Papa John's International, Inc.

Good day, and thank you for standing by. Welcome to the Papa John's first quarter 2023 conference call and webcast. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 1-1 on your telephone, and you will hear a message advising your hand is raised. To withdraw the question, simply press star 1-1 again. Be advised that today's conference is being recorded. I would now like to hand the conference over to Stacey Froehlich.

vice president of investor relations please go ahead good morning and welcome to our first quarter earnings conference call this morning we issued our 2023 first quarter earnings release a copy of the release can be obtained on our investor relations website at ir.papajohns.com under the news releases tab or by contacting our investor relations department at investor underscore relations at PapaJohns.com. On the call this morning are Rob Lynch, our president and CEO, and Chris Collins, our interim principal financial and accounting officer. Before we begin, I need to remind you that comments made during this call will include forward-looking statements within the meaning of the federal securities laws. These statements may involve risks and uncertainties that could cause actual results to differ materially from these statements. Forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our SEC filing. In addition, please refer to our earnings release for the required reconciliation of non-GAAP financial measures discussed on today's call. Lastly, let me thank you in advance for asking only one question and getting back in the queue for more follow-up. Rob? Thank you, Stacey.

Good morning, everyone, and thanks for joining us. Overall, we are pleased with our first quarter performance, which was consistent with our expectations and resulted in the highest global system-wide sales in company history. Our North America comparable sales were in line with our record results we achieved a year ago and supported by 3% growth in our domestic company-owned restaurants. In the first quarter, we also opened 59 new restaurants. We are extremely proud of our accomplishments over the last three and a half years. We've built a unique infrastructure and business model that is designed for sustainable sales growth. We've built an amazing product pipeline with new platforms that keep producing new ideas. We have also significantly improved our operations to support our business moving forward, and we have built a company culture that makes us all proud. But we know there is more to be done, and we have yet to realize our full potential. We continue to see opportunities to get better and create value for our customers, our franchisees, and our shareholders. This is why I'm so excited about the future of Papa John's, the challenges and opportunities that we have to get better. We recognize we are lapping significant comps from 2022 and 2021. For the first quarter, our outlook was for flat comps, but that is not our expectations for the year. We expect to see improvement, especially in the second half, as year-over-year comparisons ease. In the current inflationary environment, we are focused on finding the optimal mix between check and transaction growth. Our track record of delivering three straight years of positive comp sales gives us confidence that we can deliver on our long-term targets. Over the past several years, we have been investing in technology and building an organizational infrastructure necessary to operate an industry-leading CRM platform that is designed to drive brand engagement through relational instead of transactional experiences. Approximately 85% of our sales come through digital channels, and we have nearly 30 million loyalty member accounts. We have a significant data platform that we must utilize to enhance our brand and make the digital experience for our customers better by offering personalization that drives activation. Our focus continues to be on taking care of our customers and driving top-line growth. I'm happy to say that we announced this week that Mark Shambura will be joining Papa John's as our new Chief Marketing Officer. I'm confident that his more than two decades of experience in growing restaurant brands, including most recently at Mod Pizza and Chipotle, will help to drive continued engagement and growth among all consumer segments. Our recent investments in digital innovation will only get better with Mark's digital-first, analytics-led approach. We look forward to igniting our brand engagement strategy under Mark's leadership. As I've already stated, we have continued to evolve our menu innovation strategy as we build strong brand partnerships to raise awareness and attract new customers. At the end of December, we launched our new Papa Bites platform, which includes small bite-sized snacks and bold new flavors utilizing our fresh dough. Our Oreo Papa Bites were especially well-received by our customers and were highly incremental to our dessert category, helping drive higher tickets throughout the quarter. We also launched our crispy parm pizza in February. making us the first large pizza chain to launch a thin crust pizza with cheese on all sides of the crust. Looking forward, we're excited about our new collaboration with Pepsi and Frito-Lay that inspired our newest proprietary menu offering, Doritos Cool Ranch Papadilla. This new offering is covered with bold ranch seasoning and includes Doritos Cool Ranch dipping sauce only available at Papa John's. We're thrilled to roll it out nationwide beginning today. We expect this premium innovation will drive both transaction and ticket growth as we target current and new customers. With this launch, we are strategically targeting a younger demographic of loyal Doritos consumers. And with a price point of $7.99, it's a great value. As we previously discussed, our barbell strategy focuses on introducing both premium and core value menu items. On the value side, we continue to see strength in our pop-up pairings offerings. which provides consumers with an array of great products and an attractive $6.99 price point. In the first quarter, we added our new hot lemon pepper chicken wings to our Papa Pairings platform. Papa Pairings will continue to be a platform where we can bring side item innovation to market. Great Operations is at the heart of everything we do. Our Back to Better Operations initiative, launched in the fourth quarter last year across our corporate restaurants, is helping to further improve execution at the store level while enhancing customer service. These efforts are helping to mitigate inflationary pressures today, and over the longer term, will deliver improved unit economics across our system. Our Back to Better initiative aligns our organization on KPIs that provide the best experience for our team members and our customers, harnessing what our brand was built upon, a relentless pursuit of better. Our data insights help us drive improved performance in key areas like out-the-door times. For the first quarter, our out-the-door times in corporate restaurants have improved by more than 25% on a year-over-year basis. Faster delivery ensures that our products are hot when they arrive. Food temperature is the number one driver of product satisfaction for pizza, and I'm pleased to say that our teams in our corporate restaurants have significantly improved overall satisfaction scores in the first quarter compared with a year ago. Operational excellence was one of the many topics we discussed at the Papa John's Franchise Conference in early April. Due to the pandemic, this was our first conference since 2019, and I couldn't have been more energized by the excitement I felt from our franchisees about the future of the brand. We had more than 1,000 attendees from around the world, and there was great optimism for the marketing, operations, and development initiatives we have underway. This is evidenced by the continued investment they are making in new restaurants globally. However, despite the fact that we have significantly improved sales and unit economics in North America over the last four years, this is not fully translated into the domestic development we want to see based on the white space that we have available. To help expedite development within the United States, we are partnering with franchisees on providing construction services, including permitting, architectural designs, and general contractor management. This allows our franchisees to lower friction points and costs throughout the construction process by utilizing our in-house expertise and leveraging the scale of the Papa John's system. Early response to this program has been favorable, and we anticipate more franchisees taking advantage of this opportunity going forward. To further enhance our development, we began rolling out our new store design last year with a focus on creating a great customer and employee experience. We also took a hard look at value engineering to mitigate construction cost increases. Our newest store footprint is more aesthetically pleasing, more efficient, and easier to build. Going forward, all new builds will have this transformational design. I also remain excited about the opportunity we have internationally. Our opportunity is not just about new unit development. It's about sustainably and profitably growing all of our restaurants globally. We are making significant investments in our international organization and infrastructure to set us up for long-term success. For example, we are investing in technology and IT capabilities to support sales growth through areas like e-commerce, loyalty, and revenue management. We have spoken a lot about our white space internationally. In Q1, we announced a development agreement to enter into India through a partnership with PJP Investments Group. BJP currently operates more than 100 Papa John's restaurants across the United Arab Emirates, Saudi Arabia, and Jordan. They are a seasoned, successful restaurant operator and plan to open 650 new restaurants in India over the next 10 years. We see India as an attractive market for Papa John's, and this announcement clearly supports our global expansion strategy, which remains on track to achieve our long-term development targets of 1400 to 1800 net new units between 2022 and 2025. I'm also pleased to say that we remain on track to meet our current year development expectations of 270 to 310 net new units in 2023, which at the midpoint represents a 5% increase in total system-wide units and a nearly 20% increase over last year's net new unit number. Looking forward, our global pipeline is robust and I'm confident the investments and strategies we are executing on today will enable us to capitalize successfully and take advantage of the significant white space we see all around the world. Finally, I want to thank our teams for their commitment to having an innovation mindset. I am pleased to announce that we were just named one of the country's most innovative companies and ranked first among pizza companies in Fortune's inaugural America's Most Innovative Companies list. We're also identified as one of Forbes' best employers for diversity for the third year in a row. We've built a truly inclusive culture full of diverse ideas and diverse teams. We believe our inclusive and diverse culture is a core strength of Papa John's, and we are extremely proud of the progress we continue to make. At this time, I want to welcome Chris Collins, who has assumed the role of our interim principal financial and accounting officer. We're appreciative of Chris taking on this additional role while we conduct a comprehensive search process to identify our next CFO. Before I turn the call over to Chris, I want to emphasize that despite near-term challenges and changing consumer trends, our business model is resilient and the underlying demand for our product offerings remains strong. We are excited about the challenges and opportunities we have to get better. We're excited about the new product ideas that we have, the improvements we are making in our operations, and the significant white space we are pursuing for new store growth domestically and internationally. Now I'd like to turn the call over to Chris to provide more color on our first quarter results.