<PAGE>
 
                           SCHEDULE 14A INFORMATION
          Proxy Statement Pursuant to Section 14(a) of the Securities
                    Exchange Act of 1934 (Amendment No.  )
        
Filed by the Registrant [X]

Filed by a Party other than the Registrant [_] 

Check the appropriate box:

[_]  Preliminary Proxy Statement         [_]  CONFIDENTIAL, FOR USE OF THE
                                              COMMISSION ONLY (AS PERMITTED BY
                                              RULE 14A-6(E)(2))

[X]  Definitive Proxy Statement 

[_]  Definitive Additional Materials 

[_]  Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

                        Papa John's International, Inc.
- --------------------------------------------------------------------------------
               (Name of Registrant as Specified In Its Charter)


- --------------------------------------------------------------------------------
   (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

   
Payment of Filing Fee (Check the appropriate box):

[X]  No fee required

[_]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

   
     (1) Title of each class of securities to which transaction applies:

     -------------------------------------------------------------------------


     (2) Aggregate number of securities to which transaction applies:

     -------------------------------------------------------------------------


     (3) Per unit price or other underlying value of transaction computed
         pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
         the filing fee is calculated and state how it was determined):

     -------------------------------------------------------------------------
      

     (4) Proposed maximum aggregate value of transaction:

     -------------------------------------------------------------------------


     (5) Total fee paid:

     -------------------------------------------------------------------------

[_]  Fee paid previously with preliminary materials.
     
[_]  Check box if any part of the fee is offset as provided by Exchange
     Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
     was paid previously. Identify the previous filing by registration statement
     number, or the Form or Schedule and the date of its filing.
     
     (1) Amount Previously Paid:
 
     -------------------------------------------------------------------------


     (2) Form, Schedule or Registration Statement No.:

     -------------------------------------------------------------------------


     (3) Filing Party:
      
     -------------------------------------------------------------------------


     (4) Date Filed:

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<PAGE>
 
                                     Pizza
                                  Papa John's
                            Better Ingredients.(R)
                                 Better Pizza.
                                P.O. Box 99900
                       Louisville, Kentucky 40269-9990
                                                                  April 10, 1998
Dear Stockholder:

     On behalf of the entire Papa John's team, I invite you to join us for the
Company's upcoming Annual Meeting of Stockholders.  The meeting will begin at
11:00 a.m. on Thursday, May 21, 1998, at the Hyatt Regency Hotel, 320 West
Jefferson Street, Louisville, Kentucky.

     Following the formal items of business to be brought before the meeting, we
will discuss our 1997 results and answer your questions.  After the meeting, we
hope you will join us for a slice of the Better Pizza!

     Thank you for your continued support of Papa John's.  We look forward to
seeing you on May 21.

                                             Sincerely,


                                             /s/ John H. Schnatter
                                             John H. Schnatter
                                             Founder and Chief Executive Officer

<PAGE>
 
                        PAPA JOHN'S INTERNATIONAL, INC.
                                P.O. Box 99900
                       Louisville, Kentucky  40269-9990


                   NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                            TO BE HELD MAY 21, 1998


To the Stockholders:

     The Annual Meeting of Stockholders of Papa John's International, Inc. (the
"Company") will be held at the Hyatt Regency Hotel, 320 West Jefferson Street,
Louisville, Kentucky on Thursday, May 21, 1998, at 11:00 a.m. (E.D.T.), for the
following purposes:

     (1)  To elect two directors to serve until the annual meeting of
          stockholders in 2001;

     (2)  To consider and approve an amendment to the Papa John's International,
          Inc. 1993 Stock Ownership Incentive Plan to increase the number of
          shares available for issuance thereunder;

     (3)  To ratify the selection of Ernst & Young LLP as the Company's
          independent auditors for the fiscal year ending December 27, 1998; and

     (4)  To transact such other business as may properly come before the
          meeting or any adjournment thereof.

     A Proxy Statement describing matters to be considered at the Annual Meeting
is attached to this Notice. Only stockholders of record at the close of business
on March 27, 1998, are entitled to receive notice of and to vote at the meeting.

                                    By Order of the Board of Directors

                                    /s/ Charles W. Schnatter
                                    Charles W. Schnatter
                                    Senior Vice President, Secretary
                                     and General Counsel

Louisville, Kentucky
A
pril 10, 1998

                                   IMPORTANT

WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE WHICH HAS BEEN PROVIDED.
IN THE EVENT YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR
SHARES IN PERSON.

<PAGE>
 
                        PAPA JOHN'S INTERNATIONAL, INC.
                                P.O. Box 99900
                       Louisville, Kentucky  40269-9990

                               ----------------

                                PROXY STATEMENT

                        ANNUAL MEETING OF STOCKHOLDERS
                            TO BE HELD MAY 21, 1998

                               ----------------

                              GENERAL INFORMATION

     This Proxy Statement and accompanying proxy card are being furnished in
connection with the solicitation of proxies by the Board of Directors (the
"Board") of Papa John's International, Inc., a Delaware corporation (the
"Company"), to be voted at the Company's Annual Meeting of Stockholders (the
"Annual Meeting") and any adjournments thereof.  The Annual Meeting will be held
at the Hyatt Regency Hotel, 320 West Jefferson Street, Louisville, Kentucky on
Thursday, May 21, 1998, at 11:00 a.m. (E.D.T.) for the purposes set forth in
this Proxy Statement and the accompanying Notice of Annual Meeting.  This Proxy
Statement and accompanying proxy card are first being mailed to stockholders on
or about April 10, 1998.

     A stockholder signing and returning a proxy has the power to revoke it at
any time before the shares subject to it are voted by (i) notifying the
Secretary of the Company in writing of such revocation, (ii) filing a duly
executed proxy bearing a later date or (iii) attending the Annual Meeting and
voting in person.  If a proxy is properly signed and returned to the Company and
not revoked, it will be voted in accordance with the instructions contained
therein.  Unless contrary instructions are given, the proxy will be voted FOR
the nominees for director named in the Proxy Statement, FOR the amendment to the
1993 Stock Ownership Incentive Plan, FOR the ratification of Ernst & Young LLP
as the Company's independent auditors for the 1998 fiscal year and in the
discretion of proxy holders on such other business as may properly come before
the Annual Meeting.

     The original solicitation of proxies by mail may be supplemented by
telephone and other means of communication and through personal solicitation by
officers, directors and other employees of the Company, at no compensation.
Proxy materials are being distributed by Corporate Investor Communications, Inc.
for a fee of approximately $1,500.  Proxy materials will also be distributed
through brokers, custodians and other like parties to the beneficial owners of
the Company's Common Stock, par value $.01 per share (the "Common Stock"), and
the Company will reimburse such parties for their reasonable out-of-pocket and
clerical expenses incurred in connection therewith.

<PAGE>
 
                       RECORD DATE AND VOTING SECURITIES

     The Board has fixed the record date (the "Record Date") for the Annual
Meeting as the close of business on March 27, 1998, and all holders of record of
Common Stock on this date are entitled to receive notice of and to vote at the
Annual Meeting and any adjournment thereof.  A list of stockholders entitled to
vote at the Annual Meeting will be available for inspection by any stockholder
for any purpose reasonably related to the Annual Meeting for a period of ten
days prior to the Annual Meeting at the Company's principal executive offices at
11492 Bluegrass Parkway, Louisville, Kentucky.  At the Record Date, there were
29,222,630 shares of Common Stock outstanding.  For each share of Common Stock
held on the Record Date, a stockholder is entitled to one vote on each matter to
be considered at the Annual Meeting.  A majority of the outstanding shares
present in person or by proxy is required to constitute a quorum to transact
business at the meeting.

     Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspectors of election appointed for the meeting, who also will determine
whether a quorum exists.  Abstentions or "withheld" votes will be treated as
present and entitled to vote for purposes of determining a quorum, but as
unvoted for purposes of determining the approval of matters submitted to the
stockholders.  Since Delaware law treats only those shares voted "for" a matter
as affirmative votes, abstentions or withheld votes will have the same effect as
negative votes or votes "against" a particular matter.  If a broker indicates
that it does not have discretionary authority as to certain shares to vote on a
particular matter, such shares will not be considered as present and entitled to
vote with respect to that matter.

                                      -2-

<PAGE>
 
            SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL HOLDERS

     The following table sets forth certain information as of the Record Date
with respect to the beneficial ownership of the Common Stock by (i) each
director or nominee for director of the Company, (ii) each of the executive
officers named in the Summary Compensation Table in this Proxy Statement, (iii)
all directors and executive officers as a group and (iv) each person known to
the Company to be the beneficial owner of more than 5% of the outstanding Common
Stock.

<TABLE>
<CAPTION>
                                                    Number of      Percent of
Directors and Executive Officers                    Shares(1)       Class(2)
- --------------------------------                    ---------      ----------
<S>                                                 <C>            <C>
John H. Schnatter
P.O. Box 99900
Louisville, Kentucky 40269.......................   7,704,096 (3)       26.4%
Charles W. Schnatter.............................     322,475 (4)        1.1%
Wade S. Oney.....................................     474,335 (5)        1.6%
Blaine E. Hurst..................................      80,813 (6)          *
Robert J. Wadell.................................       6,215 (7)          *
E. Drucilla Milby................................      35,017 (8)          *
O. Wayne Gaunce..................................      48,224 (9)          *
Jack A. Laughery.................................      39,750 (10)         *
Michael W. Pierce................................      49,872 (11)         *
Richard F. Sherman...............................      21,500 (12)         *

All directors and executive officers as a group
(13 persons, including those named above)........   8,880,394 (13)      30.4%

Other 5% Beneficial Owners
- --------------------------

Putnam Investments, Inc.
One Post Office Square
Boston, Massachusetts 02109......................   4,125,826 (14)      14.1%

FMR Corp.
82 Devonshire Street
Boston, Massachusetts  02109.....................   1,817,000 (14)       6.2%
</TABLE>


                                      -3-

<PAGE>
 
- ---------------------------
*  Represents less than 1% of class.

(1)  Based upon information furnished to the Company by the named persons and
     information contained in filings with the Securities and Exchange
     Commission (the "Commission").  Under the rules of the Commission, a person
     is deemed to beneficially own shares over which the person has or shares
     voting or investment power or which the person has the right to acquire
     beneficial ownership within 60 days.  Unless otherwise indicated, the named
     persons have sole voting and investment power with respect to shares shown
     as owned by them.
(2)  Based on 29,222,630 shares outstanding as of March 27, 1998, the Record
     Date for the Annual Meeting.
(3)  Includes (a) 67,278 shares subject to options exercisable within 60 days of
     the Record Date, (b) 791,000 shares held in trust for Mr. Schnatter's minor
     children, (c) 395,500 shares held in a family limited partnership and (d)
     83,750 shares held by a foundation.  Mr. Schnatter holds sole voting and
     investment power for all such shares.
(4)  Includes (a) 47,002 shares subject to options exercisable within 60 days of
     the Record Date, (b) 14,634 shares held in a trust for Mr. Schnatter's
     minor children as to which Mr. Schnatter has neither voting nor investment
     power and (c) 54,542 shares held by a partnership.  Mr. Schnatter has
     neither voting nor investment power with respect to the shares held in the
     trust and the partnership and disclaims beneficial ownership of such
     shares.
(5)  Includes 458,989 shares subject to options exercisable within 60 days of
     the Record Date.
(6)  Includes 80,813 shares subject to options exercisable within 60 days of the
     Record Date.
(7)  Includes 6,215 shares subject to options exercisable within 60 days of the
     Record Date.
(8)  Includes 33,185 shares subject to options exercisable within 60 days of the
     Record Date.
(9)  Includes (a) 39,000 shares subject to options exercisable within 60 days of
     the Record Date and (b) 5,137 shares held in a trust of which Mr. Gaunce is
     trustee with voting and investment power.
(10) Includes (a) 36,000 shares subject to options exercisable within 60 days of
     the Record Date and (b) 3,750 shares held by Mr. Laughery's spouse, as to
     which shares Mr. Laughery disclaims beneficial ownership.
(11) Includes (a) 4,500 shares held by a partnership in which Mr. Pierce has a
     50% interest, as to which Mr. Pierce shares voting and investment power,
     (b) 114 shares held by Mr. Pierce's spouse, as to which shares Mr. Pierce
     disclaims beneficial ownership, and (c) 45,000 shares subject to options
     exercisable within 60 days of the Record Date.
(12) Includes 19,500 shares subject to options exercisable within 60 days of the
     Record Date and 1,200 shares held in a trust of which Mr. Sherman's
     daughter is trustee.
(13) Includes 923,204 shares subject to options exercisable within 60 days of
     the Record Date held by all directors and executive officers.
(14) As disclosed in a Schedule 13G filed with the Commission.  Reflects
     beneficial ownership (based on sole or shared voting or dispositive power)
     of the reporting entity and its affiliates reported as of January 26, 1998,
     in the case of Putnam Investments, Inc. and as of February 11, 1998, in the
     case of FMR Corp.

                                      -4-

<PAGE>
 
                           1.  ELECTION OF DIRECTORS

     The Company's Certificate of Incorporation provides for a classified board
of directors, with three classes of directors each nearly as equal in number as
possible.  Each class serves for a three-year term and one class is elected each
year.  The Board of Directors is authorized to fix the number of directors
within the range of three to 15 members, and the Board size is currently fixed
at seven members.  Charles W. Schnatter and Richard F. Sherman are the members
of the class to be elected at the Annual Meeting and have been nominated to
serve as directors for a three-year term expiring at the annual meeting to be
held in 2001. The remaining five directors will continue to serve in accordance
with their previous elections.

     It is intended that shares represented by proxies received in response to
this Proxy Statement will be voted for the nominees listed below, unless
otherwise directed by a stockholder in his or her proxy. Although it is not
anticipated that any of the nominees will decline or be unable to serve, if that
should occur, the proxy holders may, in their discretion, vote for a substitute
nominee or nominees.  Directors are elected by a plurality of the votes cast.

     Set forth below is information concerning the nominees and the other
directors who will continue in office, each of whom is currently a member of the
Board.

<TABLE>
<CAPTION>
                                                                                  Director
Name                                          Age      Position or Office          Since
- ----                                          ---      ------------------          -----
<S>                                           <C>      <C>                        <C>
NOMINEES FOR ELECTION TO THE BOARD
For a 3-Year Term Expiring in 2001

Charles W. Schnatter....................       35      Senior Vice President,       1993
                                                       Secretary, General
                                                       Counsel and Director

Richard F. Sherman......................       54      Director                     1993

  DIRECTORS CONTINUING IN OFFICE
       Term Expiring in 2000

O. Wayne Gaunce.........................       64      Director                     1993

Jack A. Laughery........................       63      Director                     1993

Michael W. Pierce.......................       46      Director                     1993

       Term Expiring in 1999

Blaine E. Hurst.........................       41      President, Vice              1996
                                                       Chairman and Director

John H. Schnatter.......................       36      Founder, Chairman of         1990
                                                       the Board and Chief
                                                       Executive Officer
</TABLE>
 
                                      -5-

<PAGE>
 
     John H. Schnatter.  John Schnatter created the Papa John's concept and
founded the Company in 1985.  He has served as Chairman of the Board and Chief
Executive Officer since 1990 and, from 1985 to 1990, served as President.  He
has been a Papa John's franchisee since 1986.

     Charles W. Schnatter.  Charles Schnatter has served as General Counsel and
Secretary since 1991 and has been a Senior Vice President of the Company 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 the
Company.  He was a Papa John's franchisee from 1989 to 1997.  Mr. Schnatter
serves on the board of directors of PJ America, Inc.

     Richard F. Sherman.  Mr. Sherman is a private investor who has been a Papa
John's franchisee, and a consultant to the Company, since 1991.  From 1987 to
1991, Mr. Sherman was Chairman and President of Rally's Hamburgers, Inc.  From
1984 to 1987, Mr. Sherman was President and a director of Church's Chicken, Inc.
From 1971 to 1984, Mr. Sherman was Group Executive Vice President and Director
of Hardee's Food Systems, Inc. and its parent, Imasco USA, Inc.  Mr. Sherman
serves on the board of directors of Taco Cabana, Inc., and Reed's Jewelers, Inc.
and is Chairman of the board of directors of PJ America, Inc.

     O. Wayne Gaunce.  Since 1988, Mr. Gaunce has been the principal of Gaunce
Management, which oversees the operation of franchised restaurants, including
Papa John's, Long John Silver's and Jerry's restaurants.  For more than the past
five years, Mr. Gaunce has also developed and managed real estate properties,
principally in the restaurant industry.  Mr. Gaunce has been a Papa John's
franchisee since 1991.  Mr. Gaunce serves on the board of directors of Trans
Financial, Inc.

     Jack A. Laughery.  Mr. Laughery is a restaurant investor and consultant,
and has been a Papa John's franchisee since 1992.  From 1990 until his
retirement in 1994, Mr. Laughery was Chairman of Hardee's Food Systems, Inc.
From 1962 to 1990, Mr. Laughery was employed by Hardee's Food Systems, Inc.,
retiring as Chief Executive Officer in 1990.  Mr. Laughery serves on the board
of directors of Mass Mutual Corporate Investors and Mass Mutual Participation
Investors.

     Michael W. Pierce.  Since 1987, Mr. Pierce has been President of Arkansas
Investment Group, Inc., which owns real estate in central Arkansas.  Since 1992,
Mr. Pierce has been President of Arkansas Pizza Group, Inc., a Papa John's
franchisee.  Since 1996, Mr. Pierce has been President of Missouri Pizza Group,
LLC, a Papa John's franchisee, and Highbar Management Group, Inc., which
provides management services.  From 1974 to 1985, Mr. Pierce was involved in
real estate development and construction, including development of restaurant
properties.

     Blaine E. Hurst.  Blaine Hurst has served as President since October 1996
and became Vice Chairman of the Company in April 1998.  From February 1995 to
October 1996, he served as Chief Information Officer of the Company after having
joined the Company in January 1995 as Vice President of Information Systems.
From 1993 to 1995, Mr. Hurst was Vice President of Information Systems for
Boston Chicken, Inc.  From 1989 to 1993, Mr. Hurst was a consulting partner with
Ernst & Young.  He has been a Papa John's franchisee since 1996.

     John and Charles Schnatter are brothers.  There are no other family
relationships among the Company's directors, executive officers and other key
personnel.

                                      -6-

<PAGE>
 
Meetings of the Board of Directors

     The Board met on four occasions during 1997.  Each director attended at
least 75% of the meetings of the Board and the Board committees on which such
director served during his period of service in 1997.

Committees of the Board of Directors

     In addition to an Executive Committee, which is comprised of John
Schnatter, Charles Schnatter and Richard Sherman, the Board of Directors has
standing Compensation and Audit Committees.  The Board does not have a
nominating committee or other committee serving a similar function.

     The Compensation Committee is currently comprised of Messrs. Gaunce,
Laughery and Sherman. The functions of the Compensation Committee are to review
and approve annual salaries and bonuses for all corporate officers and
management personnel, review, approve and recommend to the Board of Directors
the terms and conditions of all employee benefit plans and administer the 1993
Stock Ownership Incentive Plan.  The Compensation Committee met three times in
1997.

     The Audit Committee is comprised of Charles Schnatter and Messrs. Sherman
and Pierce.  The functions of the Audit Committee are to recommend annually to
the Board of Directors the appointment of the independent auditors of the
Company, discuss and review the scope and the fees of the prospective annual
audit and review the results thereof with the independent auditors, review and
approve non-audit services of the independent auditors, review compliance with
accounting and financial policies of the Company, review the adequacy of the
financial organization of the Company and review management's procedures and
policies relative to the adequacy of the Company's internal accounting controls
and compliance with federal and state laws relating to accounting practices.
The Audit Committee met two times in 1997.


Compensation of Directors

     Directors who are not also employees of the Company are eligible to
participate in the Company's 1993 Non-Employee Directors Stock Option Plan (the
"Director Plan").  Under the terms of the Director Plan, non-employee directors
who do not otherwise hold options to purchase shares of Common Stock upon their
initial election to the Board of Directors are awarded options to purchase
27,000 shares of Common Stock upon joining the Board.  Each non-employee
director (regardless of option ownership) is then eligible to receive options
for an additional 9,000 shares after three years of continuous Board service.
The options are granted at fair market value and vest in equal one-third
installments upon the earlier of each subsequent annual meeting of stockholders
or the anniversary of the option grant date.  In addition, non-employee
directors who serve on the Executive Committee of the Board receive an annual
award of 7,500 options (at fair market value and with a two-year vesting
schedule).

     Non-employee directors also receive reimbursement of reasonable out-of-
pocket expenses incurred in connection with their attendance at Board and
committee meetings.  Directors who are employees of the Company do not receive
additional compensation for services rendered as a director.

     Mr. Sherman is compensated at a rate of $5,000 per month, plus group health
insurance coverage, for providing consulting services to the Company.  See
"Compensation Committee Interlocks and Insider Participation."

                                      -7-

<PAGE>
 
                            EXECUTIVE COMPENSATION

     The following table sets forth information concerning the annual and long-
term compensation paid, earned or accrued by the Company's Chief Executive
Officer and its next four most highly compensated executive officers for
services rendered in all capacities to the Company for the years indicated.

                          SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
 
                                                                                  Long Term
                                               Annual Compensation           Compensation Awards
                                      ----------------------------------- -------------------------
                                                                Other     Restricted    Securities
                                                                Annual      Stock       Underlying    All Other
Name and                                                     Compensation   Awards        Stock      Compensation
Principal Position            Year    Salary($)   Bonus($)      ($)(1)      ($)(2)       Options(#)     ($)(3)
- --------------------------    ---     ---------  --------    ------------ ----------   ------------  ------------   
<S>                           <C>    <C>        <C>            <C>       <C>             <C>           <C> 
John H. Schnatter             1997    $217,307   $      0       $   --           0        100,000       $183,244
  Founder, Chairman and       1996      99,000          0        16,265          0         85,278        383,700
  Chief Executive Officer     1995     121,365     13,125        13,788          0         22,500        394,226

Wade S. Oney                  1997     150,000     85,000           --           0        339,533            --
  Chief Operating Officer     1996     150,000    115,000           --           0        187,305            --
                              1995     141,500    111,200(4)        --    $150,000        108,755            --
                                                             
Blaine E. Hurst               1997     225,000          0           --           0         80,000            --
 President and Vice           1996     191,346     32,500           --           0        249,000            --
 Chairman                     1995     142,116      3,500        69,955          0         43,313            --

Robert J. Wadell              1997     176,538     50,000           --           0         20,000            --
  President - PJ Food         1996     125,000     10,000           --           0         75,000            --
  Service                     1995     105,192     56,823           --           0          9,375            --

E. Drucilla Milby             1997     172,500          0           --           0         20,000            --
 Chief Financial Officer      1996     149,904     25,000           --           0         78,122            --
 and Treasurer                1995     105,192     56,823           --           0          9,375            --
- --------------------------
</TABLE>

(1) Except as otherwise indicated, perquisites and other personal benefits paid
    to each named executive officer were less than 10% of the officer's annual
    salary and bonus. The amount reported for John Schnatter in 1996 includes an
    automobile allowance of $7,800, tax preparation services valued at $8,270
    and group term life insurance premiums of $195. The amount reported for Mr.
    Hurst in 1995 includes reimbursement for moving expenses of $65,905 and an
    automobile allowance of $4,050.

(2) Represents the value of shares of Common Stock awarded under the Company's
    1993 Stock Ownership Incentive Plan, which shares are restricted as to
    transferability for a period of six months after the date of award. There
    was no restricted stock outstanding held by the named executive officers at
    the Company's 1996 and 1997 fiscal year-ends. The aggregate restricted stock
    holdings of the named executive officers at the Company's 1995 fiscal year-
    end consisted of 5,625 shares held by Mr. Oney, as to which shares the
    restrictions lapsed on June 28, 1996.

(3) Represents premiums advanced by the Company for the purchase of split-dollar
    life insurance coverage. The premiums will be recovered by the Company out
    of the cash value or proceeds from the policy.

(4) Mr. Oney's bonus in 1995 includes a one-time signing bonus of $25,000.

                                      -8-

<PAGE>
 
                       OPTION GRANTS IN LAST FISCAL YEAR

     The following table sets forth information as to stock options granted to
the named executive officers during the 1997 fiscal year. The Company does not
grant stock appreciation rights ("SARs").


<TABLE>
<CAPTION>
                                                                                                    Potential
                                                                                                Realizable Value
                            Number of          % of                                                at Assumed
                            Securities     Total Options                                         Annual Rates of
                            Underlying      Granted to       Exercise or                           Stock Price
                             Options       Employees in      Base Price      Expiration         Appreciation for
       Name                 Granted(1)      Fiscal Year       ($/Share)         Date             Option Term(2)
- -----------------------     ----------     -------------     -----------     ----------     -------------------------
<S>                         <C>            <C>               <C>             <C>            <C>            <C>
                                                                                              5% ($)        10% ($)
                                                                                            ----------     ----------

John H. Schnatter......     100,000(3)         4.4%            $30.38         12/17/07      $1,910,267     $4,840,993

Wade S. Oney...........     43,803(4)          1.9%             26.38         03/31/07         726,565      1,841,257
                           150,000(5)          6.6%             27.00         04/07/07       2,547,023      6,454,657
                            49,645(6)          2.2%             35.00         06/27/07       1,092,752      2,769,247
                            48,270(7)          2.1%             32.50         09/28/07         986,594      2,500,223
                            47,815(8)          2.1%             31.75         12/26/07         954,741      2,419,502

Blaine E. Hurst........     80,000(3)          3.5%             30.38         12/17/07       1,528,214      3,872,794

Robert J. Wadell.......     20,000(3)          0.9%             30.38         12/17/07         382,053        968,199

E. Drucilla Milby......     20,000(3)          0.9%             30.38         12/17/07         382,053        968,199
</TABLE>

__________________________
(1)  All options except the grant of 150,000 shares under option to Mr. Oney
     were awarded under the 1993 Stock Ownership Incentive Plan. All options
     have a term of 10 years and vest immediately in the event of a change in
     control of the Company.
(2)  Assumed annual appreciation rates are set by the Securities and Exchange
     Commission and are not a forecast of future appreciation. The amounts shown
     are pre-tax and assume the options will be held throughout the entire ten-
     year term. If Papa John's Common Stock does not increase in value after the
     grant date of the options, the options are valueless.
(3)  These options become exercisable in four annual installments of 10%, 20%,
     30% and 40% beginning December 17, 1998.
(4)  These options were granted pursuant to Mr. Oney's employment agreement and
     became exercisable September 30, 1997.
(5)  These options were granted pursuant to Mr. Oney's employment agreement and
     become exercisable in two equal installments on June 28, 1998, and December
     27, 1998.
(6)  These options were granted pursuant to Mr. Oney's employment agreement and
     became exercisable December 27, 1997.
(7)  These options were granted pursuant to Mr. Oney's employment agreement and
     became exercisable March 28, 1998.
(8)  These options were granted pursuant to Mr. Oney's employment agreement and
     become exercisable June 28, 1998.


                                      -9-

<PAGE>
 
                      AGGREGATED OPTION EXERCISES IN LAST
                 FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

     Set forth below is information with respect to option exercises by the
named executive officers in the 1997 fiscal year and unexercised stock options
held by the named executive officers at the end of the Company's 1997 fiscal
year. There were no SARs outstanding at the 1997 fiscal year-end.


<TABLE>
<CAPTION>
                                                           Number of Securities
                                                          Underlying Unexercised          Value of Unexercised
                                                                Options at               In-the-Money Options at
                            Shares                          Fiscal Year-End(#)            Fiscal Year-End($)(2)
                           Acquired         Value       ---------------------------    ---------------------------
Name                      On Exercise    Realized(1)    Exercisable   Unexercisable    Exercisable   Unexercisable
- ----                      -----------    -----------    -----------   -------------    -----------   -------------

<S>                       <C>            <C>            <C>           <C>              <C>           <C>
John H. Schnatter.....           --              --        59,084        193,694        $  935,902     $  952,793
Wade S. Oney..........           --              --       361,074        304,730         2,191,032        902,250
Blaine E. Hurst.......           --              --        52,924        319,389           696,236      2,821,780
Robert J. Wadell......       32,448        $602,367           900         98,215            18,375        572,690
E. Drucilla Milby.....        5,000         130,983        29,090         98,995           363,070        584,021
</TABLE>


- -----------------------------

(1)  The Value Realized represents the difference between the fair market value
     on the date of exercise and the total option exercise price.
(2)  Based on the difference between the option exercise price and the last
     reported sale price of the Common Stock ($31.75) as reported on The Nasdaq
     Stock Market on December 26, 1997, the last trading day of the Company's
     1997 fiscal year.

Employment Agreement

     Wade Oney serves as Chief Operating Officer pursuant to an Employment
Agreement with the Company dated October 9, 1997 (the "Employment Agreement").
Upon agreeing to extend his employment through 1998, Mr. Oney was granted an
option to purchase 150,000 shares of Common Stock at $27.00 per share
exercisable in two installments at June 28, 1998 and December 27, 1998. Mr. Oney
is paid an annual salary of $150,000. In addition, Mr. Oney is eligible to earn
an annual bonus of up to $100,000. The term of the Employment Agreement expires
December 27, 1998.

     Prior to his promotion to Chief Operating Officer, entities in which Mr.
Oney owned an equity interest were awarded franchise and development rights to
develop a total of 29 Papa John's restaurants in Orlando, Tampa and Southeast
Florida. See "Compensation Committee Interlocks and Insider Participation --
Franchise and Development Arrangements." Under the terms of the Employment
Agreement, the Company has loaned one such franchise entity $776,198 at 8.25%
interest, and this loan is personally guaranteed by Mr. Oney. Such loan must be
used solely for the development and operation of Papa John's restaurants.


                                     -10-

<PAGE>
 
 
           COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     The following report includes a discussion of the Compensation Committee's
philosophy on executive compensation, the primary components of the Company's
compensation program and a description of the Chief Executive Officer's
compensation package during 1997.

     Compensation Principles.  The Compensation Committee is responsible for
advising the Board of Directors on matters relating to the compensation of the
Company's executive officers and administering the Company's 1993 Stock
Ownership Incentive Plan (the "Incentive Plan"). The Compensation Committee
believes the following principles are important in compensating executive
officers:

     .  Compensation awarded by the Company should be effective in attracting,
        motivating and retaining key executives;

     .  Incentive compensation should be awarded based on the achievement of
        growth or operational targets at the Company, its subsidiaries or
        restaurants, as appropriate to the executive officer; and

     .  Executive officers should have an equity interest in the Company to
        encourage them to manage the Company for the long-term benefit of
        stockholders.

     The Company's executive officers are compensated through a combination of
salary, cash bonuses and stock option awards under the Incentive Plan, each of
which is discussed below.

     Annual Salary.  The Committee reviews salary levels on an annual basis with
the Chief Executive Officer and the Company's other senior managers, and makes
adjustments as appropriate or necessary to keep employees motivated. Mr. Oney's
Employment Agreement is also reviewed annually. The Committee gives great weight
to the Chief Executive Officer's recommendations as to annual salary levels of
the Company's executive officers.

     Bonus Program.  During 1997, certain officers and employees within the
Company's restaurant operations, commissary and equipment areas, including
several executive officers, were eligible to receive bonuses based on the
attainment of operational goals during the fiscal year. The operational goals
include targeted sales and profits at the restaurant or commissary level, or on
a Company-wide basis, depending upon the employee's position, or the opening of
a targeted number of Company-owned or franchised restaurants. The Board retains
discretion to award bonuses in excess of the pre-determined maximum if growth or
performance is exceptional and results from the efforts of the officer or
employee. Other officers received discretionary cash bonuses based upon a review
of performance by his or her supervisor or, in the case of executive officers,
the Committee.

     Incentive Plan Awards.  In late 1995, the Compensation Committee and Board
of Directors established a new stock option program (the "1996 Program")
designed to replace the cash bonus program previously used with the award of
options for the majority of the Company's executive officers. Under the 1996
Program, options (ranging from 5,000 to 100,000 shares) were awarded to
executive officers under the Incentive Plan during the 1997 fiscal year. Other
officers and management personnel were awarded options with the number of
options determined by dividing the closing price of the Common Stock on the
award date into the officer's annual salary, multiplied from one and one-half to
up to five times. The options vest in four annual installments with respect to
10%, 20%, 30% and 40% of the option amount. In addition, options to purchase
189,533 shares were granted to Mr. Oney under the Incentive Plan pursuant to his
employment agreement with the Company for 1997. Mr. Oney was also granted an
option to purchase 150,000 shares pursuant to his Employment Agreement for 1998,
but outside of the

                                     -11-

<PAGE>
 
Incentive Plan. Such options vest in six months from the date of grant with
respect to 100% of the option amount. The Company believes that these grants
will garner the commitment and service of key management personnel by allowing
these employees to share substantially in the appreciation and value of the
Company's Common Stock. All other staff employees who had been employed by the
Company at least one year at the end of 1997 were also awarded stock options at
fair market value with the number of options based on lower multiples of salary.

     The Committee believes that stock options and other equity-based incentives
are a valuable tool in encouraging executive officers and other employees to
align their interests with the interests of the stockholders and to manage the
Company for the long-term. Non-qualified options to purchase 619,533 shares of
the Company's Common stock were granted under the Incentive Plan to all
executive officers (including the Company's Chief Executive Officer) in 1997,
with an exercise price equal to the fair market value of the underlying Common
Stock on the date of grant.

     Compensation of Chief Executive Officer.  Consistent with the compensation
policies and components described above, the Compensation Committee determined
the salary, bonus and stock options received by John H. Schnatter, Founder,
Chairman and Chief Executive Officer of the Company, for services rendered in
1997. Mr. Schnatter received a base salary of $217,307 for 1997. On December 17,
1997, Mr. Schnatter also received non-qualified options to purchase 100,000
shares of the Company's Common Stock pursuant to the 1996 Program described
above. He did not receive a cash bonus during 1997.

     OBRA Deductibility Limitation.  The Omnibus Budget Reconciliation Act of
1993 limits the deduction by public companies of compensation of certain
executive officers to $1 million per year, per executive officer, unless certain
criteria are met. Executive compensation in 1997 did not exceed this limit. The
Committee continues to review issues relating to this compensation deduction
limitation.
                                                          COMPENSATION COMMITTEE

                                                                 O. Wayne Gaunce
                                                                Jack A. Laughery
                                                              Richard F. Sherman

                                     -12-

<PAGE>
 
          COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Immediately prior to its initial public offering of Common Stock in June
1993, the Company's Board of Directors adopted a policy requiring that all
future transactions with affiliates be on terms comparable to those that the
Company could obtain from unaffiliated third parties.  In addition, the policy
requires that all such transactions be approved by a majority of the members of
the Board who are not officers or employees of the Company and who do not have
an interest in the transaction.

     All of the current members of the Compensation Committee, Messrs. Gaunce,
Laughery and Sherman, are franchisees of the Company.  In addition, Mr. Sherman
provides consulting services to the Company pursuant to a consulting agreement,
as hereinafter described.  Set forth below is a description of transactions
during the Company's last fiscal year involving these directors, as well as
other directors and executive officers of the Company.

Franchise and Development Arrangements

     Prior to the Company's initial public offering of Common Stock in June
1993, certain executive officers and directors of the Company acquired equity
interests in entities that were franchisees of the Company and that had rights
to develop Papa John's restaurants.  Certain of the entities acquired
development rights at reduced development fees and also pay a reduced franchise
fee when each restaurant is opened.  However, such entities pay royalties at the
same rate as other franchisees.  The Company has entered into additional
franchise and development agreements with non-employee directors and executive
officers of the Company and entities in which they have an equity interest, and
may continue to do so in the future.  It is expected that any such arrangements
will be on terms no more favorable than with independent third parties.

     Set forth below is a description of franchise and development arrangements
between the Company and entities in which the Company's executive officers and
directors, as well as their immediate family members, have an equity interest as
of the end of the fiscal year or prior to an acquisition of the entity, and the
amount of franchise fees, development fees and royalties earned by or paid to
the Company from such entities during the last fiscal year.  Such entities also
purchase various food and other products from the Company's commissary system
and may purchase the equipment and other items needed to open a Papa John's
restaurant from the Company.  All such purchases and sales are made on terms and
at rates identical to those that may be obtained from the Company by an
independent franchisee.


<TABLE>
<CAPTION>
                                 Franchise Entity -- Amounts Earned/Development
Name and Percentage Owned        Rights
- -------------------------        -----------------------------------------------
<S>                              <C>
John H. Schnatter (76.00%)       Joe K Corporation -- Operates one restaurant in
Annette Schnatter (24.00%)       Louisville, Kentucky and operated three
                                 restaurants in Colorado. Franchise and
                                 development fees earned by the Company in 1997
                                 were $20,000. Paid royalties of $74,243 in
                                 1997. John and Annette Schnatter are husband
                                 and wife.

John H. Schnatter (12.50%)       Ohio Pizza Delivery Co. -- Operates eight 
Charles W. Schnatter (5.00%)     restaurants in Ohio.  Franchise and 
Richard J. Emmett (5.80%)        development fees earned by the Company in 1997
                                 were $18,500.  Paid royalties of $310,176 in
                                 1997.
</TABLE>
 
                                     -13-

<PAGE>


<TABLE>
<CAPTION>
                                        Franchise Entity -- Amounts Earned/
Name and Percentage Owned               Development Rights
- -------------------------               ---------------------------------------
<S>                                     <C>
John H. Schnatter (29.80%)              Norcar, Inc. -- Operated 16 restaurants
Charles W. Schnatter (29.80%)           in North Carolina.  Paid royalties of
Richard J. Emmett (5.80%)               $170,742 in 1997.

Richard F. Sherman (79.75%)             Sherfiz, Inc. -- Operates two
John H. Schnatter (8.25%)               restaurants in Ohio.  Paid royalties of
                                        $43,663 in 1997.

Richard F. Sherman (72.00%)             P.J. Cambridge, Inc. and Sherfiz II,
John H. Schnatter (7.43%)               Inc. -- Operates two restaurants in
                                        Ohio and three in West Virginia.  Paid
                                        royalties of $132,190 in 1997.

Blaine E. Hurst (51.00%)                Mountain Pizza Group, L.L.C. -- Operates
                                        seven restaurants in Colorado.
                                        Franchise and development fees earned
                                        by the Company in 1997 were $60,000.
                                        Paid royalties of $111,058 in 1997.

Wade S. and Elizabeth Oney (100.00%)    Bam-Bam Pizza, Inc. -- Operates seven
                                        restaurants in Florida.  Franchise and
                                        development fees earned by the Company
                                        in 1997 were $22,500.  Paid royalties
                                        of $171,851 in 1997.  Wade and
                                        Elizabeth Oney are husband and wife.

Wade S. Oney (100.00%)                  L-N-W Pizza, Inc. -- Operates 12
                                        restaurants in Florida. Paid royalties
                                        of $389,365 in 1997.

Wade S. Oney (25.00%)                   Brown's Pizza, Inc. -- Operates one
                                        restaurant in Florida. Paid royalties
                                        of $24,958 in 1997.

Richard J. Emmett (51.00%)              Williamsburg Pizza Group, Inc. --
                                        Operates seven restaurants in Virginia.
                                        Franchise and development fees earned by
                                        the Company in 1997 were $12,500. Paid
                                        royalties of $104,388 in 1997.

Nicholas H. Sherman (9.25%)             PJ Louisiana, Inc. (f/k/a Easy Cheese,
Merida L. Sherman (9.25%)               L.L.C.) -- Operates eight restaurants in
                                        Louisiana. Franchise and development
                                        fees earned by the Company in 1997 were
                                        $74,000. Paid royalties of $213,532 in
                                        1997. Nicholas and Merida Sherman are
                                        the children of Richard F. Sherman.

Richard F. Sherman (20.00%)             PJ Carolina, Inc. -- Operates one
                                        restaurant in North Carolina.  Franchise
                                        and development fees earned by the
                                        Company in 1997 were $20,000. Paid
                                        royalties of $469 in 1997.

Nicholas H. Sherman (4.7%)              Michigan Cheese, Inc. -- Operates one 
Merida L. Sherman (4.7%)                restaurant in Michigan.  Paid royalties
                                        of $16,177 in 1997.  Nicholas and 
                                        Merida Sherman are the children of 
                                        Richard F. Sherman.
</TABLE>

                                     -14-

<PAGE>


<TABLE> 
<CAPTION> 
                                        Franchise Entity -- Amounts Earned/
Name and Percentage Owned               Development Rights
- -------------------------               ---------------------------------------
<S>                                     <C> 
Richard F. Sherman (7.90%)              PJ America, Inc. ("PJ America") -- PJ 
Jack A. Laughery (4.60%)                America operates 73 restaurants in
                                        Virginia, Alabama and Texas. Franchise
                                        and development fees earned by the
                                        Company in 1997 were $220,000. Paid
                                        royalties of $1,582,405 in 1997.
 
Richard F. Sherman (26.00%)             P.J.N.C., Inc. -- Operated six 
Jack A. Laughery (26.00%)               restaurants in North Carolina. Paid
                                        royalties of $55,285 in 1997.
 
Richard F. Sherman (20.74%)             PJ Utah, L.L.C. -- Operates eight 
Jack A. Laughery (10.90%)               restaurants in Utah. Franchise and
                                        development fees earned by the Company
                                        in 1997 were $140,000. Paid royalties of
                                        $79,934 in 1997.
 
Richard F. Sherman (20.80%)             PJIOWA, L.C. -- Operates eight 
Jack A. Laughery (20.80%)               restaurants in Iowa and two restaurants
                                        in Illinois. Franchise and development
                                        fees earned by the Company in 1997 were
                                        $55,500. Paid royalties of $138,675 in
                                        1997.

Jack A. Laughery (30.57%)               Houston Pizza Venture, LLC -- Operates 
                                        36 restaurants in Texas.  Franchise and
                                        development fees earned by the Company
                                        in 1997 were $203,500. Paid royalties of
                                        $768,752 in 1997.

Jack A. Laughery (25.00%)               PJ New England, LLC -- Operates 12 
                                        restaurants in Connecticut, 
                                        Massachusetts, Rhode Island, Maine, New
                                        Hampshire and Vermont. Franchise and
                                        development fees earned by the Company
                                        in 1997 were $180,000. Paid royalties of
                                        $62,878 in 1997.

Michael W. Pierce (40.00%)              Missouri Pizza Group, LLC -- Operates 
                                        four restaurants in Missouri.  
                                        Franchise and development fees earned by
                                        the Company in 1997 were $40,000. Paid
                                        royalties of $103,664 in 1997.

Michael W. Pierce (47.50%)              Arkansas Pizza Group, Inc. -- Operates 
                                        13 restaurants in Arkansas.  Franchise
                                        and development the Company in 1997 
                                        were $45,000.  Paid royalties of 
                                        $279,540 in 1997.

Wayne Gaunce (25.33%)                   H & H Pizza, Inc., ILMO, Inc., P & G 
Patrick Gaunce (35%)                    Pizza, Incorporated and OWG, Inc. -- 
                                        These entities operated 36 restaurants
                                        during 1997 in Kentucky, Tennessee,
                                        Illinois, Mississippi, Missouri and
                                        Alabama. Franchise and development fees
                                        earned by the Company from these
                                        entities in 1997 were $58,712. Paid
                                        royalties aggregating $945,995 in 1997.
                                        Patrick Gaunce is the son of Wayne
                                        Gaunce.
</TABLE>
 
                                     -15-

<PAGE>
    

<TABLE> 
<CAPTION> 
                                        Franchise Entity -- Amounts Earned/
Name and Percentage Owned               Development Rights
- -------------------------               ---------------------------------------
<S>                                     <C> 
Wayne Gaunce (15.20%)                   Texas P.B., Inc. -- Operates five 
Patrick Gaunce (21.00%)                 restaurants in Texas. Franchise and 
                                        development fees earned by the Company 
                                        in 1997 were $57,000.  Paid royalties 
                                        of $106,528 in 1997.
 
Patrick Gaunce (100%)                   SPG, Inc. -- Operates two restaurants in
                                        Bowling Green, Kentucky. Paid royalties
                                        of $79,316 in 1997.

Wayne Gaunce (12.67%)                   Michigan Restaurant Group, Inc. -- 
Patrick Gaunce (17.50%)                 Operates seven restaurants in Michigan.
                                        Franchise and development fees earned by
                                        the Company in 1997 were $74,000. Paid
                                        royalties of $112,026 in 1997.
 
Wayne Gaunce (13.17%)                   Camelback Pizza, Inc. -- Operates ten 
Patrick Gaunce (18.20%)                 restaurants in Arizona.  Franchise and 
                                        development fees earned by the Company 
                                        in 1997 were $100,000.  Paid royalties 
                                        of $76,510 in 1997.
</TABLE>

     Ohio Pizza Delivery Co. and Williamsburg Pizza Group, Inc. were acquired by
PJ America, Inc. during the 1997 fiscal year.  Franchise and development fees
earned by the Company and royalties paid after their acquisition are reported as
having been earned from or paid by PJ America, Inc.

     During April 1997, the Company acquired 16 Papa John's restaurants in North
Carolina for $5.0 million (consisting of $4,960,000 in cash and a credit of
$40,000 towards future development fees) from NorCar, Inc. ("NorCar").
Ownership interests in NorCar were held by John H. Schnatter (29.8%), Charles W.
Schnatter (29.8%) and Richard J. Emmett (5.8%).

     During October 1997, the Company acquired three Papa John's restaurants
near Denver, Colorado from Joe K Corporation ("Joe K") for $720,000 in cash. Joe
K is owned by John H. Schnatter and his wife.

     During December 1997, the Company acquired a 49% equity ownership interest
in Mountain Pizza Group, L.L.C. ("MPG"), an entity which operates seven Papa
John's restaurants in Denver, Colorado, for $150,000 in cash. The 49% equity
ownership interest was acquired from Blaine E. Hurst, who remains the 51%
majority owner of MPG.

PJ America, Inc. Stock Warrant

     PJ America, Inc., Papa John's largest franchisee ("PJ America"), completed
an initial public offering of its common stock ("IPO") effective October 25,
1996.  In connection with the IPO, PJ America issued a warrant to purchase
225,000 shares of its common stock to the Company.  The warrant is exercisable
in whole or in part at any time within five years from the closing date of the
IPO, and the purchase price of each share of PJ America common stock pursuant to
the warrant is $11.25 per share (90% of the IPO price of $12.50 per share).  The
warrant was issued by PJ America to the Company in consideration for the grant
by the Company of rights to enter into development agreements for certain
specified territories and the waiver by the Company of certain market transfer
fees.  The Company's agreement with PJ America anticipates that PJ America will
pay standard development and franchise fees in connection with opening
restaurants in the specified territories.  In addition to his ownership interest
as 

                                     -16-

<PAGE>
 
set out above, Mr. Sherman is Chairman of the Board of PJ America.  Charles
Schnatter is also a director of PJ America.

Franchisee Loan Program

     The Company has established a program under which selected franchisees may
borrow funds for use in the construction and development of their restaurants
from Capital Delivery, Ltd., a wholly-owned subsidiary of the Company.  Such
loans bear interest at fixed or floating rates (ranging from 5.5% to 10.0% at
December 28, 1997), and are generally secured by the fixtures, equipment,
signage and, where applicable, land of each restaurant, the ownership interests
in the franchisee and, in certain circumstances, guarantees of the franchisee
owners.  Under the terms of the applicable loan agreement, interest only is
payable over the term of the loan, generally 12 to 24 months.  Thereafter, if
the loan is not in default, the franchisee may convert the loan to a term loan
with principal and interest payable monthly, amortized over a four- to six-year
term.

     Set forth below is a description of franchise loan transactions between
Capital Delivery, Ltd. and entities in which the Company's executive officers
and directors, as well as their immediate family members, have an equity
interest, the amount outstanding as of February 18, 1998, and the rate of
interest paid on such loans as of February 18, 1998.  The amount outstanding as
of February 18, 1998 is equal to the largest aggregate amount of indebtedness of
each entity under the franchisee loan program since the beginning of the
Company's last fiscal year.

<TABLE> 
<CAPTION> 
                                                                Principal Amount        Interest
         Name and                                                Outstanding at           Rate
     Percentage Owned                  Franchisee               February 18, 1998          (%)
     ----------------                  ----------               -----------------       --------
<S>                            <C>                              <C>                     <C>
Michael W. Pierce (40.00%)     Missouri Pizza Group, Inc.          $  672,500             9.5%

Blaine E. Hurst (37.69%)       Mountain Pizza Group, Inc.           2,208,454             7.5%

Wade S. Oney and
Elizabeth Oney (100%)          Bam-Bam Pizza, Inc.                    926,198             8.25%

Wade S. Oney (100%)            L-N-W Pizza, Inc.                       54,348             6.0%
                                                                      411,298             8.0%

Richard F. Sherman (20.74%)    PJ Utah, L.L.C.                      2,150,000             7.5%
Jack A. Laughery (10.9%)

Jack A. Laughery (30.57%)      Houston Pizza Venture, LLC           1,667,500             9.5%

</TABLE>


Consulting Agreement

     The Company and Mr. Sherman are parties to a Consulting Agreement dated
March 29, 1991, as amended (the "Consulting Agreement"), pursuant to which the
Company pays Mr. Sherman a monthly consulting fee of $5,000 and provides him
with group health insurance.  The total amount paid to Mr. Sherman in 1997 under
the Consulting Agreement was $60,000, and the value of group health benefits
provided to Mr. Sherman in 1997 was $3,510.  Mr. Sherman is also entitled to
compensation at a rate of $157 per hour for each hour of consulting service
provided in excess of 30 hours per month.  Under the Consulting Agreement, Mr.
Sherman was awarded an option on April 1, 1991, to purchase 617,873 shares

                                     -17-

<PAGE>
 
of Common Stock at an exercise price of $0.05 per share. The option has been
exercised. After termination of the Consulting Agreement, Mr. Sherman has agreed
not to compete with the Company in any capacity for a period of 12 months, and
in any business that offers pizza on a delivery basis anywhere in the United
States for a period of two years. 


Other Transactions

     During 1997, the Company paid $619,141 to Hampton Airways, Inc. ("Hampton")
and $63,311 to Hemisphere Airways, Inc. ("Hemisphere") for charter aircraft
services.  Hampton's sole shareholder is John Schnatter, the Company's Founder
and Chief Executive Officer.  Hemisphere is owned 50% by John Schnatter and 50%
by Charles Schnatter, the Company's Senior Vice President, Secretary and General
Counsel.  The Company believes the rates charged to the Company by Hampton and
Hemisphere were at or below rates which could have been obtained from an
independent third party for a similar aircraft.
     
 
           SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934 ("Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than 10% of the Company's Common Stock, to file initial stock ownership
reports and reports of changes in ownership with the Securities and Exchange
Commission and The Nasdaq Stock Market.  Based on a review of these reports and
written representations from the reporting persons, the Company believes that
all applicable Section 16(a) reporting requirements were complied with for all
Common Stock transactions in 1997 except that Wade S. Oney and O. Wayne Gaunce
each failed to file timely one Form 4 reporting one transaction, which reports
have now been filed.

                                     -18-

<PAGE>

 
              Comparison of Five Year-Cumulative Total Returns
                             Performance Graph for
                        Papa John's International, Inc.

Prepared by the Center for Research in Security Prices
Produced on 02/16/98 including data to 12/26/97

                       [PERFORMANCE GRAPH APPEARS HERE]


<TABLE> 
<CAPTION> 
- ---------------------------------------------------------------------------------------------------------------
                                                 Legend
Symbol   CRSP Total Returns Index for:                    06/08/93 12/23/93 12/23/94 12/29/95 12/27/96 12/26/97
- ------   ----------------------------                     -------- -------- -------- -------- -------- --------
<S>      <C>                                              <C>      <C>      <C>      <C>      <C>      <C> 
______ . Papa John's International, Inc.                    100.0    155.7    155.7    235.4    418.7    408.2
 ... __ * Nasdaq Stock Market (US Companies)                 100.0    110.4    109.2    156.5    192.7    227.3
- ------ . NASDAQ Stocks (SIC 5800-5899 US Companies)         100.0    103.2     75.5     92.3     89.8     76.3
         Eating and drinking places
Notes:
    A. The lines represent monthly index levels derived from compounded daily returns that include all 
       dividends.
    B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
    C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day 
       is used.
    D. The index level for all series was set to $100.0 on 06/08/93.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
 

                                     -19-

<PAGE>
 
             2.  PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S
                      1993 STOCK OWNERSHIP INCENTIVE PLAN

     The Board of Directors has adopted, and recommends that stockholders
approve, an amendment to the Company's 1993 Stock Ownership Incentive Plan (the
"Incentive Plan").  This amendment is being made to increase the number of
shares of Common Stock reserved for issuance under the Incentive Plan from
4,737,500 shares to 6,000,000 shares.  At March 27, 1998, options to purchase
4,713,560 shares of Common Stock were outstanding, and 31,025 restricted shares
had been issued, under the Incentive Plan. At March 27, 1998, 720,911 shares
would have been available for issuance under the Incentive Plan if this
amendment is approved.  The Company has issued an option to purchase 47,815
shares to Wade S. Oney and options to purchase 493,774 shares to employees who
are not executive officers, subject to approval of this amendment. The proposed
amendment does not affect the provision in the Incentive Plan that limits the
maximum aggregate number of shares of restricted stock (which is limited to
225,000) which may be issued under the Incentive Plan.

     Upon stockholder approval of the amendment, the Company intends to file a
registration statement on Form S-8 under the Securities Act of 1933, as amended,
with respect to the additional shares issuable under the Incentive Plan.

Description of the Incentive Plan

     The Incentive Plan was approved by the Company's Board of Directors and
stockholders in 1993. The Incentive Plan permits the award to the Company's
employees of performance units (which may be paid in cash or shares of Common
Stock), restricted stock and stock options.  The Incentive Plan currently
reserves for issuance an aggregate of 4,737,500 shares of Common Stock, no more
than 225,000 shares of which may be issued in the form of restricted shares.
The Incentive Plan is intended to advance the interests of the Company and its
stockholders by encouraging employees, who are largely responsible for the long-
term success and development of the Company, to acquire and retain an ownership
interest in the Company.  The Company believes that equity incentives
represented by stock options enhance the Company's ability to attract and retain
needed personnel.  The amendment to the Incentive Plan increases the number of
shares of Common Stock reserved for issuance under the Incentive Plan by
1,262,500 shares.

     Employees of the Company are eligible to receive awards under the Incentive
Plan when designated by the committee responsible for administering the
Incentive Plan (the "Committee").  The Committee may designate eligible
employees as it deems appropriate.  At December 28, 1997, the Company had
approximately 14,200 employees.
 
     Restricted stock consists of shares of Common Stock which are sold or
transferred by the Company to an employee at a price which may be below their
fair market value or for no payment, but subject to restrictions on their sale
or other transfer by the employee.

     Performance units are rights to receive a payment from the Company which
may be payable in cash or shares of Common Stock or both, provided certain
performance standards are met.  The Incentive Plan provides that the Committee
will determine the performance goals based on business criteria which may
include net income, earnings per share or return on equity for the Company, or
net income or return on equity for a region, subsidiary or other unit of the
Company ("Performance Goals").  The Committee may establish more than one level
of performance criteria such that a portion of the maximum number of performance
units is allocated if a level (other than the highest level) is attained.  The
Committee also determines the number of performance units to be granted.  The
Committee is required to establish 

                                     -20-

<PAGE>
 
Performance Goals applicable to a fiscal year within 90 days of the commencement
of that year and the maximum number of performance units which may be allocated
to a participant in a calendar year is limited to 150,000 units. Moreover, the
Committee is required to certify that the Performance Goals have been satisfied
prior to the payment of any units. To date, no performance units have been
awarded under the Incentive Plan.

     The Committee may also grant stock options under the Incentive Plan.  The
Committee determines the number and purchase price of the shares of Common Stock
subject to an option, the term of each option and the time or times during its
term when the option becomes exercisable.  The term of a stock option may not
exceed ten years from the date of grant and generally may not be exercised
earlier than six months after the date of grant.  No stock option will be issued
with an exercise price below the fair market value of a share of Common Stock on
the date of grant.  On the Record Date, the closing price per share of the
Company's Common Stock as reported on the Nasdaq Stock Market was $38.875.  The
maximum number of stock options that may be awarded to any participant in any
calendar year is limited to options for no more than 250,000 shares.

     Stock options granted under the Incentive Plan may be either incentive
stock options ("ISOs") which qualify under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), or stock options that do not so qualify
("NQSOs").  ISOs granted to any employee holding more than 10% of the combined
voting power of all classes of stock of the Company must be granted with an
exercise price of not less than 110% of fair market value.  To date, no ISOs
have been awarded under the Incentive Plan. Optionees may exercise options under
the Incentive Plan by paying cash, tendering shares of Common Stock or through a
cashless exercise procedure.  Upon a Change in Control (as defined in the
Incentive Plan) of the Company, all outstanding options will become fully vested
and immediately exercisable.

     The number of shares of Common Stock available for issuance under the
Incentive Plan will be adjusted in the event of a merger, consolidation,
reorganization, stock dividend, stock split or other change in corporate
structure or capitalization affecting the Common Stock.  Shares of Common Stock
subject to, but not delivered under, an award terminating or expiring for any
reason generally will be available for the grant of future awards under the
Incentive Plan.

     The Incentive Plan will terminate on the earliest to occur of (i) the date
when all shares of Common Stock available under the Incentive Plan have been
acquired through the exercise of options, lapse of restrictions or payment of
benefits under the Incentive Plan, (ii) April 15, 2003, or (iii) such earlier
date as the Board of Directors may determine.  The Board may amend, modify or
terminate the Incentive Plan, but may not, without the prior approval of
stockholders, make any amendment which would materially increase the benefits
accruing to participants under the Incentive Plan, materially increase the total
number of shares of Common Stock which may be issued under the Incentive Plan or
materially modify the class of employees eligible to participate in the
Incentive Plan, if such approval is required by the Code, Section 16 of the
Securities Exchange Act of 1934 ("Exchange Act") and the rules promulgated
thereunder, any national securities exchange or system on which the Common Stock
is then listed or reported or a regulatory body having jurisdiction over the
Company.  No amendments of the Incentive Plan will impair the rights of any
participant without such participant's consent.

Federal Income Tax Consequences

     Because tax results may vary due to individual circumstances, participants
in the Incentive Plan are urged to consult their personal tax advisors regarding
tax consequences of awards or grants, or the sale of any shares received, under
the Incentive Plan.   The Federal income tax consequences of awards under the
Incentive Plan, as previously disclosed to stockholders, will not be impacted by
the proposed amendment.

                                     -21-

<PAGE>
 
     Non-Qualified Stock Options

     The granting of a NQSO does not produce taxable income to the optionee or a
tax deduction to the Company. Taxable ordinary income will generally be
recognized by the optionee at the time of exercise in an amount equal to the
excess of the fair market value of the shares purchased at the time of exercise
over the aggregate option price. The Company is entitled to a corresponding
Federal income tax deduction. The tax basis for the shares acquired is the
option price plus the taxable income recognized.

     Incentive Stock Options

     In the case of an ISO, an optionee will not recognize any taxable income at
the time of grant and the Company will not be entitled to a Federal income tax
deduction. No income will be recognized by an optionee at the time of exercise
of the ISO. If the optionee holds the shares acquired upon exercise of the ISO
for at least two years from the date of grant of the ISO and at least one year
from the date of exercise, the optionee would realize taxable long-term capital
gain or loss upon a subsequent sale of the shares at a price different from the
option price. If the foregoing holding period is met, no deduction would be
allowed to the Company for Federal income tax purposes at any time. If, however,
the optionee disposes of the shares prior to satisfying the required holding
period, generally (1) the optionee would realize ordinary income in the year of
such disposition in an amount equal to the difference between (a) the fair
market value of such shares on the date of exercise or (b) the sales price,
whichever is less, and the option price; (2) the Company would be entitled to a
deduction for such year in the amount of the ordinary income so realized; and
(3) the optionee would realize capital gain in an amount equal to the difference
between (a) the amount realized upon the sale of the shares and (b) the option
price plus the amount of ordinary income, if any, realized upon the disposition.

     Restricted Stock

     In the absence of an election under section 83(b) of the Code ("Section
83(b) Election"), a participant who receives restricted stock will recognize no
income at the time of issuance. When the restriction period expires with respect
to shares of restricted stock, a participant will recognize ordinary income
equal to the fair market value of the shares as of the date the restrictions
expire over the amount paid for such shares (if any). The participant's basis
for the shares is equal to the amount paid (if any) plus the ordinary income
recognized, and the holding period begins just after the restriction period
ends. An employee may, however, make a Section 83(b) Election to include in
income in the year of purchase or grant the excess of the fair market value of
the shares (computed without regard to the restrictions) on the date of purchase
or grant over their purchase price. The Company will be entitled to a deduction
in the same year and in the same amount as income is recognized by the
participant. If a Section 83(b) Election is made, a participant's basis for the
shares will be the amount paid for the shares, if any, plus the ordinary income
recognized.

     Performance Units

     Generally, performance units granted to a participant will be taxable to
the participant in the amount of cash and the fair market value of shares
received.  The Company will be entitled to a deduction for such amount at the
time it is includible in the income of the participant.

     The affirmative vote of the holders of a majority of the shares of Common
Stock present, in person or by proxy, at the Annual Meeting is required for the
approval of the above-described amendment to the Incentive Plan.  THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO INCREASE THE
NUMBER OF SHARES AVAILABLE FOR ISSUANCE UNDER THE INCENTIVE PLAN.  Shares of
Common Stock covered by proxies executed and received 

                                     -22-

<PAGE>
 
in the accompanying form will be voted in favor of the amendment, unless
otherwise specified on the proxy.


           3.  RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS

     The Board of Directors will request stockholders to ratify its selection of
Ernst & Young LLP, independent auditors, to examine the consolidated financial
statements of the Company for the fiscal year ending December 27, 1998.  Ernst &
Young LLP has audited the Company's financial statements since 1991.
Representatives of Ernst & Young LLP will be present at the Annual Meeting to
make a statement if they desire to do so and respond to questions by
stockholders.  The affirmative vote of a majority of the shares represented at
the meeting is required for the ratification of the Board's selection of Ernst &
Young LLP as the Company's independent auditors.  THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP
AS INDEPENDENT AUDITORS OF THE COMPANY.

                                OTHER BUSINESS

     The Board of Directors is not aware of any other matters to be presented at
the Annual Meeting other than those set forth in the Notice of Annual Meeting
and routine matters incident to the conduct of the meeting.  If any other
matters should properly come before the Annual Meeting or any adjournment or
postponement thereof, the persons named in the proxy, or their substitutes,
intend to vote on such matters in accordance with their best judgment.
     
                             STOCKHOLDER PROPOSALS

     Any stockholder proposal intended to be presented at next year's Annual
Meeting of Stockholders must be received by the Company by December 10, 1998, to
be considered for inclusion in the Company's proxy materials for such meeting.
In addition, a stockholder who wishes to introduce a proposal at an annual
meeting of stockholders, regardless of whether the stockholder wants the
proposal included in the Company's proxy materials, must comply with certain
requirements set forth in the Company's Certificate of Incorporation.  A copy of
the Certificate of Incorporation may be obtained by written request to the
General Counsel of the Company at its principal executive offices at P.O. Box
99900, Louisville, Kentucky 40269-9990.
     
                                 ANNUAL REPORT

     The Company's Annual Report to Stockholders for the fiscal year ended
December 28, 1997, accompanies this Proxy Statement.

                                        By Order of the Board of Directors
                                    
                                        /s/ Charles W. Schnatter
                                        Charles W. Schnatter
                                        Senior Vice President, Secretary
                                          and General Counsel

Louisville, Kentucky
April 10, 1998

                                     -23-

<PAGE>
 
                        PAPA JOHN'S INTERNATIONAL, INC.
                P.O. Box 99900, Louisville, Kentucky 40269-9990

                        ANNUAL MEETING OF STOCKHOLDERS
          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

     The undersigned, a stockholder of PAPA JOHN'S INTERNATIONAL, INC., a 
Delaware corporation (the "Company"), hereby constitutes and appoints CHARLES W.
SCHNATTER and CHARLOTTE L. HENDRICK, and each of them, the true and lawful 
attorneys and proxies with full power of substitution, for and in the name, 
place and stead of the undersigned, to vote all shares of the Common Stock of 
the Company which the undersigned would be entitled to vote if personally 
present at the Annual Meeting of Stockholders to be held at The Hyatt Regency 
Hotel, 320 West Jefferson Street, Louisville, Kentucky, on Thursday, May 21, 
1998, at 11:00 A.M. (E.D.T.) and at any adjournment thereof.

     The undersigned hereby instructs said proxies or their substitutes:

     1.   ELECTION OF DIRECTORS
          NOMINEES: Charles W. Schnatter, Richard F. Sherman
          [_]   FOR the above-named nominees.
          [_]   WITHHOLD AUTHORITY to vote for the above-named nominees.
     INSTRUCTION: To withhold authority to vote for any individual nominee, 
     write that nominee's name in the space provided below:

     ___________________________________________________________________________

     2.   AMENDMENT TO THE COMPANY'S 1993 STOCK OWNERSHIP INCENTIVE PLAN: To 
          increase the number of shares available for issuance under the plan.
               [_] FOR           [_] AGAINST           [_] ABSTAIN

     3.   RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS: To ratify the 
          selection of Ernst & Young LLP as the Company's independent auditors
          for the 1998 fiscal year.
               [_] FOR           [_] AGAINST           [_] ABSTAIN

     4.   DISCRETIONARY AUTHORITY: To vote with discretionary authority with 
          respect to all other matters which may properly come before the Annual
          Meeting.

<PAGE>
 
     This proxy, when properly executed, will be voted in accordance with any 
directions hereinbefore given. Unless otherwise specified, this proxy will be 
voted FOR the nominees named in Item 1 and FOR the Proposals set forth in Items 
2, 3, and 4. MANAGEMENT RECOMMENDS A VOTE FOR THE ABOVE MATTERS.

     The undersigned hereby revokes all proxies heretofore given and ratifies 
and confirms all that the proxies appointed hereby, or either of them, or their 
substitutes, may lawfully do or cause to be done by virtue hereof. The 
undersigned hereby acknowledges receipt of a copy of the Notice of Annual 
Meeting and Proxy Statement, both dated April 10, 1998, and a copy of the 
Company's Annual Report for the fiscal year ended December 28, 1997.




                             ___________________________________________________
                             Signature                            Date



                             ___________________________________________________
                             Signature, if held jointly           Date

                             Please sign exactly as name appears on proxy. If
                             shares are held by joint tenants, all parties in
                             the joint tenancy must sign. When signing as
                             attorney, executor, administrator, trustee or
                             guardian, state capacity. If executed by a
                             corporation, the proxy should be signed by a duly
                             authorized officer. If a partnership, please sign
                             in partnership name by authorized person.