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Landlords Could Seize Opportunity If Papa John’s Shuts Stores

It’s not often that commercial real estate landlords want to lose tenants, but that may be the case with the criticized pizza chain Papa John’s as it faces the prospect of closing 250 restaurants across the country.

Landlords throughout the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – are concerned the chain’s highly publicized missteps by its former chief executive, who received swift criticism after using a racial slur on a recent conference call, could dissuade shoppers and they may hope the chain shuts stores, an industry spokesperson said recently.

“There’s a need for that size of space in the market and there’s not that much of it,” the spokesperson explained. “They (landlords) may be able to get higher rents from other tenants.”

This report on U.S. and Philadelphia commercial properties from the CoStar Group research organization is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

Papa John’s, the country’s third-largest pizza chain, has suffered public blows this past year from, among others, owners of national and Philadelphia commercial real estate properties. Founder and former Chairman and Chief Executive John Schnatter — who still owns about 30 percent of the company — this summer used a racial slur to describe African Americans on a conference call. Last fall, he blamed NFL leadership for allowing players to kneel during the National Anthem and complained the controversy was hurting the chain’s sales. At the time, Papa John’s was an NFL sponsor. It has since been replaced by Pizza Hut.

In a recent earnings call, Papa John’s Chief Executive Steve Ritchie said the chain was struggling and may be forced to close some locations.

“We’re going to evaluate all the options as they’re presented to us, if there is some sort of increase in closures that exist here because of the declines in the sales,” he said.

A Papa John’s spokeswoman declined to comment.

If the chain does close stores, a new commercial real estate report providing insight into the national and Philadelphia commercial real estate market offers clues as to which businesses might replace them. The report said non-retail and non-restaurant space in shopping centers increased to 23.1 percent this year from 19.2 percent in 2012. Forty-four percent of shoppers say they prefer to visit shopping centers that have a wide variety of non-retail tenants.

“The growing focus on experience has led to a rising share in non-retail tenants, including food and beverage, salons, movie theaters, fitness centers and medical clinics,” the report said.

Most Papa John’s stores are in shopping and strip centers, and industry observers believe two popular concepts — Mediterranean or taco restaurants — could backfill the space in these U.S. and Philadelphia commercial real estate listings and drive traffic.

Rival pizza chain Domino’s, the country’s second-largest pizza chain, in particular is taking advantage of Papa John’s woes, said Henry Renaud, president of retail brokerage Renaud Consulting. In contrast to Papa John’s, Domino’s Chief Executive Richard Allison said this summer that the chain was preparing to build about 2,500 restaurants in the next decade or so and two supply chain centers in the next two years to keep pace with growth.

For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

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