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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

Commission File Number: 0-21660

PAPA JOHN'S INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

2002 Papa John's Boulevard
Louisville, Kentucky 40299-2334
(Address of principal executive offices)

(502) 261-7272
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

(Title of Each Class)
None

(Name of each exchange on which registered)
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
The NASDAQ Stock Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes /x/ No / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / /

As of March 12, 2001 there were 22,741,582 shares of the Registrant's Common Stock outstanding. The aggregate market value of the shares of Registrant's Common Stock held by non-affiliates of the Registrant at such date was $327,300,663 based on the last sale price of the Common Stock on March 12, 2001 as reported by The NASDAQ Stock Market. For purposes of the foregoing calculation only, all directors and executive officers of the Registrant have been deemed affiliates.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Part III are incorporated by reference to the Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held May 17, 2001.

TABLE OF CONTENTS

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PART I

Item 1. Business

General

    Papa John's International, Inc. (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 carry-out restaurants under the trademark "Papa John's" domestically in 49 states, the District of Columbia and ten international markets, and under the trademark "Perfect Pizza" in the United Kingdom. The first Company-owned Papa John's restaurant opened in 1985 and the first franchised restaurant opened in 1986. We acquired Perfect Pizza Holdings Limited ("Perfect Pizza") in 1999 as part of our plan to develop restaurants internationally (see Business—Expansion). At December 31, 2000, there were 2,612 Papa John's restaurants in operation, consisting of 641 Company-owned and 1,971 franchised restaurants. Additionally, there were 205 Perfect Pizza restaurants in operation, consisting of three Company-owned and 202 franchised restaurants.

    In February 2001, the Company realigned into four key groups—Operations, Administration, Development and Resource/Support, each reporting to our Chief Executive Officer. The four areas are as follows:

Operations—responsible for Corporate Restaurant Operations, PJ Food Service and Support Services.

Administration—responsible for Finance, Information Systems and Office Services.

Development—responsible for Restaurant Development, International Operations, Franchise Sales and Legal.

Resource/Support—responsible for Franchise Operations and Business Consulting, Education and Training, Human Resources, Field Marketing and Internal Communications.

Strategy

    Our goal is to build the strongest brand loyalty of all pizzerias internationally. To accomplish this goal, we have developed a strategy designed to achieve high levels of customer satisfaction and repeat business, as well as to establish recognition and acceptance of the Papa John's brand. The key elements of our strategy include:

    Focused Menu.  Papa John's restaurants offer a focused menu of high-quality pizza, breadsticks and cheesesticks. Papa John's traditional crust pizza is prepared using fresh dough (never frozen), cheese made from 100% real mozzarella, fresh-packed pizza sauce made from vine-ripened tomatoes (not from concentrate) and a proprietary mix of savory spices, and a choice of high-quality meat (no artificial fillers) and vegetable toppings. Papa John's thin crust pizza is made with a prepared crust and the same high-quality toppings. We believe our focused menu creates a strong identity in the marketplace, while also simplifying operations at our restaurants.

    Efficient Operating System.  We believe our operating and distribution systems, restaurant layout and designated delivery areas result in lower restaurant operating costs and improved food quality, and promote superior customer service. Our Quality Control Center ("QC Centers") system takes advantage of volume purchasing of food and supplies, and provides consistency and efficiencies of scale in dough production. This eliminates the need for each restaurant to order food from multiple vendors and commit substantial labor and other resources to dough preparation. Because Papa John's restaurants have a focused menu and specialize in delivery and carry-out services, each team member can concentrate on a well-defined function in preparing and delivering the customer's order.

    Commitment to Team Member Training and Development.  We are committed to the development and motivation of our team members through training programs, incentive compensation and

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opportunities for advancement. Team member training programs are conducted for corporate team members, and offered to our franchisees at training centers across the United States. We offer performance-based financial incentives to restaurant team members at various levels. Our growth also provides significant opportunities for advancement. We believe these factors create an entrepreneurial spirit throughout Papa John's, resulting in a positive work environment and motivated, customer-oriented team members.

    Marketing.  Our restaurant-level marketing programs target the delivery area of each restaurant, making extensive use of distinctive print materials in direct mail and store-to-door couponing. Local marketing efforts also include a variety of community-oriented activities with schools, sports teams and other organizations. In markets where we or our franchisees have a significant presence, local marketing efforts are supplemented with radio and television advertising. Three national television campaigns aired in 2000.

    Franchise System.  We are committed to developing a strong franchise system by attracting experienced operators, allowing them to expand in a controlled manner and monitoring their compliance with our high standards. We seek to attract franchisees with experience in multi-unit restaurant operations and with the financial resources and management capability to open multiple locations. To ensure consistent food quality, each domestic franchisee is required to purchase dough and spice mix from us and purchase all other supplies from us or our approved suppliers. QC Centers outside the U.S. may be operated by franchisees pursuant to license agreements. We devote significant resources to provide Papa John's franchisees with assistance in restaurant operations, management training, team member training, marketing, site selection and restaurant design.

Unit Economics

    We believe our unit economics are exceptional. In 2000, the 534 Company-owned restaurants included in the most recent comparable restaurant base generated average sales, based on a 53-week year, of $782,000, average cash flow (operating income plus depreciation) of $155,000 and average restaurant operating income of $127,000 (or 16.2% of average sales).

    The average cash investment for the 42 domestic company-owned restaurants opened during the 2000 fiscal year, exclusive of land, was approximately $268,000. We expect the average cash investment for Company-owned restaurants opening in 2001 to be approximately $272,000.

Expansion

    A total of 358 Papa John's restaurants were opened during 2000, consisting of 44 Company-owned (42 domestic and 2 in the United Kingdom) and 314 franchised restaurants. During 1999, we acquired Perfect Pizza, an operator and franchisor of 206 delivery and carry-out pizza restaurants in the United Kingdom (See "Note 3" of "Notes to Consolidated Financial Statements"). During 2000, 11 Perfect Pizza franchised restaurants were opened and we converted eight Company-owned Perfect Pizza restaurants to Papa John's units. During 2001, we plan to open approximately 15 to 20 restaurants domestically and acquire an additional 20 restaurants from our franchisees and expect franchisees to open approximately 195 to 255 restaurants both domestically and internationally. Newer domestic market expansion is planned for the West Coast, Mid-Atlantic states, and Rocky Mountain regions, in addition to building out existing markets throughout the country. International expansion in 2001 is planned primarily in Mexico, Puerto Rico, Venezuela, Costa Rica, Guatemala, Honduras, Saudi Arabia, Canada, Bahamas, and the United Kingdom. The conversion of Perfect Pizza restaurants will continue during the next four or five years.

    Our ability and the ability of our franchisees to open new restaurants is affected by a number of factors, many of which are beyond our control and the control of our franchisees. These factors include, among other things, selection and availability of suitable restaurant and QC Center sites,

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increases in food, paper or labor costs, negotiation of suitable lease or financing terms, constraints on permitting and construction of restaurants and the hiring, training and retention of management and other personnel. Accordingly, there can be no assurance that we or our franchisees will be able to meet planned growth targets or open restaurants in markets now targeted for expansion.

    Our expansion strategy is to cluster restaurants in targeted markets, thereby increasing consumer awareness and enabling us to take advantage of operational, distribution and advertising efficiencies. Our experience in developing markets indicates that market penetration through the opening of multiple restaurants within a particular market results in increased average restaurant sales in that market. We have co-developed markets with some franchisees or divided markets among franchisees, and will continue to utilize market co-development in the future. In determining which new markets to develop, we consider many factors, including the size of the market, demographics and population trends, competition, and availability and costs of real estate. Before entering a new market, we analyze detailed information concerning these factors and each market is toured and evaluated by a member of our Development department.

Menu

    Papa John's restaurants offer a focused menu of high-quality pizza, breadsticks and cheesesticks, as well as canned or bottled soft drinks. Papa John's traditional crust pizza is prepared using fresh dough (never frozen), and our thin crust pizza is made with a prepared crust. Papa John's pizzas are made from hard wheat flour, cheese made from 100% real mozzarella, fresh-packed pizza sauce made with vine-ripened tomatoes (not from concentrate) and a proprietary mix of savory spices, and a choice of high-quality meat (no artificial fillers) and vegetable toppings. Fresh onions and green peppers are purchased from local produce suppliers or the QC Center system and sliced daily in the restaurants. Fresh baby portabella mushrooms are purchased from the QC Center system, which delivers twice weekly. Each traditional crust pizza is served with a container of our special garlic sauce and two pepperoncinis, and each thin crust pizza is served with a container of special seasonings and two pepperoncinis. We believe our focused menu helps create a strong identity among consumers and simplifies operations, resulting in lower restaurant operating costs, improved food quality and consistency and superior customer service. Additionally, we may from time to time test product variations or new products which are consistent with our goal of simplified operations and superior customer service.

Restaurant Design and Site Selection

    The exterior of most Papa John's restaurants is characterized by backlit awnings, neon window designs and other visible signage. A typical domestic Papa John's restaurant averages 1,200 to 1,800 square feet and a typical international Papa John's restaurant averages 800 to 1,400 square feet. Papa John's restaurants are designed to facilitate a smooth flow of food orders through the restaurant. The layout includes specific areas for order taking, pizza preparation and routing, resulting in simplified operations, lower training and labor costs, increased efficiency and improved consistency and quality of food products. The typical interior of a Papa John's restaurant has a vibrant red and white color scheme with green striping, and includes a bright menu board, custom counters and a carry-out customer area. The counters are designed to allow customers to watch the team members slap out the dough and put sauce and toppings on pizzas.

    We consider the location of a restaurant to be important and therefore devote significant resources to the investigation and evaluation of potential sites. The site selection process includes a review of trade area demographics, target population density, household income levels and competitive factors. A member of our development team inspects each potential domestic Company-owned or franchised restaurant location and the surrounding market before a site is approved. Our restaurants are typically located in strip shopping centers or free-standing buildings that provide visibility, curb appeal and

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accessibility. Our restaurant design may be configured to fit a wide variety of building shapes and sizes, which increases the number of suitable locations for our restaurants.

    Since 1994, an increasing number of free-standing restaurants have been opened in the Papa John's system. We seek either existing buildings suitable for conversion, or locations suitable for the construction of our prototype restaurant. Free-standing buildings generally provide more signage and better visibility, accessibility and parking. We believe that these locations improve Papa John's image and brand awareness. At year-end, free-standing units represented approximately 23% of Company-owned restaurants. We expect this ratio to remain fairly constant in future years. We also have ten multi-bay units open, but we do not expect to significantly increase the number of these units.

    All of the equipment, fixtures and smallwares needed to open a Papa John's restaurant are available for purchase through us. We also provide layout and design services and recommend subcontractors, signage installers and telephone systems to Papa John's franchisees. Although not required to do so, substantially all Papa John's franchisees purchase most of their equipment from us.

Quality Control Centers; Strategic Supply Chain Management

    Our domestic QC Centers, comprised of eleven regional production and distribution centers, supply pizza dough, food products, paper products, smallwares and cleaning supplies twice weekly to each restaurant. Our system enables us to monitor and control product quality and consistency, while lowering food costs. A full-service QC Center was opened in Phoenix, Arizona in the second quarter of 2000 replacing our previous distribution center. Our other full-service QC Centers are in Louisville, Kentucky; Dallas, Texas; Pittsburgh, Pennsylvania; Orlando, Florida; Raleigh, North Carolina; Jackson, Mississippi; Denver, Colorado; Rotterdam, New York; Portland, Oregon and Des Moines, Iowa. The primary difference between a full-service QC Center and a distribution center is that full-service QC Centers produce fresh pizza dough. The QC Center system capacity is continually evaluated in relation to planned restaurant growth, and facilities are developed or upgraded as operational or economic conditions warrant.

    Six franchised QC Centers located in Canada, Mexico, Honduras, Iceland, Saudi Arabia and Alaska were opened in 2000, and a corporate QC Center was opened in Cambridge, Canada. Other international franchised QC Centers are located in Puerto Rico, Costa Rica, Venezuela, and Guatemala. We expect future international QC Centers to be licensed to franchisees; however, we may open Company-owned QC Centers at our discretion. Perfect Pizza relocated and expanded its distribution center to accommodate a full-service QC Center during 2000.

    We set quality standards for all products used in our restaurants and designate approved outside suppliers of food and paper products that meet our quality standards. In order to ensure product quality and consistency, all of our restaurants are required to purchase proprietary spice mix and dough from our QC Centers. Franchisees may purchase other goods directly from approved suppliers or our QC Centers. National purchasing agreements with most of our suppliers generally result in volume discounts to us, allowing us to sell products to our restaurants at prices which we believe are below those generally available in the marketplace. Within our domestic QC Center system, products are distributed to restaurants by refrigerated trucks leased and operated by us or transported by a dedicated logistics company.

    Effective December 27, 1999, PJ Food Service, our wholly-owned subsidiary that operates our domestic company-owned QC Centers, entered into a purchasing arrangement with a third-party entity formed at the direction of the Franchise Advisory Council (see Franchise Program—Franchise Advisory Council) for the sole purpose of reducing cheese price volatility. Under this arrangement, PJ Food Service purchases cheese at a fixed quarterly price based in part on historical average cheese prices. Gains and losses incurred by the selling entity are passed to the commissary via adjustments to the selling price over time. Ultimately PJ Food Service purchases cheese at a price approximating the

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actual average market price, but with more predictability and less volatility than the previous purchasing method. (See "Note 12" of "Notes to Consolidated Financial Statements.")

Marketing Programs

    Our restaurant-level marketing programs target the delivery area of each restaurant, making extensive use of distinctive print materials in direct mail and store-to-door couponing. The local marketing efforts also include a variety of community-oriented activities with schools, sports teams and other organizations. In markets in which we or Papa John's franchisees have a significant presence, local marketing efforts are supplemented with radio and television advertising.

    All Company-owned and franchised Papa John's restaurants within a developed market are required to join an advertising cooperative ("Co-op"). Each member restaurant contributes a percentage of sales to the Co-op for market wide programs, such as radio, television and print. 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 print and electronic advertising materials that are produced by the Papa John's Marketing Fund, Inc., a non-profit corporation (the "Marketing Fund"), for use by us and our franchisees. The Marketing Fund produces Papa John's national television commercials.

    We provide both Company-owned and franchised restaurants with catalogs for the purchase of uniforms and promotional items and pre-approved print marketing materials. We also provide direct marketing services to Company-owned and franchised restaurants utilizing customer information gathered by our proprietary point-of-sale technology.

Company Operations

    Restaurant Personnel.  A typical Papa John's restaurant employs a restaurant manager, two assistant managers and approximately 20 to 25 hourly team members, most of whom work part-time. The manager is responsible for the day-to-day operation of the restaurant and for maintaining Company-established operating standards. The operating standards and other resources are contained in a comprehensive operations manual supplied to each restaurant and updated regularly. We seek to hire experienced restaurant managers and staff, provide comprehensive training on operations and managerial skills, and motivate and retain them by providing opportunities for advancement and performance-based financial incentives.

    We employ area supervisors, each of whom has responsibility for overseeing three to six Company-owned restaurants. We also employ operations vice presidents and district managers who oversee area supervisors and managers within their respective markets. These team members are eligible to earn performance-based financial incentives.

    Training and Education.  We have a department dedicated to training and developing team members, as well as assisting with new restaurant openings. We have at least one full-time training coordinator for each of our markets and regional training directors located strategically across the country. We provide an on-site training team three days before and three days after the opening of any Company-owned or franchised restaurant requesting assistance. Each operations vice president, district manager, area supervisor and restaurant manager completes our management training program and on-going development programs in which instruction is given on all aspects of our systems and operations. The programs include classroom instruction and hands-on training at an operating Papa John's restaurant or at Company-certified training centers. Our training includes: new team member orientation, in-store and delivery training, core management skills training, new product or program implementation and ongoing developmental programs.

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    Point of Sale Technology.  Point of sale technology (our proprietary PROFIT System™) is in place in substantially all Company-owned and franchised restaurants. We believe this technology facilitates faster and more accurate order taking and pricing, reduces paperwork and allows the restaurant manager to better monitor and control food and labor costs. We believe the PROFIT System enhances restaurant-level marketing capabilities through the development of a data base containing information on customers and their buying habits with respect to our products. Polling capabilities allow us to obtain restaurant operating information, thereby improving the speed, accuracy and efficiency of restaurant-level reporting.

    Reporting.  Managers at Company-owned restaurants evaluate daily reports of sales, cash deposits and operating costs. Physical inventories of all food and beverage items are taken nightly. Our area supervisors prepare weekly operating projections for each of the restaurants under their supervision.

    Hours of Operations.  Our domestic restaurants are open seven days a week, typically from 11:00 a.m. to 12:30 a.m. Monday through Thursday, 11:00 a.m. to 1:30 a.m. on Friday and Saturday and 12:00 noon to 11:30 p.m. on Sunday.

Franchise Program

    General.  We continue to attract many franchisees with significant restaurant experience. We consider our franchisees to be a vital part of our system's continued growth and believe our relationship with our franchisees is excellent. As of December 31, 2000, there were 1,971 franchised Papa John's restaurants operating in 49 states, the District of Columbia, and ten international markets, and 202 franchised Perfect Pizza restaurants operating in the United Kingdom. We have development agreements with our domestic franchisees for approximately 460 additional franchised restaurants committed to open through 2007 and agreements for 343 additional international franchised restaurants to open through 2009. There can be no assurance that all of these restaurants will be opened or that the development schedule set forth in the development agreements will be achieved. Formal development agreements for franchised Perfect Pizza restaurants do not exist, although a pipeline of qualified franchisees interested in expansion is maintained. During the 2000 fiscal year, 314 (271 domestic and 43 international) franchised Papa John's restaurants were opened, and 11 Perfect Pizza franchised restaurants were opened.

    Approval.  Franchisees are approved on the basis of the applicant's business background, restaurant operating experience and financial resources. We generally seek franchisees who will enter into development agreements for multiple restaurants. We seek franchisees who have restaurant experience or, in the case of franchisees who do not have restaurant experience, we require the franchisee to hire a full-time operator who has either an equity interest or the right to acquire an equity interest in the franchise operation.

    Development and Franchise Agreements.  We enter into development agreements with our domestic franchisees for the opening of a specified number of restaurants within a defined period of time and specified geographic area. Under our current standard development agreement, the franchisee is required to pay, at the time of signing the agreement, a non-refundable fee of $5,000 per restaurant covered by the development agreement. This amount is credited against the standard $20,000 franchise fee payable to us upon signing the franchise agreement for a specific location. Generally, a franchise agreement is executed when a franchisee secures a location.

    Our current standard domestic franchise agreement provides for a term of 10 years (with one ten-year renewal option) and payment to us of a royalty fee of 4% of sales. The current agreement, as well as substantially all existing franchise agreements, permit us to increase the royalty fee up to 5% of sales after the agreement has been in effect for three years. However, the royalty fee cannot be increased to an amount greater than the percentage royalty fee then in effect for new franchisees.

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    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 policies and standards. Many state franchise laws limit the ability of a franchisor to terminate or refuse to renew a franchise.

    We opened our first franchised restaurant outside the United States in 1998. In international markets, we enter into 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 subfranchise a portion of the development to one or more subfranchisees approved by us. Under our current standard international development agreement, the franchisee is required to pay total fees of $25,000 per restaurant, $5,000 at the time of signing the agreement, and $20,000 when the restaurant opens or the agreed-upon development date, whichever comes first. Under our current master franchise agreement, the master franchisee is required to pay total fees of $25,000 per restaurant owned and operated by the master franchisee, under the same terms as for the development agreement, and $15,000 for each subfranchised restaurant, $5,000 at the time of signing the agreement and $10,000 when the restaurant opens or the agreed-upon development date, whichever comes first.

    Our current standard international master franchise and development agreements provide for payment to us of a royalty fee of 5% of sales (including sales by subfranchised restaurants), with no provision for increase. The remaining terms applicable to the operation of individual restaurants are substantially equivalent to the terms of our standard domestic franchise agreement.

    We franchise restaurants in the United Kingdom under Perfect Pizza franchise agreements, which were in effect at the time of our acquisition. These franchise agreements differ from our standard international franchise agreements in many respects, although with few material differences. A principal difference is the term of the agreement, which is five years. The franchisee fee is £8,000 (approximately $11,900 at an exchange rate of 1.49), and the royalty rate of 5% is the same as our standard international agreements. The Perfect Pizza system has been developed principally through franchising of individual restaurants to single location franchisees. Thus, the system has no equivalent to our development agreements or master franchise agreements.

    We have entered into a limited number of development and franchise agreements for non-traditional restaurant units. These agreements generally cover venues or areas not originally targeted for development and have terms differing from the standard agreement. These agreements have not had a significant impact on our revenues or earnings.

    Franchise Restaurant Development.  We provide assistance to Papa John's franchisees in selecting sites, developing restaurants and evaluating the physical specifications for typical restaurants. Each franchisee is responsible for selecting the location for its restaurants but must obtain our approval of restaurant design and location based on accessibility and visibility of the site and targeted demographic factors, including population, density, income, age and traffic. We provide design plans, fixtures and equipment for most franchisee locations at competitive prices.

    Franchisee Loan Program.  We have a program under which selected franchisees can borrow funds principally for use in the construction and development of their restaurants. Loans made under the program typically bear interest at fixed or floating rates (ranging from 7.0% to 12.0% at December 31, 2000), and are secured by the fixtures, equipment and signage (and where applicable, the land) of the restaurant and the ownership interests in the franchisee. In limited cases, we have obtained a purchase option with respect to the financed restaurants. At December 31, 2000, loans outstanding under the franchise loan program totaled $16.7 million, net of the estimated allowance for doubtful collection of certain notes, with commitments to lend up to an additional $6.0 million. The loans outstanding include a loan of $3.4 million to the Marketing Fund (see Marketing Programs). We do not expect to significantly expand the franchisee loan program beyond current commitment levels. See "Notes 4 and 7" of "Notes to Consolidated Financial Statements" for additional information.

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    Franchise Training and Support.  Every franchisee is required to have a principal operator approved by us who satisfactorily completes our required training program and who devotes his or her full business time and efforts to the operation of the franchisee's restaurants. Each franchised restaurant manager is also required to complete our Company-certified management training program. We provide an on-site training crew three days before and three days after the opening of a franchisee's first two restaurants. Ongoing supervision of training is monitored by the corporate franchise training team. Multi-unit franchisees are encouraged to hire a full-time training coordinator certified to deliver Company approved programs in order to train new team members and management candidates for their restaurants. Our franchise consultants, reporting to the Vice President of Franchise Operations, maintain open communication with the franchise community, relaying operating and marketing information and new ideas between us and franchisees.

    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, materials, supplies, services, fixtures, furnishings, decor and signs. Each franchisee has full discretion to determine the prices to be charged to its customers.

    Franchise Advisory Council.  We have a Franchise Advisory Council that consists of Company and franchisee representatives. The Advisory Council holds quarterly meetings to discuss new marketing ideas, operations, growth and other relevant issues.

    Reporting.  We collect weekly and monthly sales and other operating information from Papa John's franchisees. We have agreements with most Papa John's domestic franchisees permitting us to electronically debit the franchisees' bank accounts for the payment of royalties, Marketing Fund contributions and QC Center purchases from Papa John's. This system significantly reduces the resources needed to process receivables, improves cash flow and virtually eliminates past-due accounts related to these items. Franchisees generally are required to purchase and install the Papa John's PROFIT System in their restaurants (see Company Operations—Point of Sale Technology).

Competition

    The restaurant industry is intensely competitive with respect to price, service, location and food quality, and there are many well-established competitors with substantially greater financial and other resources than Papa John's. Competitors include a large number of international, national and regional restaurant chains, as well as local pizza operators. Some of our competitors have been in existence for a substantially longer period than us and may be better established in the markets where our restaurants are, or may be, located. Within the pizza segment of the restaurant industry, we believe our primary competitors are the international pizza chains, including Pizza Hut, Domino's and Little Caesars, and several regional chains. A change in the pricing or other marketing strategies of one or more of our competitors could have an adverse impact on our sales and earnings.

    The restaurant business is often affected by changes in consumer tastes, national, regional or local economic conditions, demographic trends, traffic patterns and the type, number and location of competing restaurants. In addition, factors such as inflation, increased cheese and other commodity costs, fuel costs, labor and benefits costs and the lack of experienced management and hourly team members may adversely affect the restaurant industry in general and our restaurants in particular.

    With respect to the sale of franchises, we compete with many franchisors of restaurants and other business concepts. In general, there is also active competition for management personnel and attractive commercial real estate sites suitable for our restaurants.

Government Regulation

    We, along with our franchisees, are subject to various federal, state and local laws affecting the operation of our respective businesses. Each Papa John's restaurant is subject to licensing and

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regulation by a number of governmental authorities, which include 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 can delay or prevent the opening of a new restaurant in a particular area. Our full-service QC Centers and distribution facilities are licensed and subject to regulation by state and local health and fire codes, and the operation of our trucks is subject to Department of Transportation regulations. We are also subject to federal and state environmental regulations.

    We are subject to Federal Trade Commission ("FTC") regulation and various state laws regulating the offer and sale of franchises. Several state laws also regulate substantive aspects of the franchisor-franchisee relationship. The FTC requires us to furnish to prospective franchisees a franchise offering circular containing prescribed information. A number of states in which we might consider franchising also regulate the sale of franchises and require registration of the franchise offering circular with state authorities. Substantive state laws that regulate the franchisor-franchisee relationship presently exist in a substantial number of states, and bills have been introduced in Congress from time to time which would provide for federal regulation of the franchisor-franchisee relationship in certain respects. The 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. As we expand internationally, we will be subject to applicable laws in each jurisdiction where franchised units are established.

    We are also subject to the Americans With Disabilities Act of 1990, which, among other things, may require renovations to restaurants to meet federally-mandated requirements. The cost of these renovations is not expected to be material. Further government initiatives could adversely affect us and our franchisees as well as the restaurant industry in general.

Trademarks

    Our rights in principal trademarks and service marks are a significant part of our business. We are the owner of the federal registration of the trademark "Papa John's." We have also registered "Pizza Papa John's and design" (our logo), "Better Ingredients. Better Pizza." and "Pizza Papa John's Better Ingredients. Better Pizza. and design" as trademarks and service marks. We also own federal registrations for several ancillary marks, principally advertising slogans. We have also applied to register our primary trademark, "Pizza Papa John's and design," in 90 foreign countries and the European Community. The "Perfect Pizza" trademark is also registered in the United Kingdom. We are aware of the use by other persons in certain geographical areas of names and marks which are the same as or similar to our marks. It is our policy to pursue registration of our marks whenever possible and to oppose vigorously any infringement of our marks. See "Item 3. Legal Proceedings" and "Note 14" of "Notes to Consolidated Financial Statements" for additional information.

Employees

    As of December 31, 2000, we employed 17,922 persons, of whom approximately 15,582 were restaurant team members, 770 were restaurant management and supervisory personnel, 681 were corporate personnel and 889 were PJ Food Service and support services personnel. Most restaurant team members work part-time and are paid on an hourly basis. None of our team members is covered by a collective bargaining agreement. We consider our team member relations to be excellent.

Forward Looking Statements

    This Form 10-K contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), including information within Management's Discussion and Analysis of Financial Condition and Results of Operations. The following cautionary statements are

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being made pursuant to the provisions of the Act and with the intention of obtaining the benefits of the "safe harbor" provisions of the Act. Although we believe that our expectations are based on reasonable assumptions, actual results may differ materially from those in the forward looking statements as a result of various factors, including but not limited to, the following:

1.

Our ability and the ability of our franchisees to continue to expand through the opening of new restaurants is affected by a number of factors, many of which are beyond our control and our franchisees' control. These factors include, among other things, selection and availability of suitable restaurant locations, increases in food, paper and labor costs, negotiation of suitable lease or financing terms, constraints on permitting and construction of other restaurants, higher than anticipated construction costs, and the hiring, training and retention of management and other personnel. Accordingly, there can be no assurance that we or the Papa John's franchisees will be able to meet planned growth targets, open restaurants in markets now targeted for expansion, or continue to operate in existing markets.

2.

The restaurant industry is intensely competitive with respect to price, service, location and food quality, and there are many well-established competitors with substantially greater financial and other resources than Papa John's and our franchisees. Some of these competitors have been in existence for a substantially longer period than us or our franchisees and may be better established in the markets where restaurants operated by Papa John's or our franchisees are, or may be, located. A change in the pricing or other marketing or promotional strategies of one or more of our major competitors could have an adverse impact on sales and earnings at restaurants operated by us and our franchisees.

3.

An increase in the cost of cheese or other commodities could adversely affect the profitability of our restaurant operations. Cheese, representing approximately 35 to 40% of our food cost, and other commodities are subject to seasonal fluctuations, weather, availability, demand and other factors that are beyond our control. Additionally, sustained increases in fuel costs could adversely affect profitability of our restaurant and QC Center businesses.

4.

Changes in consumer taste, demographic trends, traffic patterns and the type, number and location of competing restaurants could adversely affect our restaurant business.

5.

Our restaurant operations are subject to federal and state laws governing such matters as wages, working conditions, citizenship requirements and overtime. A significant number of hourly personnel employed by us and our franchisees are paid at rates related to the federal minimum wage. Accordingly, further increases in the minimum wage will increase labor costs for us and our franchisees. Additionally, labor shortages in various markets could result in higher required wage rates.

6.

Our international operations are subject to a number of additional factors, including international economic and political conditions, currency regulations and fluctuations, differing cultures and consumer preferences, diverse government regulations and structures, availability and cost of land and construction, and differing interpretation of the obligations established in franchise agreements with international franchisees. Accordingly, there can be no assurance that our international operations will achieve or maintain profitability or meet planned growth rates.

7.

Our planned conversion of Perfect Pizza restaurants to Papa John's restaurants over the next four to five years represents the first time we have attempted to expand the Papa John's brand in this manner. There can be no assurance that all conversion issues will be identified and successfully addressed in a timely and cost-effective manner or that the existing Perfect Pizza market share can be successfully converted to Papa John's.

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Item 2. Properties

    As of December 31, 2000, there were 2,612 Papa John's restaurants and 205 Perfect Pizza restaurants systemwide.

Company-owned Papa John's Restaurants

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Domestic Franchised Papa John's Restaurants

13

International Franchised Papa John's Restaurants

    Most Papa John's restaurants are located in leased space. The initial term of most restaurant leases is five years or less with most leases providing for one or more options to renew for at least one additional term. Virtually all of our leases specify a fixed annual rent. Generally, the leases are triple net leases which require us to pay all or a portion of the cost of insurance, taxes and utilities. Certain leases further provide that the lease payments may be increased annually, with a small number of escalations based on changes in the Consumer Price Index.

    Approximately 144 Company-owned restaurants are located in buildings we own on land either owned or leased by us. These restaurants range from 1,200 to 1,800 square feet. Ten of the restaurants are located in multi-bay facilities we own. These multi-bay facilities contain from 2,800 to 5,000 square feet, and the space not utilized by the Papa John's restaurants in each facility is leased or held for lease to third party tenants.

    All 202 franchised and three Company-owned Perfect Pizza restaurants are located in the United Kingdom. In addition to leasing the three Company-owned restaurant sites, we lease and sublease to franchisees 168 of the 202 franchised restaurant sites. The initial lease terms on the Company and franchised sites are generally 10 to 15 years. The initial lease terms of the franchisee subleases are generally five to ten years.

    Information with respect to our leased QC Centers and other facilities as of December 31, 2000, is set forth below.

    We own approximately five acres in Orlando on which our 63,000 square foot full-service commissary is located, and eight acres in Dallas on which our 77,500 square foot full-service commissary is located. In addition, the Company owns approximately 72 acres in Louisville, Kentucky

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with a 42,000 square foot building housing our printing operations and a 247,000 square foot building, approximately 30 to 40% of which accommodates the Louisville QC Center operation and promotional division. The remainder of the building houses our corporate offices.

    The Perfect Pizza management team is located in 6,000 square feet of leased office space in London with a remaining lease term of 15 years. We expanded and relocated the Perfect Pizza distribution center into a 30,000 square foot owned facility in March 2000. This new facility can accommodate a full-service commissary as the conversion to Papa John's restaurants occurs.

Item 3. Legal Proceedings

    In August 1998, Pizza Hut, Inc. filed suit against us in the United States District Court for the Northern District of Texas, claiming that our "Better Ingredients. Better Pizza." slogan constituted false and deceptive advertising in violation of the Lanham Trademark Act. In November 1999, the jury returned a verdict that our "Better Ingredients. Better Pizza." slogan was false and deceptive. On January 3, 2000, the court announced its judgment, awarding Pizza Hut $468,000 in damages and ordering us to cease all use of the "Better Ingredients. Better Pizza." slogan. Under the judge's order, we were to cease using the slogan in print and broadcast advertising, phase out printed promotional materials and other items containing the slogan and remove the slogan from restaurant signage, all according to deadlines specified by the court. We initially estimated that the pre-tax costs of complying with the court's order and certain related costs could have approximated $12.0 to $15.0 million, of which $6.1 million was recorded as pre-tax charges against 1999 earnings. We filed an appeal of the verdict and the court's order and a motion for stay of the court's order pending outcome of the appeal.

    On January 21, 2000, the United States Court of Appeals for the Fifth Circuit granted a stay of the District Court judgment pending our appeal. Oral arguments related to the appeal were held on April 5, 2000. On September 19, 2000, the Fifth Circuit vacated the District Court's judgment in its entirety and remanded the case to the District Court for entry of judgment in favor of Papa John's. On December 18, 2000, Pizza Hut filed a Petition for Writ of Certiorari with the United States Supreme Court. On March 19, 2001, the United States Supreme Court denied Pizza Hut's Petition for Writ of Certiorari. For the 2000 fiscal year, we incurred an additional $1.0 million of pre-tax charges related to this issue.

    We are also subject to claims and legal actions in the ordinary course of our business. We believe that all such claims and actions currently pending against us are either adequately covered by insurance or would not have a material adverse effect on us if decided in a manner unfavorable to us.

Item 4. Submission of Matters to a Vote of Security Holders

    Not applicable.

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EXECUTIVE OFFICERS OF THE REGISTRANT

    Set forth below are the executive officers of Papa John's, together with their ages as of January 1, 2001, their positions and the years in which they first became an officer:

*

These officers resigned from or left the Company in late 2000 or early 2001.

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    John Schnatter created the Papa John's concept and founded Papa John's in 1985. He has served as Chairman of the Board and Chief Executive Officer since 1990, and from 1985 to 1990, served as President, a position to which he was reappointed in January 2001. He has also been a franchisee since 1986.

    Robert Wadell was named Chief Operating Officer in February 2001. He will continue to serve as President of PJ Food Service, Inc., a position he has held since 1995, after having served as Vice President of Commissary Operations from 1990 to 1995. From 1979 to 1990, Mr. Wadell was employed with Mr. Gatti's, a pizza restaurant chain. From 1983 to 1988, Mr. Wadell was an Area Supervisor for Mr. Gatti's, and from 1979 to 1983, was a store operator for Mr. Gatti's.

    Blaine Hurst served as Vice Chairman from 1998 to December 2000 and President from 1996 to December 2000. From 1995 to 1996, Mr. Hurst served as Chief Information Officer after having joined Papa John's in January 1995 as Vice President of Information Systems. Mr. Hurst resigned from the Company in December 2000.

    Charles Schnatter was named Chief Development Officer in February 2001. He will continue to serve as Secretary and General Counsel, positions he has held since 1991; he has been a Senior Vice President since 1993. From 1988 to 1991, he was an attorney with Greenebaum Doll & McDonald PLLC, Louisville, Kentucky, a law firm, which provides legal services to us. Charles Schnatter has been a franchisee since 1989.

    Mary Ann Palmer was named Senior Vice President and Chief Resource Officer in February 2001. She served as Vice President, People Department since the department was created in January 1999. Ms. Palmer served as Vice President of Education and Training from 1997 to 1999. From 1996 to 1997, Ms. Palmer held the position of Senior Counsel in our legal department. Prior to joining Papa John's, Ms. Palmer practiced law as a partner with the law firm, Wyatt, Tarrant & Combs.

    Julie Larner was named Senior Vice President and Chief Administrative Officer in February 2001. She is responsible for Finance, Information Systems and Office Services. Ms. Larner has been with Papa John's since 1992 serving as controller for PJ Food Service, Inc. from 1992 to 1997 and its Vice President of Finance and Administration since 1998.

    Dru Milby served as Senior Vice President from 1996 to February 2001, and as Chief Financial Officer from 1995 to 2001 and Treasurer from 1993 to 2001. Ms. Milby held the position of Vice President—Finance from 1991 to 1995. From 1990 to 1991, Ms. Milby was Director of Financial Planning for American Air Filter. Ms. Milby left the Company in February 2001.

    Mike Cortino has served as Senior Vice President of Corporate Operations since May 2000 after having served as Vice President of Operations Support since November 1999. Prior to joining Papa John's, Mr. Cortino served five years as Vice President of Corporate Operations for AFC Enterprises—Church's Chicken Brand and ten years as a market manager and other positions with Taco Bell.

    Barry Barron served as Senior Vice President of International from 1998 to January 2001. Mr. Barron also served as Regional Vice President, Southwest Region from 1995 to 1998 serving restaurants in Texas, New Mexico, Colorado, Missouri and Illinois. Mr. Barron resigned from the Company in January 2001.

    David Flanery has served as Vice President of Finance since 1995 after having joined Papa John's in 1994 as Corporate Controller. From 1979 to 1994, Mr. Flanery was with Ernst & Young LLP in a variety of positions, most recently as Audit Senior Manager. Mr. Flanery is a licensed Certified Public Accountant.

    Tim O'Hern was appointed Vice President of Global Development in February 2001 after having served as Vice President of U.S. Development since March 1997. From December 1996 to March 1997, Mr. O'Hern held the position of Director of Franchise Development. Mr. O'Hern joined Papa John's in

17

November 1995 as a construction manager. Prior to joining Papa John's, Mr. O'Hern owned his own business and has been a franchisee since 1993.

    Richard Emmett was appointed Senior Vice President and Senior Counsel in March 1997, after having served as Senior Vice President of Development from August 1996 to March 1997. From 1992 to 1996, Mr. Emmett held the position of Vice President and Senior Counsel. From 1983 to 1992, Mr. Emmett was an attorney with the law firm of Greenebaum Doll & McDonald PLLC, having become a partner of the firm in 1989. Mr. Emmett has been a franchisee since 1992.

    Hart Boesel has served as Vice President of Franchise Operations since 1995. In his capacity as Vice President, Mr. Boesel serves as the primary corporate contact for the Papa John's franchise family. Prior to joining Papa John's, Mr. Boesel had 17 years of experience in corporate, franchise and international operations with Wendy's International, Inc.

    Syl Sosnowski has served as Vice President of Marketing since 1995. Mr. Sosnowski also served as Vice President of Support Services from 1997 to 1998. From 1990 to 1995, Mr. Sosnowski served as Vice President of Marketing and Sales for Carvel Corporation.

    Tom Kish served as Vice President, Information Systems from October 1996 to February 2001 and Vice President, Support Services, from March 1998 to February 2001. From 1995 to 1996, Mr. Kish served as Director of Store Systems. Prior to joining Papa John's, Mr. Kish held several consulting positions, many of them with Fortune 500 companies. Mr. Kish has been a franchisee since 1998. Mr. Kish resigned from the Company in February 2001.

    John and Charles Schnatter are brothers. There are no other family relationships among the executive officers and other key personnel.

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PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

    Our common stock trades on the NASDAQ National Market tier of The NASDAQ Stock Market under the symbol PZZA. As of March 12, 2001, there were approximately 912 record holders of common stock. The following table sets forth for the quarters indicated the high and low closing sales prices of our common stock, as reported by The NASDAQ Stock Market.

    Since our initial public offering of common stock in 1993, we have not paid dividends on our common stock, and have no plans to do so in the foreseeable future.

Item 6. Selected Financial Data

    The selected financial data presented on the following page for each of the years in the five-year period ended December 31, 2000 was derived from our audited consolidated financial statements. The selected financial data should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and Notes thereto included in Item 7 and Item 8, respectively, of this Form 10-K.

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Selected Financial Data

(1)

We operate on a 52-53 week fiscal year ending on the last Sunday of December of each year. The 2000 fiscal year consisted of 53 weeks, and the 1999, 1998, 1997 and 1996 fiscal years consisted of 52 weeks.

(2)

Reflects the cumulative effect on income and earnings per share of a change in accounting principle, net of tax, as required by Statement of Position 98-5 "Reporting the Costs of Start-Up Activities" (see "Note 2" of "Notes to Consolidated Financial Statements").

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

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 1985 with the opening of the first Papa John's restaurant in Jeffersonville, Indiana. At December 31, 2000, there were 2,612 Papa John's restaurants in operation, consisting of 641 Company-owned and 1,971 franchised, and 205 Perfect Pizza restaurants in the United Kingdom (consisting of 3 Company-owned and 202 franchised). Our revenues are principally derived from retail sales of pizza to the general public by Company-owned restaurants, franchise royalties, sales of franchise and development rights, sales to franchisees of food and paper products, restaurant equipment, printing and promotional items, risk management services, and information systems and related services used in their operations.

    We intend to continue to expand the number of Company-owned and franchised restaurants. Our expansion strategy is to cluster restaurants in targeted markets, thereby increasing consumer awareness and enabling us to take advantage of operational, distribution and advertising efficiencies. We believe that our expansion strategy has contributed to increases in comparable annual sales for Company-owned restaurants of 3.0% in 2000, 3.5% in 1999, and 9.0% in 1998. Average sales for the Company's most recent comparable base restaurants increased to $782,000 for 2000, based on a 53-week year, from $754,000 for 1999 and $750,000 in 1998 (based on 52-week years). This increase is attributable to continuing strong sales of maturing restaurants. Average sales volumes in new markets are generally lower than in those markets in which we have established a significant market position.

    Approximately 45% of our revenues for 2000 and 1999 were derived from the sale to franchisees of food and paper products, restaurant equipment, printing and promotional items, risk management services and information systems equipment and software and related services by us, our commissary subsidiary, PJ Food Service, Inc., our support services subsidiary, Papa John's Support Services, Inc. and Perfect Pizza. We believe that, in addition to supporting both Company and franchised growth, these subsidiaries contribute to product quality and consistency throughout the Papa John's system.

    We continually strive to obtain high-quality sites with good access and visibility, and to enhance the appearance and quality of our restaurants. We believe that these factors improve our image and brand awareness. The average cash investment for the 42 domestic Company-owned restaurants opened during 2000, exclusive of land, increased to approximately $268,000 from $224,000 for the 36 units opened in 1999. We expect the average cash investment for restaurants opening in 2001 to be approximately $272,000.

    Our fiscal year ends on the last Sunday in December of each year. Our 2000 fiscal year consists of 53 weeks, and all other fiscal years presented consist of 52 weeks.

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Results of Operations

    The following tables set forth the percentage relationship to total revenues, unless otherwise indicated, of certain income statement data, and certain restaurant data for the years indicated.

22

23

(1)

As a percentage of Domestic Restaurant sales.

(2)

As a percentage of Domestic Commissary sales and Equipment and other sales on a combined basis.

(3)

As a percentage of International Restaurant and commissary sales.

(4)

The 1998 operating results reflect the adoption of an accounting standard related to the costs of start-up activities (see "Note 2" of "Notes to Consolidated Financial Statements") which impacts the amount of depreciation and amortization, general and administrative expenses, and pre-opening and other general expenses reflected above.

(5)

Represents costs related to complying with the Court's order in the Pizza Hut litigation (see "Item 3. Legal Proceedings" and "Note 14" of "Notes to Consolidated Financial Statements").

(6)

See "Note 4" of "Notes to Consolidated Financial Statements."

(7)

Includes only Company-owned restaurants open throughout the periods being compared.

(8)

Year 2000 is based on a 53-week year while 1999 and 1998 are 52-week years.

(9)

Non-traditional units previously opened but not included in restaurant progression.

(10)

Represents Perfect Pizza restaurants converted to Papa John's restaurants.

(11)

We purchased Perfect Pizza on November 29, 1999.

2000 Compared to 1999

    On November 29, 1999, we acquired Perfect Pizza Holdings Limited ("Perfect Pizza"), a company located in the United Kingdom which operated and franchised 206 restaurants (see "Note 3" of "Notes to Consolidated Financial Statements"). The Consolidated Statements of Income contain financial results for Perfect Pizza for the full year in 2000 which reflect total revenues of $28.7 million and operating income of $1.4 million and financial results only for the month of December in 1999, which reflect total revenues of $2.9 million and operating income of $332,000.

    Revenues.  Total revenues increased 17.3% to $944.7 million in 2000, from $805.3 million in 1999.

    Domestic restaurant sales increased 15.7% to $456.6 million in 2000, from $394.6 million in 1999. This increase was primarily due to a 13.2% increase in the number of equivalent Company-owned

24

restaurants open during 2000 as compared to 1999. "Equivalent restaurants" represents the number of restaurants open at the beginning of a given period, adjusted for restaurants opened or acquired during the period on a weighted average basis. Also, sales increased 3.0% over 1999 for Company-owned restaurants open throughout both periods.

    Domestic franchise royalties increased 16.2% to $47.1 million in 2000, from $40.6 million in 1999. This increase was due to an increase of 16.9% in the number of equivalent franchised domestic Papa John's restaurants open during 2000 as compared to 1999. Also, comparable sales increased 2.1% in 2000 over 1999 for franchised restaurants open throughout both years.

    Domestic franchise and development fees decreased 14.6% to $5.6 million in 2000, from $6.5 million in 1999 due primarily to 74 fewer domestic unit openings in 2000 compared to 1999. The decrease in franchise unit openings was partially offset by an increase in average fees per restaurant opening.

    Domestic commissary sales increased 14.4% to $351.3 million in 2000, from $306.9 million in 1999. This increase was primarily the result of the previously mentioned increase in the number of equivalent franchise restaurants and franchise comparable sales, partially offset by lower cheese sales prices.

    Domestic equipment and other sales were substantially flat in 2000 as compared to 1999.

    International revenues substantially consist of Perfect Pizza operations which is denominated in British Sterling Pounds and converted to U.S. dollars. The increase in revenues in 2000 as compared to 1999 is due to 1999 operations reflecting one month of Perfect Pizza financial results compared to a full year in 2000.

    Costs and Expenses.  Domestic restaurant cost of sales, which consists of food, beverage and paper costs, decreased as a percentage of restaurant sales to 24.4% in 2000, from 25.4% in 1999. This decrease is primarily due to a decrease in cheese costs, partially offset by an increase in certain other commodity costs. The cost of cheese, representing approximately 35% of food cost in 2000, and other commodities are subject to significant price fluctuations caused by weather, availability, demand and other factors. Most of the factors affecting the cost of cheese are beyond our control (see "Item 1. Business—Quality Control Centers: Strategic Supply Chain Management" and "Note 12" of "Notes to Consolidated Financial Statements").

    Domestic restaurant salaries and benefits increased as a percentage of restaurant sales to 27.9% in 2000, from 27.0% in 1999. This increase was primarily due to the higher wage rates in response to increasing labor cost pressures. Occupancy costs as a percentage of restaurant sales increased slightly to 5.1% for 2000 as compared to 5.0% in 1999, as increases in rent and utilities more than offset efficiencies from increased sales levels.

    Domestic restaurant advertising and related costs remained consistent as a percentage of restaurant sales at 9.1% for both 2000 and 1999.

    Other domestic restaurant operating expenses increased as a percentage of restaurant sales to 14.3% in 2000, from 13.5% in 1999. Other operating expenses include an allocation of commissary operating expenses equal to 3.0% of Company-owned restaurant sales in order to assess a portion of the costs of dough production and food and equipment purchasing and storage to Company-owned restaurants. The increase in other operating expenses as a percentage of restaurant sales was primarily due to an increase in mileage reimbursement for drivers, sponsorship fees and the provision for potentially uncollectible accounts receivable.

25

    Domestic commissary, equipment and other expenses include cost of sales, salaries and benefits, and other operating expenses associated with sales of food, paper, equipment, information systems and printing and promotional items to franchisees and other customers. These costs decreased as a percentage of combined commissary sales and equipment and other sales to 89.7% in 2000 from 90.6% in 1999. Cost of sales as a percentage of combined commissary sales and equipment and other sales decreased to 75.2% in 2000 from 76.3% in 1999, principally due to lower commodity costs, primarily resulting from lower cheese costs. Salaries and benefits increased to 6.8% of sales in 2000 from 6.6% in 1999, which primarily reflects the lower cheese prices in 2000 as compared to 1999. Other operating expenses decreased to 7.6% in 2000 compared to 7.7% in 1999, due primarily to fixed expense leverage against a higher sales base.

    International operating expenses in 2000 are substantially comprised of the Perfect Pizza operations acquired in November 1999.

    General and administrative expenses increased to 7.7% of revenues for 2000 compared to 6.8% of revenues in 1999. This increase is primarily due to the cost of additional support services, such as field marketing, training and international development, required for our expanded operations as well as the addition of Perfect Pizza.

    Advertising litigation expense represents costs associated with the lawsuit filed against us by Pizza Hut, Inc. claiming that our "Better Ingredients. Better Pizza." slogan is false and deceptive advertising. Advertising litigation expense was $1.0 million in 2000, compared to $6.1 million in 1999. These costs for 2000 consisted primarily of legal costs, and for 1999 consisted of legal costs and other costs associated with the initial verdict, which was subsequently overturned. See "Item 3. Legal Proceedings" and "Note 14" of "Notes to Consolidated Financial Statements" for additional information.

    During the fourth quarter of 2000, the Company incurred a $24.1 million special charge. The 2000 special charge is comprised of the following non-recurring items (dollars in 000's):

    Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS No. 121), requires impairment losses to be recognized for long-lived assets used in operations when indicators of impairment are present and the estimate of undiscounted cash flows is not sufficient to recover asset carrying amounts. SFAS No. 121 also requires long-lived assets held for disposal to be carried at the lower of carrying value or fair value, less costs of disposal, once management has committed to a plan of disposal or closure.

    The Company determined that certain domestic restaurants were impaired due to specific operational performance indicators. Certain domestic restaurants' operational performance declined during 2000 due to increased competition and increased operating expenses, such as salaries, reflecting general operating conditions. In addition, the performance of certain acquired markets did not meet expectations in 2000, which indicated that some of the acquired restaurants were impaired. During our

26

review for potentially impaired restaurants, we considered several indicators, including individual restaurant profitability, annual comparable sales, operating trends, as well as actual operating results. In accordance with SFAS No. 121, we estimated the undiscounted cash flows over the estimated lives of the assets for each of our restaurants that met certain impairment indicators and compared these estimates to the carrying values of the underlying assets.

    The forecasted cash flows were based on our assessment of the individual store's future profitability which is based on the restaurant's historical results, the maturity of the restaurant's market as well as our future plans for the restaurant and its market. In estimating forecasted cash flows, we used a discount rate of 12% which approximates the return we would expect on those types of investments. Based on our analysis, we determined that 52 restaurants were impaired by a total of $6.8 million.

    The impairment or write-off of certain assets was principally comprised of technology assets, including the development of our on-line ordering capabilities. The Company reviewed the future use of certain technological and other assets and determined that the assets were no longer beneficial to the Company or the carrying value of the assets was impaired due to lower future cash flows based on our updated strategy to focus on our primary business activities. Based on an asset analysis and an analysis of estimated future cash flows in accordance with SFAS No. 121, a charge of $6.7 million was recorded.

    We established a reserve of $4.2 million for franchisee notes receivable. We concluded the reserve was necessary due to certain franchisees' deteriorating economic performance and underlying collateral value. Substantially all of the reserve, approximately $4.1 million, relates to notes receivable with a related party franchisee.

    Prior to year-end, we identified and committed to close 13 restaurants in 2001 due to deteriorating economic performance and poor outlook for improvement. A charge of $3.1 million was recorded.

    During the fourth quarter of 2000, the Company decided to close 20 field offices to reduce future costs and to allow our operations area supervisors and district managers to spend more time in our restaurants. We also eliminated certain positions in the fourth quarter to reduce future administrative costs. These actions resulted in a charge of $2.6 million in the fourth quarter.

    In December 2000, the Company agreed to pay $750,000 to settle a lawsuit with a vendor.

    The special charge resulted in a write-down of asset carrying value of $20.2 million and the establishment of accrued liabilities for cash payments of $3.9 million. We paid approximately $200,000 during the fourth quarter 2000 related to these liabilities. We anticipate paying a majority of the remaining liabilities associated with this special charge during 2001. The payments are expected to be made from operating cash flow.

    The impairment of the restaurant and other corporate assets in 2000 will reduce depreciation and amortization in 2001 approximately $2.1 million as compared to 2000. The closing of the 20 field offices and the severance and exit costs will reduce salaries and operating expenses approximately $900,000 in 2001 as compared to 2000.

    Pre-opening and other general expenses decreased to $2.2 million in 2000 from $3.4 million in 1999. Pre-opening costs of $1.1 million, relocation costs of $1.3 million and net gains on restaurant and other asset dispositions of $200,000 were included in the 2000 amount, as compared to pre-opening costs of $759,000, relocation costs of $1.3 million and net losses on restaurant and other asset dispositions of $1.4 million in 1999.

    Depreciation and amortization was 3.6% of revenues in 2000 compared to 3.1% for 1999, due primarily to a full year of depreciation on the corporate headquarters facility, a full year of goodwill amortization on the Perfect Pizza acquisition in 2000 as compared to only a partial year impact of each

27

of these items in 1999, as well as the goodwill amortization related to restaurants purchased during 2000. The purchase of Perfect Pizza in November 1999 resulted in $30.9 million of goodwill. Total goodwill amortization for the Company was $2.6 million in 2000 compared to $1.1 million in 1999.

    Net Interest.  Net interest expense was $5.8 million in 2000 compared to net interest income of $3.2 million in 1999, due to the cash used and debt incurred to fund the stock repurchase program.

    Income Tax Expense.  The effective income tax rate increased to 38.3% in 2000 compared to 37.6% for 1999, due primarily to the sale of certain tax-exempt investments during the fourth quarter of 1999 to fund the Perfect Pizza acquisition and to begin funding of the stock repurchase program.

    Operating Income and Earnings Per Common Share.  Operating income in 2000 was $57.4 million, or 6.1% of total revenues, as compared to $72.5 million or 9.0% of total revenues. Excluding the special charge in 2000 and the advertising litigation expense in both years, operating income in 2000 was $82.5 million, or 8.7% of total revenues, compared to $78.6 million, or 9.8% of total revenues, in 1999. The decline in 2000 operating income as a percentage of sales as compared to 1999 was principally due to a decrease in the restaurant operating margin and the previously mentioned increase in general and administrative expenses.

    Diluted earnings per share in 2000 was $1.28 compared to $1.52 in 1999. Excluding the special charge and advertising litigation, diluted earnings per share in 2000 was $1.90 compared to $1.64 in 1999. In December 1999, the Company began a repurchase program of its common stock. Through December 31, 2000, a total of 7.6 million shares were repurchased under this program. The repurchase of the Company's common shares resulted in a $0.11 increase in the diluted earnings per share for 2000 as compared to 1999.

1999 Compared to 1998

    Revenues.  Total revenues increased 18.1% to $805.3 million in 1999, from $682.2 million in 1998.

    Domestic restaurant sales increased 14.7% to $394.6 million in 1999, from $344.1 million in 1998. This increase was primarily due to a 12.6% increase in the number of equivalent Company-owned restaurants open during 1999 as compared to 1998. Also, comparable sales increased 3.5% in 1999 over 1998 for Company-owned restaurants open throughout both years, in large part due to reduced price discounting.

    Domestic franchise royalties increased 26.3% to $40.6 million in 1999, from $32.1 million in 1998. This increase was primarily due to a 25.6% increase in the number of equivalent franchised restaurants open during 1999 as compared to 1998. Also, comparable sales increased 6.4% in 1999 over 1998 for franchised restaurants open throughout both years.

    Domestic franchise and development fees increased 22.3% to $6.5 million in 1999, from $5.3 million in 1998. This increase was primarily due to the 345 franchised restaurants opened during 1999, as compared to 296 opened during 1998, an increase of 16.6%. The remainder of the increase is due to the mix of restaurant openings.

    Commissary sales increased 20.3% to $306.9 million in 1999, from $255.1 million in 1998. This increase was primarily due to the increases in equivalent franchised restaurants and comparable sales for franchised restaurants noted above, partially offset by the impact of lower 1999 cheese costs which resulted in lower cheese pricing and sales relative to 1998 levels.

    Equipment and other sales increased 16.9% to $53.1 million in 1999, from $45.4 million in 1998. This increase was primarily due to ongoing equipment, smallwares, uniforms and print materials related to the increase in equivalent franchised restaurants open during 1999 as compared to 1998, and the

28

increase in the number of new restaurant equipment packages sold to franchisees that opened restaurants in 1999 as compared to 1998.

    The international revenues of $3.6 million in 1999 are principally comprised of Perfect Pizza ($2.9 million of the 1999 revenues) which was purchased on November 29, 1999.

    Costs and Expenses.  Domestic restaurant cost of sales, which consists of food, beverage and paper costs, decreased as a percentage of restaurant sales to 25.4% in 1999, from 26.9% in 1998. The primary reason for the decrease is attributable to reduced restaurant menu price discounting and a decrease in the average cheese block price. The cost of cheese, representing approximately 40% of food cost in 1999, and other commodities are subject to significant price fluctuations caused by weather, availability, demand and other factors. Most of the factors affecting the cost of cheese are beyond our control (see "Item 1. Business—Quality Control Centers; Strategic Supply Chain Management" and "Note 12" of "Notes to Consolidated Financial Statements").

    Domestic restaurant salaries and benefits increased as a percentage of restaurant sales to 27.0% in 1999, from 26.8% in 1998. This increase was primarily due to higher staffing levels after our 14^th Anniversary promotion to support the demands of new customers and enhanced employee benefits to select restaurant personnel. Occupancy costs as a percentage of restaurant sales remained consistent at 5.0% for both 1999 and 1998.

    Restaurant advertising and related costs increased as a percentage of restaurant sales to 9.1% in 1999, from 8.7% in 1998. The increase in 1999 was primarily the result of increased promotional activities in the second quarter in response to significant promotional activities by our competitors and increased activities in the fourth quarter in response to overall market conditions and sales trends.

    Other restaurant operating expenses increased as a percentage of restaurant sales to 13.6% in 1999, from 13.0% in 1998. Other operating expenses include an allocation of commissary operating expenses equal to 3.0% of Company-owned restaurant sales in order to assess a portion of the costs of dough production and food and equipment purchasing and storage to Company-owned restaurants. The increase in other operating expenses as a percentage of restaurant sales was primarily due to increased costs associated with our 14^th Anniversary promotion and increased repair and maintenance costs. Repair and maintenance costs are expected to increase as existing units mature.

    Commissary, equipment and other expenses include cost of sales, salaries and benefits, and other operating expenses associated with sales of food, paper, equipment, information systems and printing and promotional items to franchisees and other customers. These costs decreased as a percentage of combined commissary sales and equipment and other sales to 90.6% in 1999 from 91.7% in 1998. Cost of sales as a percentage of combined commissary sales and equipment and other sales decreased to 76.3% in 1999 from 78.5% in 1998, principally due to the timing of certain favorable commodity price changes (primarily cheese) and the change in classification of certain expenses to salaries and benefits previously reported as cost of sales. Salaries and benefits increased to 6.6% in 1999 from 5.7% in 1998 due to the change in classification of certain expenses previously reported in cost of sales and general and administrative expenses. Other operating expenses increased to 7.7% in 1999 compared to 7.5% in 1998 due primarily to higher delivery costs related to the transition to a new distribution vendor and higher costs related to the 14^th Anniversary promotion, partially offset by a reduction in rent expense due to the opening of the Dallas, Texas and relocation of the Louisville, Kentucky commissaries. Additionally, delivery costs as a percentage of sales will fluctuate with cheese prices. Although the change in cheese price has an effect on sales, the costs to deliver remain relatively consistent regardless of cheese prices.

    The international operating expenses in 1999 relate to Perfect Pizza which was acquired on November 29, 1999.

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    General and administrative expenses decreased as a percentage of total revenues to 6.8% in 1999 from 7.8% in 1998. This decrease was due to the following: (1) leveraging expenses on a higher sales base; (2) the resolution of certain economic incentives related to the construction of the new corporate headquarters facility; (3) reduction in payroll processing fees due to bringing payroll processing in-house; and (4) the change in classification of certain expenses to commissary, equipment and other salaries and benefits previously reported as general and administrative expenses. The change in classification represented approximately 0.2% of the total improvement.

    Advertising litigation expense represents costs associated with the lawsuit filed against us by Pizza Hut, Inc. claiming that our "Better Ingredients. Better Pizza." slogan is false and deceptive advertising. The $6.1 million in advertising litigation expense consists primarily of legal costs and costs to discontinue the "Better Ingredients. Better Pizza." slogan. See "Item 3. Legal Proceedings" and "Note 14" of "Notes to Consolidated Financial Statements" for additional information.

    Pre-opening and other general expenses were $3.4 million in 1999, compared to $2.8 million in 1998. The increase is primarily due to an increase in the net losses on restaurant and other asset dispositions in 1999, as compared to 1998.

    Depreciation and amortization expense as a percentage of total revenues remained consistent at 3.1% in 1999, compared to 3.0% in 1998.

    Operating income was $72.5 million, or 9.0% of total revenues, compared to $53.7 million, or 7.9% of total revenues, for the comparable period in 1998.

    Investment Income.  Investment income decreased to $3.4 million in 1999 from $4.1 million in 1998 due to a lower average balance of franchise loans and a decrease in our average investment portfolio balance.

    Interest Expense.  Interest expense was $151,000 in 1999 compared to $643,000 in 1998. Interest expense for both periods relates to debt assumed from the acquisition of Minnesota Pizza.

    Income Tax Expense.  Income tax expense (exclusive of the cumulative effect of accounting change and related taxes) reflects a combined federal, state and local effective tax rate of 37.6% for 1999, compared to 38.8% in 1998. The effective income tax rate for 1998, including an income tax benefit for the treatment of Minnesota Pizza as a C Corporation (see "Note 3" of "Notes to Consolidated Financial Statements"), was 37.0%. The effective income tax rate in 1999 increased as compared to the 1998 rate as a result of a continued decrease in the relative level of tax-exempt investment income to total pre-tax income.

Liquidity and Capital Resources

    Cash flow from operations for 2000 decreased to $76.7 million from $89.6 million in 1999 primarily due to an increase in working capital requirements, principally increases in inventory levels (including accumulation of hot bag inventory for continued installation in franchise restaurants during 2001), changes in accounts payable and accrued expense levels and a decrease in tax benefits related to the exercise of non-qualified stock options.

    Cash flow from operations increased $24.6 million in 1999 compared to 1998. This increase is primarily due to increased net income in 1999 as compared to 1998.

    Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), excluding advertising litigation and the special charge, increased 12.8% in 2000 to $116.7 million, compared to $103.4 million in 1999. EBITDA, excluding advertising litigation cost, increased 39.4% in 1999 to $103.4 million from $74.2 million in 1998.

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    We require capital primarily for the development and acquisition of restaurants, the addition of new QC Centers and support services facilities and equipment, the enhancement of corporate systems and facilities and the funding of franchisee loans. Additionally, we began a common stock repurchase program in December 1999. During 2000, common stock share repurchases of $156.2 million, capital expenditures of $59.4 million, acquisitions of $6.6 million, and net loans to franchisees of $9.0 million were primarily funded by net advances of $145.0 million on a $200.0 million unsecured revolving line of credit, liquidation of investments of $15.1 million and cash flow from operations.

    Total 2001 capital expenditures are expected to be approximately $30 million to $35 million, about one-half of which is for the development, relocation or remodeling of restaurants, and about one-half of which is for QC Centers, Support Services and corporate requirements. During 2001, we plan to open approximately 15 to 20 new Company-owned restaurants and relocate an additional 15 to 20 restaurants.

    Additionally, during 2001 we may fund up to $5 to $6 million in additional loans under existing franchisee loan program commitments. Approximately $16.7 million, net of allowance for potential uncollectible balances, was outstanding under this program as of December 31, 2000. At this time, we do not expect to significantly expand the program beyond existing commitments.

    The Board of Directors has authorized up to $275 million for the share repurchase program through 2001 year-end. Through December 31, 2000, a total of 7.6 million shares have been repurchased for $187.9 million at an average price of $24.67 per share since the repurchase program started in 1999 (approximately 6.3 million shares in 2000 and 1.3 million shares in 1999). These repurchases were funded by a revolving line of credit, cash flow from operations, and liquidation of available investments, cash and cash equivalents. Subsequent to year end (through March 12, 2001), we acquired an additional 319,500 shares at an aggregate cost of $7.2 million. As of March 12, 2001, approximately $79.9 million of common stock remains available for repurchase under this authorization.

    The Company expects to fund the planned capital expenditures, acquisition of franchised restaurants, disbursements under the franchise loan program and additional share repurchases for the next twelve months from operating cash flow and the remaining availability under the Company's unsecured revolving line of credit. The Company's debt at December 31, 2000 was $146.6 million compared to $6.2 million at December 26, 1999. The increase in debt is due to the common stock repurchase program.

    Through December 2000, we earned approximately $6.0 million ($1.1 million in 2000, $2.9 million in 1999 and $2.0 million in 1998) of an expected $13.0 million in incentives under the Kentucky Jobs Development Act in connection with the relocation of the corporate offices. We expect to earn the remaining $7.0 million of such incentives through 2007.

Impact of Inflation

    We do not believe inflation has materially affected earnings during the past three years. Substantial increases in costs, particularly labor, benefits, food, utilities and fuel costs, could have a significant impact on us. Thus far in 2001, we have continued to experience higher than normal utility and fuel costs and ongoing wage rate pressures. Our restaurant and commissary margins continue to be impacted by these cost factors. Cheese costs appear to be returning to more historical levels, after being unusually low throughout most of 2000; however, this increase in costs will not begin to impact our restaurant margins until the third quarter of 2001 due to our existing cheese purchasing arrangement (See "Note 12" of "Notes to Consolidated Financial Statements").

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Forward Looking Statements

    Certain information contained in this annual report, particularly information regarding future financial performance and plans and objectives of management, is forward looking. Certain factors could cause actual results to differ materially from those expressed in forward looking statements. These factors include, but are not limited to, our ability and the ability of our franchisees to obtain suitable locations and financing for new restaurant development; the hiring, training, and retention of management and other personnel; competition in the industry with respect to price, service, location, and food quality; an increase in food cost due to seasonal fluctuations, weather, and demand; changes in consumer tastes and demographic trends; changes in federal and state laws, such as increases in minimum wage; and risks inherent to international development, including operational or market risks associated with the planned conversion of Perfect Pizza restaurants to Papa John's in the United Kingdom.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

    The Company's debt at December 31, 2000 is principally comprised of a $145.0 million outstanding principal balance on the $200.0 million unsecured revolving line of credit. The interest rate on the revolving line of credit is variable and is based on the London Interbank Offered Rate (LIBOR). An increase in interest rate of 100 basis points would increase interest expense approximately $1.5 million annually. The weighted average interest rate on the revolving line of credit was 7.13% in 2000 and 7.25% as of December 31, 2000. In March 2000, we entered into a $100.0 million interest rate collar, which is effective until March 2003. The collar establishes a 6.36% floor and a 9.50% ceiling on the LIBOR base rate on a no-fee basis.

    Substantially all of our business is transacted in U.S. dollars. Accordingly, foreign exchange rate fluctuations do not have a significant impact on the Company.

    Cheese, representing approximately 35 to 40% of our food cost, is subject to seasonal fluctuations, weather, availability, demand and other factors that are beyond our control. We have entered into a purchasing arrangement with a third-party entity formed at the direction of the Franchise Advisory Council for the sole purpose of reducing cheese price volatility. Under this arrangement, we are able to purchase cheese at a fixed quarterly price, based in part on historical average cheese prices. Gains and losses incurred by the selling entity will be used as a factor in determining adjustments to the selling price over time. Ultimately, we will purchase cheese at a price approximating the actual average market price, but with less short-term volatility. See "Note 12" of "Notes to Consolidated Financial Statements" for further information.

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Item 8. Financial Statements and Supplementary Data

Papa John's International, Inc. and Subsidiaries
Consolidated Statements of Income