Papa Murphy's to Close Up to 50 Locations Amid Intense Pizza Competition

The Decision to Close Dozens of Papa Murphy's Stores

MTY Food Group, the Canadian parent of Papa Murphy's, intends to shutter 45 to 50 of its locations.

The closures are part of a larger cleanup. MTY is shutting a total of 68 company-owned stores that have underperformed across its entire brand lineup, with those locations having racked up more than $10 million in losses over the last twelve months.

Papa Murphy's is taking the biggest hit. CEO Eric Lefebvre explained that the pizza business is cutthroat right now, and Papa Murphy's is struggling more than other brands. "Papa Murphy's, in such a competitive environment for pizza, is currently suffering a little bit more," he said.

The affected stores will close within a six-to-nine-month window, with the first locations scheduled to shut the following week. That slow rollout is intentional.

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Why the Turnaround Effort Failed

This was not a snap decision. MTY had been trying to save those Papa Murphy's locations for nearly two years.

MTY repossessed three clusters of stores and put a lot of work into turning them around. They saw some success in a few markets. But ultimately, the math did not add up. Lefebvre put it bluntly: "After nearly two years of efforts and some successful turnarounds in those markets, we came to the conclusion that these markets are probably not appropriate for Papa Murphy's at this time, and we chose to close a lot of these stores in these locations."

Papa Murphy's offers take-and-bake pizzas, which customers collect from the store after ordering in person, by phone, or online, then bake at home. MTY Food Group, the owner of the brand, runs some stores directly and franchises the rest.

The company says it will handle the closures carefully, protecting staff, negotiating with landlords, and dealing with distribution issues that come from shutting multiple locations at once. "We will do things in order to protect the staff, also, that's in the store and take the time to negotiate properly with the landlords, handle all the distribution issues that might arise from closing a certain number of locations," Lefebvre said.

What Comes Next for MTY and Its Investors

This is not a fire sale, according to Lefebvre. The company may close or sell additional corporate stores if it makes business sense going forward. But he made clear there is no panic.

"It's not a fire sale, but we're also in a process where we can reduce the corporate store portfolio," he said.

Lefebvre called the closures an "important step" that will be the "right long-term action for the business" even though the number of stores will shrink in the short term. He noted that although Papa Murphy's outlets constitute a larger portion of the closures among MTY's entire brand network, they "don't account for the majority of the losses or of the costs of the stores we're going to close." He added that there are other locations that will cost more to close and yield greater benefits.

Shares of MTY Food Group, which trades under the ticker MTYFF, were up slightly, sitting at $23.51, a gain of 0.30 points.

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