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Papa John's Plans Major China Push With PE Firm FountainVest

Papa John's and PE firm FountainVest plan to open more than 1,350 of the pizza chain's franchised stores across southern China by 2040.
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Papa John's International  (PZZA) - Get Papa John's International, Inc. Report has partnered with private-equity firm FountainVest Partners to open more than 1,350 of the pizza chain's franchised stores across southern China by 2040. 

Terms weren't disclosed.

The Louisville, Ky., pizza chains called China "one of the world's fastest-growing pizza delivery markets."

As part of the deal, FountainVest, based in Hong Kong, bought a majority stake in a current Papa John's franchisee, CFB Group, which owns and operates 160 of the chain's outlets in Shanghai and across southern China.

"Papa John's has enormous global development white space in the U.S. and in attractive growth markets, especially relative to our peers," President and Chief Executive Rob Lynch said in a statement. 

"Our new development agreement with FountainVest alone stands to grow Papa John's' current global unit count by 25%."

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Papa John's, founded 1984, said that in recent years it has entered 15 new countries, including Spain, Portugal, Germany, Cambodia, Pakistan, France and Poland.

At the end of the third quarter Papa John's operated more than 5,500 restaurants in 50 countries and territories.

No Shortage of Competition

China is a sharply competitive space for pizza. 

Yum China Holdings  (YUMC) - Get Yum China Holdings, Inc. Report says it was the first restaurant chain to introduce pizza and Western-style casual dining to China.

"The first Pizza Hut restaurant in China opened in Beijing in 1990," the company says. "As of the end of September 2021, we have opened over 2,500 Pizza Hut restaurants in over 500 cities."

And in August Domino's Pizza China  (DPZ) - Get Domino's Pizza, Inc. Report noted that it had opened its 400th store in May. 

“To put that in perspective, when Aileen Wang was hired as CEO in 2017, there were only 106 Domino's stores in the whole Chinese market,” the company said. It said it was targeting the opening of its 500th store by the end of 2021.