Papa Johns franchisee files for Chapter 11 bankruptcy
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Papa JohnsPhoto courtesy of Papa Johns
Papa ZHS LLC, a Papa Johns franchisee since 2019, has filed for bankruptcy in the U.S. bankruptcy court of the Western District of Pennsylvania, alongside four of its affiliated companies — ZHS Pittsburgh, ZHS Cranberry, ZHS McKeesport, and Papa ZHS Cleveland.
In its court filing, the operator reported assets between $100,000 and $500,000 and more than $2.9 million in unsecured creditor claims. The largest creditor listed is Itria Ventures for $909,000 owed, while the Small Business Administration is owed $811,000.
Papa ZHS expanded to 12 locations in the past seven years and opened Papa Johns’ 6,000th restaurant in February 2025. The filing indicates the company was preparing to open a 13th location in Cleveland.
Papa ZHS is owned by Yasir Hussain, who began working at Papa Johns as a dishwasher about 20 years ago.
The court filing did not indicate a specific cause of the bankruptcy, however Papa Johns’ sales have deteriorated throughout the past several quarters. In the third quarter, reported last week, the chain’s same-store sales in North America fell by 8.3%, marking its ninth negative quarter out of the past 10 periods.
The company also closed more than 230 restaurants worldwide through the third quarter of 2026, including nearly 150 in North America. It has targeted 300 North American closures by the end of 2027. CEO Todd Penegor, who was named to that position in August 2024, unveiled an “Unbox Better” strategy aimed at “strengthening the brand and the system.” It covers all aspects of the business, from menu innovation to operations and marketing. It also includes several financial incentives designed to improve franchisee economics, such as a reduction of the fixed operating margin charged by its commissaries and a reduction of tech fees.
In a statement, Papa Johns said, “Papa ZHS LLC is an independently owned and operated Papa Johns franchise partner. While we cannot comment on the specifics of the filing, we are working with the franchisee to support business continuity throughout the process. We remain focused on executing Unbox Better, our strategy to drive long-term growth and support franchisee success across our system.”
Contact Alicia Kelso at [email protected]
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