461) |
| Change in cash and cash equivalents, excluding the impact of foreign currency | ​ | $(59,363) | ​ | $101,907 |

#### Operating Activities

Total cash provided by operating activities was $184.7 million for the year ended December 26, 2021 which was generally consistent with the prior year comparable period. The Company benefited from strong comparable sales growth of 12.1% in 2021 driven by our product innovation, customer retention and expansion both domestically and internationally, which more than doubled our net income to $125.0 million from $60.6 million a year ago. This was offset by unfavorable changes in working capital, including the repayment of previously deferred employer payroll taxes from the Coronavirus Aid, Relief, and Economic Security Act and the timing of payments associated with our national marketing fund.

#### Investing Activities

Cash flow used in investing activities was $63.5 million in 2021 compared to $41.1 million in 2020. The increase of $22.4 million was primarily driven by a $32.9 million increase in capital spend as part of our long-term growth strategy and expansion both domestically and internationally, including expenditures for the buildout of our corporate office located in Atlanta, Georgia, information technology upgrades for our corporate and restaurant facilities, and the development of Company-owned restaurants. This was partially offset by higher repayments from notes issued to franchisees.

#### Financing Activities

Cash flow used in financing activities was $180.5 million in 2021 compared to $43.5 million in 2020, an increase of $137.0 million. During 2021, the Company executed a new capital allocation strategy to optimize its capital structure, accelerating our long-term earnings potential and providing ongoing value to our shareholders. This strategy included cash consideration paid for the repurchase of the Company’s outstanding shares of Series B Preferred stock totaling $188.6 million, share repurchases made under the Company’s share repurchase programs of $72.5 million, and an increase to our dividend rate per common share, from $0.90 to $1.40 on an annual basis. These cash uses were partially offset by net proceeds of $60.0 million from the issuance of our 3.875% senior notes due 2029 and refinancing of our revolving credit facility, and also $80.0 million in net proceeds received from our revolving credit facility which were mainly used to fund our share repurchases.

#### Debt

On September 14, 2021, the Company issued $400.0 million of 3.875% senior notes (the “Notes”) which will mature on September 15, 2029. Concurrently with the issuance of the Notes, the Company entered into an amended and restated credit agreement (the “Amended Credit Agreement”) replacing the previous credit agreement (“Previous Credit Agreement”). The Amended Credit Agreement provides for a senior secured revolving credit facility in an aggregate available principal amount of $600.0 million (the “PJI Revolving Facility”), of which up to $40.0 million is available as swingline loans and up to $80.0 million is available as letters of credit. The PJI Revolving Facility will mature on September 14, 2026.

The net proceeds from the Notes, together with borrowings under the PJI Revolving Facility, were used to repay outstanding revolver and term loan borrowings under the Company’s Previous Credit Agreement.

Our outstanding debt as of December 26, 2021 was $490.0 million, which was comprised of $400.0 million outstanding under the Notes and $90.0 million outstanding under the PJI Revolving Facility. Remaining availability under the PJI Revolving Facility was approximately $510.0 million as of December 26, 2021.

Our Amended Credit Agreement contains affirmative and negative covenants that, among other things, require customary reporting obligations and restrict, subject to certain exceptions, the incurrence of additional indebtedness and liens, the consummation of certain mergers, consolidations, sales of assets and similar transactions, the making of investments, equity distributions and other restricted payments, and transactions with affiliates. The Company is also subject to certain financial covenants, as shown in the following table, that could restrict or impose constraints on the liquidity of our business:

|  |  |  |  |  |
| --- | --- | --- | --- | --- |
| ​ | ​ | ​ | ​ | ​ |
| **​** |  | **​** |  | **Actual Ratio for the** |
| **​** | **​** | **​** | **​** | **Year Ended** |
| **​** | **​** | **Permitted Ratio** | **​** | **December 26, 2021** |
| Leverage ratio |  | Not to exceed 5.25 to 1.0 |  | 2.0 to 1.0 |
| ​ | ​ | ​ | ​ | ​ |
| Interest coverage ratio |  | Not less than 2.00 to 1.0 |  | 5.0 to 1.0 |

Our leverage ratio is defined as outstanding debt divided by consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the most recent four fiscal quarters. Our interest coverage ratio is defined as the sum of consolidated EBITDA and consolidated rental expense for the most recent four fiscal quarters divided by the sum of consolidated interest expense and consolidated rental expense for the most recent four fiscal quarters. We were in compliance with all financial covenants as of December 26, 2021.

In addition, the Indenture governing the Notes contains customary covenants that, among other things and subject to certain exceptions, limit our ability and the ability of certain of our subsidiaries to: incur additional indebtedness and guarantee indebtedness; pay dividends or make other distributions or repurchase or redeem our capital stock; prepay, redeem or repurchase certain debt; issue certain preferred stock or similar equity securities; make loans and investments; sell assets; incur liens; enter into transactions with affiliates; enter into agreements restricting our subsidiaries’ ability to pay dividends; and consolidate, merge or sell all or substantially all of our assets.

Papa John’s Marketing Fund, Inc. (“PJMF”), our national marketing fund, has a $20.0 million revolving line of credit (the “PJMF Revolving Facility”) pursuant to a Revolving Loan Agreement, dated September 30, 2015 with U.S. Bank National Association, as lender. There was no debt outstanding under the PJMF Revolving Facility as of December 26, 2021 or December 27, 2020. The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Amended Credit Agreement.

See “Note 12” of “Notes to Consolidated Financial Statements” for additional information.

#### Share Repurchases

As part of our long-term growth and capital allocation strategy, we are committed to investing in share repurchases to provide ongoing value and enhanced returns to our shareholders. On October 28, 2021, our Board of Directors approved a share repurchase program with an indefinite duration for up to $425.0 million of the Company’s common stock. The share repurchase program operated alongside our previous $75.0 million share repurchase authorization, which began on November 4, 2020 and expired on December 26, 2021.

The following table summarizes our repurchase activity for the years ended December 26, 2021 and December 27, 2020:

*(in thousands, except average price per share)*

| ​ ​ ​ ​ Year Ended | ​ ​ ​ ​ ​ ​ | ​ ​ Total Number of Shares Purchased | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ Average ​ Price ​ Paid per Share | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ Aggregate ​ Cost of ​ Shares ​ Purchased | ​ ​ ​ ​ ​ ​ | ​ ​ ​ Maximum Dollar ​ Value of Shares ​ that May Yet Be ​ Purchased Under the ​ Plans or Programs |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| December 26, 2021 | ​ | 594 | ​ | $121.96 | ​ | $72,499 | ​ | $424,800 |
| December 27, 2020 | ​ | 32 | ​ | $83.90 | ​ | $2,701 | ​ | $72,299 |

39

Subsequent to year-end, we acquired an additional 109,000 shares at an aggregate cost of $13.3 million. Approximately $411.5 million remained available under the Company’s share repurchase program as of February 17, 2022.

The Company utilizes a written trading plan under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, from time to time to facilitate the repurchase of shares of our common stock under this share repurchase program. There can be no assurance that we will repurchase shares of our common stock either through a Rule 10b5-1 trading plan or otherwise.

#### Dividends

The Company recorded dividends of approximately $46.0 million for the year ended December 26, 2021 consisting of the following:

- $40.4 million paid to common stockholders ($1.15 per share);
- $3.0 million in preferred dividends on the Series B Preferred Stock (3.6% of the investment per annum);
- $1.5 million of common stock deemed dividend distributions in conjunction with the repurchase and conversion of the Series B Preferred Stock; and
- $1.1 million in common stock “pass-through” dividends paid to Series B Preferred Stockholders on an as-converted basis ($0.45 per share).

The Company paid common stock dividends of $29.4 million, common stock “pass-through” dividends to Series B Preferred Stockholders of $4.6 million, and $9.1 million in preferred dividends on the Series B Preferred Stock in 2020.

On January 27, 2022, our Board of Directors declared a first quarter dividend of $0.35 per share of common stock, representing an approximate $12.7 million aggregate dividend that was paid on February 18, 2022 to common stockholders of record as of the close of business on February 7, 2022. The declaration and payment of any future dividends will be at the discretion of our Board of Directors.

#### Free Cash Flow

Free cash flow, a non-GAAP measure, is defined as net cash provided by operating activities (from the Consolidated Statements of Cash Flows) less the purchases of property and equipment and dividends paid to preferred stockholders. We view free cash flow as an important financial measure because it is one factor that management uses in determining the amount of cash available for discretionary investment. Free cash flow is not a term defined by GAAP, and as a result, our measure of free cash flow might not be comparable to similarly titled measures used by other companies. Free cash flow should not be construed as a substitute for or a better indicator of the Company’s performance than the Company’s GAAP measures.

The Company’s free cash flow for the last two years was as follows (in thousands):

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Year Ended December 26, 2021 ​ ​ | ​ ​ ​ | ​ ​ December 27, 2020 ​ ​ |
| --- | --- | ---: | --- | ---: |
| Net cash provided by operating activities | ​ | $184,675 | ​ | $186,439 |
| Purchases of property and equipment | ​ | ​ (68,559) | ​ | ​ (35,652) |
| Dividends paid to preferred stockholders (1) | ​ | (6,394) | ​ | (13,649) |
| Free cash flow | ​ | $109,722 | ​ | $137,138 |

(1) Excludes $188.6 million of cash consideration paid for the repurchase and conversion of the Series B Preferred Stock in the second quarter of 2021.

#### Cash Requirements

The Company believes that its balances of cash and cash equivalents and borrowing capacity, along with cash generated by operations, will be sufficient to satisfy its cash requirements, cash dividends, interest payments and share repurchases over the next twelve months and beyond.

The Company’s material cash requirements as of December 26, 2021 include the following contractual obligations (in thousands):

| ​ ​ ​ ​ Contractual Obligations: | ​ ​ ​ ​ | ​ ​ Payments Due by Period Less than 1 Year ​ ​ | ​ ​ ​ | ​ ​ ​ ​ 1-3 Years ​ ​ | ​ ​ ​ | ​ ​ ​ ​ 3-5 Years ​ ​ | ​ ​ ​ | ​ ​ After 5 Years ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| 3.875% Senior Notes | ​ | $— | ​ | $— | ​ | $— | ​ | $400,000 | ​ | $400,000 | ​ |
| Revolving Facility | ​ | ​ — | ​ | ​ — | ​ | ​ 90,000 | ​ | ​ — | ​ | ​ 90,000 | ​ |
| Interest payments (1) | ​ | 23,299 | ​ | 36,150 | ​ | 34,600 | ​ | 46,500 | ​ | 140,549 | ​ |
| Total debt | ​ | $23,299 | ​ | $36,150 | ​ | $124,600 | ​ | $446,500 | ​ | $630,549 | ​ |
| Operating leases (2) | ​ | 33,323 | ​ | 63,243 | ​ | 49,521 | ​ | 96,187 | ​ | 242,274 | ​ |
| Finance leases (2) | ​ | ​ 5,969 | ​ | ​ 10,791 | ​ | ​ 5,507 | ​ | ​ 1,748 | ​ | ​ 24,015 | ​ |
| Total contractual obligations | ​ | $62,591 | ​ | $110,184 | ​ | $179,628 | ​ | $544,435 | ​ | $896,838 | ​ |

(1) Interest payments assume an outstanding debt balance of $490.0 million. Interest payments are calculated based on LIBOR plus the applicable margin in effect at December 26, 2021, and includes the impact of interest rate swap agreements in effect. The actual interest rates on our variable rate debt and the amount of our indebtedness could vary from those used to compute the above interest payments. See “Note 12” of “Notes to Consolidated Financial Statements” for additional information concerning our debt and credit arrangements.

(2) See “Note 3” of “Notes to Consolidated Financial Statements” for additional information. The above amounts exclude variable-based rents and future expected sub-lease income in the UK.

The above table does not include the following:

- Unrecognized tax benefits of $0.9 million, including interest and penalties, since we are not able to make reasonable estimates of the period of cash settlement with respect to the taxing authority.
- Redeemable noncontrolling interests of $5.5 million as we are not able to predict the timing of the redemptions.
- Expected capital expenditures of approximately $75.0 million to $85.0 million in 2022, which the Company expects to spend primarily on the buildout and development of Company-owned stores and technological enhancements.

#### Impact of Inflation

From time to time, we experience the impacts of inflation, which cause increased food, labor and benefits costs and higher operating expenses. To the extent permitted by competition, increased costs are recovered through a combination of menu price increases and/or implementing other cost reductions.

#### Off-Balance Sheet Arrangements

We guarantee leases for certain Papa John’s North American franchisees who have purchased restaurants that were previously Company-owned. We are contingently liable on these leases. These leases have varying terms, the latest of which expires in 2036. As of December 26, 2021, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was approximately $11.5 million.

We have certain other commercial commitments where payment is contingent upon the occurrence of certain events. With our insurance programs, we are party to surety bonds with off-balance sheet risk as follows by year (in thousands):

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Amount of Commitment Expiration Per Period Less than 1 Year | ​ ​ | ​ ​ 1-3 Years | ​ ​ | ​ ​ 3-5 Years | ​ ​ | ​ ​ After 5 Years | ​ ​ | ​ ​ ​ Total |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Surety bonds | ​ | $45,748 | ​ | $— | ​ | $— | ​ | $— | ​ | $45,748 |

The surety bond arrangements expire within one year but have automatic renewal clauses. See “Note 12” and “Note 19” of “Notes to Consolidated Financial Statements” for additional information related to contractual and other commitments.

### Forward-Looking Statements

Certain matters discussed in this Annual Report on Form 10-K and other Company communications that are not statements of historical fact constitute forward-looking statements within the meaning of the federal securities laws. Generally, the use of words such as “expect,” “intend,” “estimate,” “believe,” “anticipate,” “will,” “forecast,” “plan,” “project,” or similar words identify forward-looking statements that we intend to be included within the safe harbor protections provided by the federal securities laws. Such forward-looking statements include or may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, earnings per share, share repurchases, the financial impact of the temporary business opportunities, disruptions and temporary changes in demand we are experiencing related to the current outbreak of the COVID-19 pandemic and the related restrictions, commodity costs, currency fluctuations, profit margins, unit growth, unit level performance, capital expenditures, restaurant and franchise development, the duration of changes in consumer behavior caused by the pandemic, labor shortages, inflation, reorganization costs and the related organizational, employment and real estate changes from opening our new office in Atlanta, royalty relief, the effectiveness of our menu innovations and other business initiatives, marketing efforts, liquidity, compliance with debt covenants, strategic decisions and actions, dividends, effective tax rates, regulatory changes and impacts, adoption of new accounting standards, and other financial and operational measures. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements. The risks, uncertainties and assumptions that are involved in our forward-looking statements include, but are not limited to:

- the ability of the Company to manage difficulties and opportunities associated with or related to the COVID-19 pandemic or the cessation thereof in the future, including risks related to: the impact of governmental restrictions on freedom of movement and business operations including quarantines, social distancing requirements and mandatory business closures; changes in consumer demand or behavior; labor shortages at Company and/or franchised stores and our quality control centers; impact of delayed new store openings, both domestically and internationally; vaccine mandates; our ability to navigate changing governmental programs and regulations relating to the pandemic; and the increased risk of phishing, ransomware and other cyber-attacks;
- our ability to fully realize the anticipated benefits of our corporate reorganization and new office in Atlanta, Georgia;
- increased costs for branding initiatives and launching new advertising and marketing campaigns and promotions to boost consumer sentiment and sales trends, and the risk that such initiatives will not be effective;
- risks related to social media, including publicity adversely and rapidly impacting our brand and reputation;
- aggressive changes in pricing or other marketing or promotional strategies by competitors, which may adversely affect sales and profitability; and new product and concept developments by food industry competitors;
- changes in consumer preferences or consumer buying habits, including the growing popularity of delivery aggregators, as well as changes in general economic conditions or other factors that may affect consumer confidence and discretionary spending, including higher unemployment;
- the adverse impact on the Company or our results caused by global health concerns, product recalls, food quality or safety issues, incidences of foodborne illness, food contamination and other general public health concerns about our Company-owned or franchised restaurants or others in the restaurant industry;
- the effectiveness of our technology investments and changes in unit-level operations;
- the ability of the Company and its franchisees to meet planned growth targets and operate new and existing restaurants profitably, including difficulties finding qualified franchisees, store level employees or suitable sites;
- increases in labor costs, food costs or sustained higher other operating costs, including as a result of supply chain disruption and inflation. This could also include increased employee compensation, including as a result of labor shortages, changes in minimum wage, benefits, insurance, tax rates, new regulatory requirements or increasing compliance costs;
- increases in insurance claims and related costs for programs funded by the Company up to certain retention limits, including medical, owned and non-owned vehicles, workers’ compensation, general liability and property;
- disruption of our supply chain or commissary operations which could be caused by our sole source of supply of mozzarella cheese, desserts, garlic cups or limited source of suppliers for other key ingredients or more generally due to weather, natural disasters including drought, disease, or geopolitical or other disruptions beyond our control, including COVID-19;
- increased risks associated with our international operations, including economic and political conditions and risks associated with the withdrawal of the UK from the European Union, instability or uncertainty in our international markets, especially emerging markets, fluctuations in currency exchange rates, difficulty in meeting planned sales targets and new store growth;
- the impact of current or future claims and litigation and our ability to comply with current, proposed or future legislation that could impact our business including compliance with the European Union General Data Protection Regulation;
- the Company's ability to continue to pay dividends to stockholders based upon profitability, cash flows and capital adequacy if restaurant sales and operating results decline;
- disruption of critical business or information technology systems, or those of our suppliers, and risks associated with systems failures and data privacy and security breaches, including theft of confidential Company, employee and customer information, including payment cards; and
- changes in Federal or state income, general and other tax laws, rules and regulations and changes in generally accepted accounting principles.

These and other risk factors are discussed in detail in “Part I. Item 1A. — Risk Factors” of this Annual Report on Form 10-K. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise, except as required by law.

## Market risk

As filed, 3,695 characters.

#### Interest Rate Risk

We are exposed to the impact of interest rate changes on our PJI Revolving Facility. We attempt to minimize interest rate risk exposure by fixing our interest rate through the utilization of interest rate swaps, which are derivative financial instruments. The interest rate swaps were eligible for hedge accounting for part of the period and were de-designated following the issuance of the Notes. Our swaps are entered into with financial institutions that participate in the PJI Revolving Facility. By using a derivative instrument to hedge exposures to changes in interest rates, we expose ourselves to credit risk due to the possible failure of the counterparty to perform under the terms of the derivative contract. We do not enter into contracts for trading purposes and do not use leveraged instruments. See “Note 12” of “Notes to Consolidated Financial Statements” for additional information on our debt obligations and derivative instruments.

#### Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange rate fluctuations from our operations outside of the United States, which can adversely impact our revenues, net income and cash flows. Our international operations principally consist of distribution sales to franchised Papa John’s restaurants located in the United Kingdom and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our international franchisees. Approximately 7.3% of our 2021 revenues, 6.8% of our 2020 revenues and 7.8% of our 2019 revenues were derived from these international operations.

We have not historically hedged our exposure to foreign currency fluctuations. Foreign currency exchange rate fluctuations had a favorable impact of approximately $8.1 million on our consolidated revenues in 2021 compared to an unfavorable impact of approximately $600,000 in 2020. Foreign currency exchange rates had a favorable impact of $1.4 million on our operating income in 2021 compared to an unfavorable impact of $1.0 million in 2020. A 10% adverse change in the foreign currency rates for our international markets would result in an additional negative impact on annual revenue and operating income of approximately $15.6 million and $3.3 million, respectively.

#### Commodity Price Risk

In the ordinary course of business, the food and paper products we purchase, including cheese (our largest ingredient cost), are subject to seasonal fluctuations, weather, availability, demand and other factors that are beyond our control. We have pricing agreements with some of our vendors, including forward pricing agreements for a portion of our cheese purchases for our domestic Company-owned restaurants, which are accounted for as normal purchases; however, we still remain exposed to on-going commodity volatility.

The following table presents the actual average block price for cheese by quarter in 2021, 2020 and 2019. Also presented is the projected 2022 average block price by quarter (based on the February 17, 2022 Chicago Mercantile Exchange cheese futures prices):

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ 2022 Projected Market ​ ​ | ​ ​ ​ ​ | ​ ​ 2021 Block Price ​ ​ | ​ ​ ​ ​ | ​ ​ 2020 Block Price ​ ​ | ​ ​ ​ ​ | ​ ​ 2019 Block Price ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Quarter 1 | ​ | $1.956 | ​ | $1.676 | ​ | $1.857 | ​ | $1.490 |
| Quarter 2 | ​ | 2.088 | ​ | 1.680 | ​ | 1.679 | ​ | 1.696 |
| Quarter 3 | ​ | 2.095 | ​ | 1.676 | ​ | 2.262 | ​ | 1.898 |
| Quarter 4 | ​ | 2.031 | ​ | 1.786 | ​ | 2.235 | ​ | 1.984 |
| Full Year | ​ | $2.043 | ​ | $1.705 | ​ | $2.008 | ​ | $1.767 |

## Controls and procedures

As filed, 6,452 characters.

#### (a) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based upon this evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures are effective.

#### (b) Management’s Report on our Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) promulgated under the Exchange Act. Our internal control system is designed to provide reasonable assurance to our management and the board of directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established in *Internal Control — Integrated Framework* issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission (“2013 Framework”). Based on our evaluation under the COSO 2013 Framework, our management concluded that our internal control over financial reporting was effective as of December 26, 2021.

Ernst & Young LLP, an independent registered public accounting firm, has audited the 2021 Consolidated Financial Statements included in this Annual Report on Form 10-K and, as part of its audit, has issued an attestation report, included herein, on the effectiveness of our internal control over financial reporting.

#### (c) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended December 26, 2021 that have materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.

### Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Papa John’s International, Inc. and Subsidiaries

### Opinion on Internal Control over Financial Reporting

We have audited Papa John’s International, Inc. and Subsidiaries’ internal control over financial reporting as of December 26, 2021, based on criteria established in Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria). In our opinion, Papa John’s International, Inc. and Subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 26, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2021 consolidated financial statements of the Company, and our report dated February 24, 2022 expressed an unqualified opinion thereon.

### Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying “Management’s Report on our Internal Control Over Financial Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

### Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Louisville, Kentucky

February 24, 2022

Filed Feb 24, 2022.
Source: SEC EDGAR, the filing index for accession 0001558370-22-001836. Last ingested by Listed: Nov 5, 2026, 11:55 ET. No prices; not investment advice.