Go od day, and thank you for standing by. Welcome to the Papa John's Q1 2023 confe rence call and webcast. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone, and you will hear a message advising your hand is raised. To withdraw the question, simply press star 11 again. Be advised that today's conference is being recorded. I would now like to hand the conference over to Stacy Frole, Vice President of Investor Relations. Please go ahead. Good morning. Welcome to our Q1 earnings conference call. This morning, we issued our 2023 Q1 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_relations@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 fi lings. 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-ups. Rob? Thank you, Stacy. Good morning, everyone, and thanks for joining us. Overall, we are pleased with our Q1 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 Q1, we also opened 59 new restaurants. We are extremely proud of our accomplishments over the last 3 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. 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 Johns, the challenges and opportunities that we have to get better. We recognize we are lapping significant comps from 2022 and 2021. For the Q1, 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 comparison 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. Today, 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 Johns as our new Chief Marketing Officer. I'm confident that his more than 2 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 ticket 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 Papadia. This new offering is covered with bold ranch seasoning and includes Doritos Cool Ranch dipping sauce only available at Papa Johns. 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. 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 Papa Pairings offering, which provides consumers with an array of great products and an attractive $6.99 price point. In the Q1, we added our new Hot Lemon Pepper 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 Q4 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 initiatives 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 Q1, 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 just pleased to say that our teams in our corporate restaurants have significantly improved overall satisfaction scores in the Q1 compared with a year ago. Operational excellence was one of the many topics we discussed at the Papa Johns Fra nchise 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 has not fully translated into domestic development we wanna 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 Johns 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. PJP currently operates more than 100 Papa Johns 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 Johns, and this announcement clearly supports our global expansion strategy, which remains on track to achieve our long-term development target of 1,400-1,800 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 270-310 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 wanna 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 Johns, and we are extremely proud of the progress we continue to make. At this time, I wanna 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 wanna 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 Q1 results. Chris? Thank you, Rob. Good morning, everybody. I'm excited to speak with you today and look forward to working with you and the Papa Johns team as I take on this interim role. As you read in our earnings release this morning, we continue to deliver top line growth on top of significant gains over the past few years. For the Q1, global system-wide restaurant sales were $1.2 billion, up 2% in constant currency and excluding the franchisee suspended restaurants announced last year. Net unit growth, primarily in international markets, contributed to the higher system-wide sales. For the Q1, North America comp sales were flat with last year's record Q1 sales, a result of a 3% growth in our company-owned restaurants and a decrease of 1% across franchised restaurants who are coming off a strong Q1 a year ago. For added color, in the Q1, we lacked our largest January ever when customers were staying closer to home due to the impact of Omicron. On a 2-year and 3-year stack, North America comps were up 2% and 28% respectively. International comps were down 6% in the Q1 as inflation continued to pressure consumer spending across markets. Similar to the Q4, the challenges we faced in the U.K. market had a significant impact on our international segment results. Q1 comps were also impacted in Asian markets due to the Chinese New Year and the loosening of COVID restrictions. Strength in our other international markets, especially in the Middle East and Spain, partially offset these pressures. Total revenues for the Q1 were $527 million, up slightly from the same period last year when excluding the impact of refranchising a 90-restaurant joint venture in 2022. Turning to margins. For the Q1, adjusted operating income was $39 million, compared with $45 million from the same period last year. The year-over-year decline was in line with our expectations as the impact of the significant commodity and wage inflation that occurred throughout 2022 has not fully lapped. Higher G&A expense was driven by annual merit increases and performance-based comp accruals, along with higher depreciation and amortization related to our investments in restaurants and technology support. Adjusted operating margins were 7.4%, a 90 basis point decline year-over-year, slightly better on a sequential basis. Our teams are taking a disciplined approach to managing costs while maintaining our high-performance culture and supporting our strategic growth initiatives. Let's take a deeper dive into our operating segments. In our domestic company-owned restaurant segment, food basket costs were up 4% compared with the prior year. Labor costs also remained elevated in the quarter. Together, commodities and labor costs represented approximately 200 basis points of headwind for the domestic company-owned restaurant segment margins year-over-year. Our strategic pricing actions somewhat, but not fully offset these higher costs, resulting in an approximate 150 basis point decline in restaurant level margins compared with a year ago. We expect to see further improvement in our domestic company-owned restaurant margins as our team continues to implement the Back to Better operational initiatives and food costs continue to moderate throughout the year. We remain focused on factors which are under our control, offering good value to our customers and running great operations. In our North America commissary segment, Q1 revenues grew by 1% year-over-year, driven by higher costs. As a reminder, our commissary arrangement with North America franchisees enables us to pass through food, labor, and fuel costs on a cost plus fixed margin basis. Higher costs are slightly accreted to commissary operating income, but dilutive to operating margins. International operating segment, adjusted operating income was down in the Q1 compared with the prior year. As discussed on prior calls, the U.K. is our largest market and the only international market where we own the commissary. This market is more than just a royalty stream, the challenges we are facing have a more pronounced impact on our international profits. Partially offsetting the impact in the U.K. was the 8% net new unit growth in our international markets when compared with a year ago. Moving on to cash flow and balance sheet. For the Q1, net cash provided by operating activities was $41 million, up from $25 million a year ago. Free cash flow increased $7 million to $22 million, reflecting changes in working capital, partially offset by an $8 million increase in capital expenditures. We ended the quarter with ample liquidity of approximately $240 million in cash and borrowings available under our revolving credit facility and a gross leverage ratio of 3.5 times. We also continued to return significant cash to our shareholders. During the quarter, we repurchased approximately $210 million in shares. In total, we have repurchased 2.5 million shares. Approximately $90 million remains available for repurchase under our current authorization. We also paid $15 million in cash dividends during the quarter. Based on our strong balance sheet and positive business outlook, our board has declared a Q2 dividend of $0.42 per common share, or $1.68 on an annual basis. Through prudent management of our cash flows, we're able to maximize our financial flexibility and our ability to create value for our shareholders in both the short and long term through a combination of organic growth investments, cash dividends, and share repurchases. To our outlook. Overall, our growth expectations remain unchanged with the long-term outlook we provided on our Q4 call. Consistent with our long-term guidance last quarter, we plan to grow our North American comps between 2% and 4% annually going forward. Also consistent with our guidance last quarter, in 2023, we anticipate being at the lower end of this range. From a cadence perspective, we believe North America comps will improve each quarter as we launch new menu innovations, activate targeted offerings for our most value-conscious customers, and execute our Back to Better initiatives. We anticipate our international comp sales will remain under pressure but will improve each quarter as the macroeconomic environment evolves, including within the UK, our largest international market. We expect our adjusted operating margins to be comparable to or up slightly to the level achieved in 2022 as we benefit from several tailwinds, including our Back to Better initiatives, positive North America comps, and the benefit of a 53rd week in 2023. Offsetting these tailwinds are the investments we are making in the U.K. and higher G&A expenses as performance-based comp ramps back up. For added color, we expect our Q2 G&A expense to be higher due to the return of our franchisee conference after a three-year pandemic hiatus. In addition, while we expect food and wage inflation to moderate over the longer term, it is difficult to predict when and to what extent it will occur in 2023. Taking into consideration that Q1 share repurchases increased our debt by approximately $200 million, we now expect full year net interest expense to be between $40 million and $45 million. The increased interest expense is mitigated by the share reduction from an EPS perspective. Our CapEx remains at $80 million-$90 million as we invest in technology innovation and the opening of new company stores. Finally, our tax rate is anticipated to be at the higher end of our 21%-24% range. In summary, we continue driving value for our shareholders and setting Papa Johns up for success through our menu innovation, digital enhancements, operational productivity, unit growth, and strategic capital allocation. With that, I'll turn the call over to Rob for some final comments. Rob? Thanks, Chris. I've said it before, pizza is a uniquely special food. It almost always brings friends and families together in some form of celebration, whether it's the Super Bowl or a casual Friday night gathering. We believe that the world deserves better pizza and that we deliver it, but we remain hungry for better. I'm proud and thankful for the last three and a half years, but I'm most excited about the future of this brand. With that, I'll turn the call over to the operator for Q&A. Thank you. As a reminder, we ask that you please keep your questions to one and queue up again for additional questions if needed. Please stand by while we compile the Q&A roster. Our first question comes from the line of Sara Senatore with Bank of America. Please proceed. Okay, thank you very much. A question and then a clarification about unit growth. On the PJP, the agreement for India, I know, you know, predates you, Rob, like, but India was a market that Papa Johns was in, and then left a few years ago. I was just wondering if you could talk a little bit about what's changed, whether it's the evolution of the market or the positioning or just better operating capabilities for your partner there. The clarification was just understanding the help you're giving your franchisees in the U.S. There's no sort of financial contribution from Papa Johns, it's just offering services and sort of the kinda upfront help that somebody who might be new to building or franchising might need. Is that correct? Yeah, Sara. Hi, good morning. I'll answer the second one first. You know, we have standard incentives that we offer for high levels of development across our domestic footprint. That hasn't changed. You know, we have equipment incentives and other types of incentives to spur development, but we haven't increased that or added any type of unique, you know, royalty relief or anything like that to spur development. We've created some services and some capabilities, but we heard from our franchisees domestically is it's never been tougher to get a restaurant built from a permitting standpoint, construction standpoint. While we have great resources to help our franchisees with that, so we set up a model that allows them to tap into our resources to help them with their permitting and construction needs. That's really the only incremental support that we've added to the model. We're really excited about the new restaurant design. Our franchisees are excited about that. We're, you know, every new model moving forward will look like the new Papa Johns and, you know, I think that's gonna have a nice impact on our sales run rate once we kind of give all of those stores a facelift and bring that new model to market. In regards to India, you know, last time, like you said, it does predate me. I wasn't here the last time Papa Johns tried to go into India, but I've definitely done my homework and diligence on why this is different than the last time. The last time we went into India, we didn't do a lot of due diligence prior to entering that market. We went in and tried to operate that market, pretty much the same way we go into every market. India is a unique market, with different dynamics, different supply chain, different cost structure, and most, different is kind of the consumer price sensitivity... The consumer, you know, needs for a different type of product. We spent about a year and a half working with our franchisee from the Middle East, who has done an amazing job building out that region and very successful. They have gone in, along with our support, and done a lot of research to understand exactly what the needs are in that market. We've built a business model and a business plan that we both believe can be successful. It's a lower priced offering that meets the needs of the consumers in that market, and it's gonna be a more concentrated effort. We're gonna go, you know, city to city and build scale in each city prior to scattering, you know, restaurants all over the market and fragmenting kind of the resource allocation for those individual markets. It's a very different go-to-market plan than I understand, you know, we went to market in India in the past, and that's what gives us a lot of confidence. Thank you very much. Thank you. Thank you. One moment for our next question, please. It comes from the line of Joshua Long with Stephens. Please proceed. Great. Thank you for taking my question. Was hopeful we could dive into some of the Back to Better operational initiatives that are underway. Understanding that we're probably early on, but just curious, you know, how those are progressing. Maybe if you could share some additional color there. You mentioned time out the door was getting better. I imagine that there are some other kind of early wins maybe at the store level that you could talk about that might inform this idea of the guidance or outline by the guidance in terms of improving sales over the course of the year. Thank you for the question. It has been transformational in our corporate restaurants. you know, I think I've shared this before, but it's probably not a big surprise to anybody on this call, but during the pandemic, staffing got so challenging that literally our restaurants and our operators were bringing in everybody and anybody from a labor standpoint to try and mitigate the staffing challenges. Really all the primary focus of every restaurant became staffing. So we lost a little bit of the discipline on the KPIs. We kind of gave ourselves freedom to not meet the standards that we had always focused on in the past in terms of make times and out the door times and total and to the door times. You know, as we came out of the pandemic and we looked at and we brought in some new leadership, we looked at all the KPIs that have historically been so important to this brand, because this brand has always prided itself on operational excellence. And we recommitted our teams to that discipline to make sure that we were tracking it, we were measuring it, we were reinforcing great behavior, we were addressing outages. You know, our corporate teams just rallied around that. That's why we have been able to deliver a 25% decrease in out the door times and increase customer service commensurately. How does that impact the margin and the productivity moving forward? Well, two ways. One, it gives you know, it gives you greater throughput. You can handle more orders in the same amount of time, it also gives you better labor productivity. As we continue to operate better, as it continues to become part of our DNA, we're able to allocate our labor much more efficiently and effectively. You know, and lastly, as we deliver better service, we anticipate, you know, frequency increasing. As customers', you know, expectations are met or exceeded, we anticipate that they're gonna order more often from us. That's kind of what's baked into our operating model moving forward, and that's why we have confidence in our restaurant margins continuing to improve sequentially throughout the year. Thank you. Thank you. One moment for our next question. It comes from the line of Chris O'Cull with Stifel. Please proceed. Thanks. Good morning, guys. This is Patrick on for Chris. Rob, you know, your guidance obviously assumes positive comps for the year. I'm curious if you can provide any additional color on current trends since, you know, we need to see that come up from the flat comp in Q1. I'm just curious if you're trending towards that now or the lower end of that range at least, or if you still have ground to make up. If so, if it's the latter, what gives you confidence that you can get there over the course of the year? It's a great question. It's a question I ask my teams pretty much every day. you know, obviously we reiterated our guidance for the year to be positive. obviously we were in... You know, we were flat in Q1, but the Q1 is definitely our biggest comp quarter. It's our highest sales quarter. It's, we were positive last year when all of the competition was negative. you know, we knew this was gonna be our toughest quarter. As you look out through the balance of the year, the comps definitely get easier. That's not the only confidence, the reason that we have confidence in our ability to change the trajectory. I mean, we today, you know, are launching our biggest innovation ever. We've got Doritos Cool Ranch Papadia. We've put a ton of support behind that. We've gotten a ton of amazing food reviews and PR surrounding that over the last week as we've kind of prepped for this launch. We're eagerly anticipating this weekend to see our customers' reaction. You know, that's just the first thing. We have a great pipeline of innovation throughout this year. We've got continued improvements in our company operations that we're excited about. You know, I think, you know, our franchisees have a big opportunity as well to kind of tap into some of these resources that we build on our Back to Better initiative corporately and drive those into their operations. That's all upside the back half of the year, and we fundamentally believe that that's gonna deliver, you know, a continued sequential comp improvement. Great. Thanks. Thank you. Thank you. One moment for our next question, please. It comes from the line of Alexander Slagle with Jefferies. Please proceed. Thanks. Good morning. I wanted to just ask on franchisee health in North America, and I know volumes are better and margins are down a bit, but, you know, where does the average franchisee EBITDA or profit stand now versus 2019? I know we've asked, you know, on this topic and overall cash returns and investment costs before. It's not something you wanna provide too many details on, but wanted to circle back on it, or any additional perspective you can provide these metrics kind of become more, more focused for investors, understandably, across the industry. We've gone through such a unusual time over the last few years and, you know, I know you have the Back to Better initiatives kind of rolling out to franchisees, so expecting a lot of improvements in, on these metrics, over time. Just wanted to see if you could circle back on any of those, metrics as prospective. Yeah, I guess what I would share with you is our franchisee, you know, situation over the last four years isn't that dramatically different from our corporate situation. We don't disclose our franchisee EBITDA, but we do disclose obviously the makeup of our company, front P&L. You know, obviously our margins have come down year-over-year after an amazing 2021 in front half of 2022 before kind of the inflation really started to take hold. You know, relative to 2019, our EBITDA margins are up and up pretty significantly. A big part of that is a function of our sales are up significantly. In 2019, our average AUV across the system was about $900,000. Today, you know, we're up, pushing up close to $1.2 million. You know, that sale, that level of sales and flow-through definitely creates some fixed overhead coverage and definitely creates some improved profitability, which has helped us, you know, to mitigate some of this increased inflation that we've seen on both the commodities and the wages. You know, what I tell everybody about this business is, like, if you believe that there is going to be a normalization of commodity costs over the next year, 18 months, then, you know, and you believe that we can hold on to the pricing that we've taken, which we've seen an ability to do over the last year since we've come out of the pandemic, there's a ton of upside on operating margin. You know, the commodity inflation that we've seen is unprecedented in this business and, you know, record highs for a lot of the input costs. I fundamentally don't believe that that can stay that way in perpetuity. I believe in efficient markets. I believe that the supply is gonna catch up to the demand regardless of the, you know, macroeconomic environment. I do believe that there's a lot of margin expansion at the operating level as we look into the back half of 2023 and beyond. I do think that margins right now, although higher than 2019, are a bit compressed relative to what we're gonna see moving forward. Got it. Thank you. Thank you. One moment for our next question, please. It comes from the line of Eric Gonzalez with KeyBank. Please proceed. Hey, thanks, and good morning. It sounds like you're reiterating that flat to slightly up op margin outlook for the year. I believe you said that you expect a large, you know, an uptick in G&A in the Q2 due to the convention and a fairly large step-up for the full year. Perhaps you can help us understand where the other offsets might be from that G&A line and how much commodity normalization you're baking into that outlook. Thanks. Yeah. I mean, our team has been focused on G&A really since day one this year. You know, we've been very efficient and productive. I don't think that we're gonna have a significant uptick on our run rate G&A. The biggest impact to G&A this year is we paid 0 bonus last year across our company. You know, we didn't achieve the targets that we had put in place. Obviously, that was driven by an unforeseen and unprecedented level of cost coming into our P&L and our, you know, corporate restaurant ownership disproportionately impacted us relative to our peer group. We did the responsible thing, and we made sure that, you know, we were good stewards of our shareholder value, and so we didn't pay any bonuses last year. This year we have baked in a return to, you know, performance compensation. That's really the big impact on G&A this year. Our actual operating G&A is actually become more efficient. That's how we think we're gonna manage through some of these challenges. Obviously, yeah, Q2, our first conference, but even the conference we were able to come in under our budget and deliver, you know, a great conference. I'm really excited about our team's focus, understanding kind of how we need to tighten the belt while the cost structure continues and I'm confident that we'll be good stewards of P&L. If I could jump back in. You know, the question is really about what are the other parts of P&L understanding that you do have that, the bonuses in the G&A. If you could speak to maybe the company margins or other offsets that could get you back to that, you know, keep that op margin flat. Yeah, I mean, you know, 2% to 4% sales growth is part of it. The other part of it, I think we've guided to sequentially improving operating margins. Those are kind of 2 of the big drivers. Our development. You know, we're gonna open up across the system, you know, between 270 and 310 net new units, so over 400 units built this year. Between those 3 drivers, I mean, that's kind of those are kind of the drivers of our earnings growth. Got it. Thanks. Thanks. One moment for our next question, please. It comes from the line of Lauren Silberman with Credit Suisse. Please proceed. Thank you very much. Rob, the pizza category broadly seems to be facing some slower trends compared to what we've seen elsewhere in QSR. Can you just speak to your view on the pizza category and whether you're seeing any changes in customer behavior, signs of trade down? Anything you can share on performance between delivery and carry-out would be helpful. Yeah. Great question, Lauren. I mean, you know, the pizza category on average over the last 10 years has been, you know, a relatively slow growth category. You know, during the pandemic, obviously, you know, the pizza industry category outperformed all of QSR. I think as we head into, you know, we're coming out of that, this is kind of the last quarter where for us, where there's kind of a, still a residual big COVID impact. People forget that it was only a year ago that Omicron was kind of wiping out a lot of the labor market and the challenges with that, and people were staying home again the last January and February. you know, that positively impacted our category, where it obviously negatively impacted a lot of the sit down and fast casual. As you see these positive comps that a lot of the restaurant industry is coming with this quarter, you need to reflect on kind of what everybody's lapping from last quarter. now once we get past all that, we look forward. I mean, we believe that we can continue to grow between 2% and 4%. you know, that will probably outpace the rate of growth for the category. you know, I think that there's gonna continue to be pressure on the 40%-50% of the category, that's the mom and pop segment. The cost structure is really hard for them to make it work. They don't have the scale to drive the kind of productivity and efficiency that some of the, you know, larger groups do, and then their prices are 40, 50% higher as a result of that. I don't know how long that can sustain itself. I think that the category in this business is becoming even more digital and IT dependent. I think that also puts stress on the smaller players that don't have the resources, the infrastructure to invest in those capabilities. I think that we'll be able to continue to take share from some of the smaller players. I think we've got a great value proposition moving forward relative to the rest of the industry. You know, our innovation pipeline continues to fill up with great ideas. You know, despite, call it, low single-digit growth from the category, I think, you know, we're confident that we'll be able to continue to deliver between 2%-4%. Thank you. Is there anything you can share on what you're seeing between delivery and carryout? Yeah, great question. Sorry, I didn't get there. You know, we are seeing some shift into carryout. Our carryout business has always been real robust. I know we haven't talked about it as much as maybe some of the other players in the industry, but, you know, we have a strong carryout business, and as these more challenging economic times and price sensitivity increases, you are gonna see a little bit of a push into carryout. That's just not necessarily a problem for us. We're excited about that. You know, obviously, it can help us maybe with some labor and some staffing challenges. It does, you know, it does reduce the ticket to some extent because of the delivery fee that goes along with the delivery purchase. You're, you know, as the model shifts from delivery to carryout, you're gonna have to be able to pick up some savings in the labor side because you are gonna see a little bit of a challenge on the revenue side by foregoing those delivery fees. You know, I think some of our delivery business is, you know, organic delivery is supplemented with our continued growth with the third-party aggregators. I know that there's a lot of talk about their growth rates slowing down, but they're still outpacing the growth in the core pizza category. We're getting the benefit from that through our investments with them and our partnerships with them. Our delivery business is probably holistic delivery business has held up a little bit better than maybe some other folks in the category. Thank you very much. Very helpful. Thanks, Lauren. Thank you. One moment for our next question, please. It comes from the line of Peter Saleh with BTIG. Please proceed. Great. Thanks, and good morning. Rob, I just wanted to come back to the conversation around the commodities. I believe last quarter, when you guys gave the full year outlook, you anticipated commodities to be maybe modestly deflationary for the full year, and now you ended the Q1 up about 4%. Are you still expecting commodities to be modestly deflationary? It does look like we've seen some moderation in some of your input costs. Just, if you could give us a little bit more color on that'd be helpful. I mean, I think we did expect to see a little bit more deflation already this year. I mean, it sequentially has continued to improve. I mean, it's just been very volatile. We do, in our forecast, have continued moderation of commodity costs, even if, you know, Q1 hasn't fully realized those costs. You know, when you look at what we're lapping, Q2 of 2022 was by far the highest input cost environment that we operated in, so it was +18% year-over-year. Average cheese price, you know, per pound was $2.30. You know, the markets today are in the $1.80 range. That's a big change that we're seeing in the current environment, but it's been very volatile, but we do see the full year being modestly deflationary. Great. Just on unit development, I know you guys reiterated your long-term targets, and it does really imply a pretty meaningful step up in development in 2024 and 2025. Just curious is how quickly can India, come on track here and start, building units? Two, what other markets, do you think you guys need to open to really get to those, development targets that you guys laid out this morning? Thanks. Yeah. I mean, our current development targets don't incorporate a significant amount of new geographies opening up over the next two years. It's really based on our current franchisees and the current agreements that we have in place. I mean, Asia is a huge growth region for us right now. China is probably gonna be our biggest unit development growth country for the foreseeable future. We are anticipating new units coming in from India in the back half of this year, or I'm sorry, starting in 2024. We'll have two years of India development. You know, 650 units over a 10-year period, obviously, there'll be a bit of a ramp there, but that's a lot of units in 2024 and 2025 relative to the development that's going on elsewhere. We do believe that we can ramp pretty quickly. We're seeing, especially internationally, we're seeing continued strength in a lot of our Middle Eastern and Asia markets. Obviously, I think, you know, we called out, we're in the U.K., where there's some franchise optimization going on there, system optimization, making sure that we are set up for long-term growth. That's been a bit of a development source for us over the last four or five years that is evolving right now, but we feel confident that we can make up some of those challenges in some of these other markets. Thank you. Thanks, Pete. Thank you. One moment for our next question. It comes from the line of Dennis Geiger with UBS. Please proceed. Thank you. Rob, in your prepared remarks, you talked about your industry-leading CRM platform and then the size of the loyalty program at this point. Just wondering if you could talk a little more about the opportunity there to better leverage that platform. Related to that, I'm curious as it relates to third party, which I don't know how much of that, you know, kind of integrates with loyalty or, you know, I assume part of it is separate. Just curious within that, if that third party business, if you can speak to it, has become a larger, you know, if the mix continues to go higher of your total business and, you know, how you think about that within the context of that, of your kind of internal CRM loyalty platform. Thank you. Sure. The aggregator business is not tied to our loyalty business. In fact, you know, ideally, we would bring in new folks from the aggregators and convert them into loyalty members. I mean, the data that we have suggests that the aggregator marketplace business is between 50% and 60% incremental new business for our business. That's something that is really part of our strategy. We're bringing in those new customers. They love our products. They love, you know, they love the innovation, the new ideas that we bring, and then they wanna come back because it is more economical to order Papa John's through our organic channels. That's the long term. That's the business model. In terms of how much the aggregators represent of our business, yeah, I mean, obviously if our comps this year are flat and our business with the aggregators is growing, then they are gonna continue to grow as a% of our business. It's still a very, you know, it's a healthy amount, but it's not something that is becoming, you know, a situation where we're dependent on that business for us to be able to deliver our long term objectives. It's a healthy growing piece of our business that we'll continue to invest in. It's profitable, but we, you know, it's not so substantial that we feel like it's, you know, a liability. The last question around our loyalty platform. You know, I know I sound like a broken record here, but we still have not fully, you know, fully captured the value of that program. We have not yet built out the capabilities to execute the level of one-to-one marketing and, you know, frequency building opportunities that I aspire for that program to achieve. You know, I take accountability for that, but I also get excited about it because it continues to be upside. You know, we just hired a new CMO, Mark Shambura, who is really passionate about that work. I'm obviously passionate about it as well. That will be a big focus for us moving forward. You know, over the last three years, the tools and capabilities to leverage that huge amount of data that we're getting has changed significantly just over the last three or four years. We look to tap into that and leverage that to create a lot of value moving forward. Thanks for taking those, Rob. Appreciate it. Got it. Thank you. One moment for our next question. It comes from the line of Andrew Strelzik with BMO Capital Markets. Please proceed. Hey, good morning. I guess I wanted to just try to tie some comments that you made together and ask about your value proposition, which you said is strong versus the industry. You've talked about the ability to hold onto the price increases, but at the same time, we're seeing some delivery shifts to carry out, which may be attributed kind of to cost, and have talked about better check traffic balance. You know, I guess how do you think about getting there? I guess on one hand, it could just be as simple as not taking as much price this year, but, you know, are you planning to shift your kind of value messaging? Is there more that you think you need to do? You talked about the one-to-one marketing, maybe that plays in. I'm just curious how you think about and reflect on the value efforts you've had so far and your value proposition going forward. Thanks. It's a great question because we're definitely entering into a period, if we're not already all the way there, where more value is gonna become more important than it has been over the last three years. It's critical for us to have a compelling, and successful value strategy. I mean, regardless of whether or not we, you know, are gonna focus on our premium innovation, I mean, that's what we've done over the last three years. It's kind of our positioning in the marketplace. If you don't have a compelling value strategy, it's really hard to compete QSR, whether you're in pizza, burger, tacos, whatever. I mean, value is a big part of the business model. Despite the fact that we've focused on our premium innovation and that we've continued to drive a significant amount of check growth through trading customers up to products like stuffed crust and New York Style and Shaq-a-Roni and all these other things, we've never walked away from value. I mean, we still offer, you know, great carryout specials on our app and our website. We still offer great bundles on our app and our website. We haven't necessarily taken the same approach as some of our competitors with big 50% off promotions and those types of things. That's not necessarily a part of our strategy, but value is a big part of our strategy, and we get at it in a lot of different ways. I mean, our Papa Pairings platform is a way for us to bring, you know, great value on wings and other side items. Our carryout specials are tapping into a lot of the drive towards carryout. We fully believe that we have to be competitive on value. We just get at it a little bit different than maybe some of the other competitors in the industry. We're gonna continue to invest on premium innovation. We're gonna continue to push, you know, our most premium loyal customers into some of our new, great products. We know we have to meet the needs of that core customer, and we're focused on doing that. Great. Thank you very much. Thank you, Andrew. One moment for our next question, please. It comes from the line of Todd Brooks with The Benchmark Company. Please proceed. Hey, good morning. Thanks. quick question. Taking the the unit growth discussion to this year's level, Rob, I know you guys have reaffirmed your targets for net new openings this year. I think you got about 10% of that level opened in Q1. Can you just talk to the opening pace early in the year relative to how you expected the year to track? Maybe just on the 24 international closures, are those concentrated in the U.K., or are they more broadly spread? Thanks. Yeah. I mean, we're actually right on track with our forecast for the year in terms of net new openings. The closures that we have seen have been spread throughout our footprint, are not concentrated in the U.S. You know, we did a market transformation in Netherlands, and I think that represented, you know, a big chunk of those closures. We didn't necessarily have that in our plan for the year, but we were able to actually open restaurants at a higher rate in other geographies to mitigate that. Net-net, it puts us, you know, right on track with where we had planned on being at this point in the year. As I did mention, though, just for color, I mean, you know, I think we disclosed in some of the discussions, you know, we are working on the U.K., and there will be some market optimization there, and there's probably going to be a little bit less development there as an outcome of that. But we have been able to fill that gap with upside in a lot of our other geographies and a lot of our other markets. I mean, the reality is we have some really strong performance and sequentially continues to improve in Asia and Middle East. You know, we're doubling down on those markets, which is mitigating, you know, some of the market optimization that we're going to have to execute in the U.K. Great. Thanks, Rob. Thank you. Thank you. One moment for our next question. It comes from the line of Nick Setyan with Wedbush. Please proceed. Thank you. You know, we saw some strength in both the commissary margin and international margin. Just wondering if there's anything sort of, you know, one time in the international margin, for example, that we should be aware of? You know, whether that's sort of, you know, how should we think about that international margin as the year progresses? Any reason why the commissary margin shouldn't stay at this level or even go higher as the year progresses? Well, you know, I'll remind you our commissary margin is a fixed margin. You know, on an annualized basis, we have a fixed margin of 4% on the commissary. The reason why it's higher year-over-year is because sometimes there's some timing issues around kind of. You know, last year we were chasing the increase in cost with increased prices out to the, you know, to the franchisees for the ingredients. We weren't able to make the full margin in Q1 last year. This year is a little bit of a different dynamic, but for the full year, you should always expect that we're gonna deliver about a 4% margin on that business. On the international side, you know, it's really about just tightening the belt and making sure that we have, you know, the right operating model to operate that business. I think our leadership, you know, we put some new leadership into that business over the last year. They're very conscientious on their performance relative to their cost structure. I think they've just been really great about doing the things necessary to hold costs down. The other piece is consistent with what I disclosed on the commissary in the U.S. We own the commissary in the U.K. Last year, as we saw this kind of hyperinflation, you know, we weren't really able to pass that inflation on to the franchisees as quickly as we needed to. There was a lower rate of margin during Q1, and I think even into Q2. This year that dynamic doesn't exist, so we're delivering a higher margin year-over-year in the UK commissary. Those are, I think, the three key drivers. Thank you. Thank you. This concludes our Q&A. I will pass the call back to management for any final remarks. Thanks, everyone, for the call today. It's obviously a unique time that we're all working through, so our intent is to be as transparent as possible on the business and on the industry so that you guys can do your jobs. You know, but to summarize, I just wanna say I'm thankful to our teams and our franchisees for continuing to deliver solid performance. You know, we lapped Q1 of 2022, which was our highest sales volume quarter in history, which lapped Q1 of 2021, which previously had been the highest sales volume in history. These are big laps for us. The ability to lap, you know, flat or positive is indicative of the strength of the sales in the restaurants. I'm thankful for our teams to continue to deliver these solid results. I'm also confident in and excited about 2023 and beyond. You know, we have forecasted increased comps, forecasted some decreased costs, and we're continuing to be strong developers throughout this system, throughout the globe, despite some of the challenges that everyone highlights in the industry, with development and construction at this point. Obviously, with kind of the macroeconomic and interest rate environment that's going on. I'm very bullish about the future. I couldn't be more proud of the team and the way everyone's working together. I just wanna thank you all for your continued support, and thank you for your time today. Thank you. With that, ladies and gentlemen, we conclude today's conference. Thank you for participating, and you may now disconnect.