U.S. pizza chain Papa John’s (PZZA) plans to reenter the Indian market this year after failing to secure a foothold in a previous attempt. The company left the market in 2017 as stores weren’t operating as expected. Its reentry was also delayed as it originally planned to open stores in the country last year.
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Papa John’s expansion plans for India include opening more than 650 locations over the next 10 years. The company notes that it’s taking its time before opening new stores to ensure that its franchise partner has the “right products and menu, technology, and restaurant footprint to ensure their long-term success.” It believes this will better help it navigate India’s “complex market with unique consumer preferences.”
Why Did Papa John’s Fail in India?
Papa John’s initial entry into India started in 2006 with four locations. Over the next decade, it expanded to more than 40 stores to better compete against Yum Brands’ (YUM) Pizza Hut and Domino’s (DPZ). However, the company wasn’t ready to compete with these two with their already-established footholds in India. This saw the chain close its remaining 33 stores in 2017.
Pizza Hut and Domino’s remain market leaders in the Indian pizza market. That means Papa John’s has an uphill battle ahead with its reentry. However, its more aggressive expansion plan this time around may assist it in establishing itself in the country and make it a rival to Pizza Hut and Domino’s.
Is PZZA Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for Papa John’s is Moderate Buy based on five Buy and six Hold ratings over the last three months. With that comes an average price target of $60.75, a high of $73, and a low of $45. This represents a potential 40.37% upside for PZZA shares.
