A once fast-growing take-and-bake pizza chain is now closing up to 50 stores after a costly turnaround plan backfired, resulting in millions in losses.
Story Snapshot
- MTY Food Group will shut 68 money-losing corporate restaurants, including up to 50 Papa Murphy’s stores, over the next 6 to 9 months.
- These locations collectively lost more than $10 million over the past year, and their performance continued to worsen.
- The closures follow a failed attempt to turn around clusters of Papa Murphy’s by converting franchise stores to corporate control.
- Papa Murphy’s has already closed nearly 150 locations in just two years, showing how hard the pizza market has become.
Pizza chain pushed into major cuts after turnaround misses the mark
MTY Food Group, the Canadian owner of Papa Murphy’s, plans to close 68 underperforming corporate-owned restaurants after they racked up more than $10 million in losses over the last 12 months.
Up to 50 of those locations are expected to be Papa Murphy’s stores, with the remaining closures spread across other MTY brands.
Closures will roll out over about six to nine months, with the first wave starting in mid-July. For regular customers, that means some familiar neighborhood pizza spots will simply vanish.
Chief executive Eric Lefebvre told investors that the company had taken back three clusters of Papa Murphy’s locations from franchisees, hoping that running them directly would fix problems and lift profits. Instead, those units continued to underperform, and many will now be shut down.
On the earnings call, Lefebvre was blunt that Papa Murphy’s is “currently suffering a little bit more” than other brands in a very tough pizza market. This is corporate-speak for a simple truth: the turnaround did not work, and the losses became too big to ignore.
Papa Murphy’s to close 50 restaurants over declining sales https://t.co/VxO3U513jo
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How a US$190 million bet on Papa Murphy’s turned into store-by-store retreat
MTY bought Papa Murphy’s for around US$190 million just a few years ago with a clear goal: turn the struggling chain around and grow it again. Since then, the footprint has shrunk instead of grown.
Papa Murphy’s closed 43 locations in 2023 and about 100 more in 2024, most of them franchise stores. Add the up to 50 locations now slated to shut, and the brand will have lost nearly 200 restaurants in roughly three years. For a chain that once filled suburban strip malls, that is a dramatic reversal.
The recent closures hit a different part of the business: corporate-owned units. MTY reported that these 68 company-run restaurants lost over $10 million in the last year, and their results were “for the most part deteriorating” rather than improving. Management also expects to spend another $10 million to $12 million to exit leases and fully close the doors at these sites.
Sales slump, rising costs, and a pizza market that left Papa Murphy’s behind
The closures come as MTY reports weaker same-store sales across its system. Comparable sales fell 2.1 percent overall, with declines in both the United States and Canada. Lefebvre has said the pizza category is especially challenged right now, with heavy competition and pressure on margins.
That matches what many families see at home: higher food costs, more deal-hunting, and less tolerance for experiments that feel like extra work. A take-and-bake concept asks customers to finish the job in their own oven instead of getting a hot pizza handed over in a box.
MTY Food Group is closing 68 underperforming restaurant locations, citing declining sales and rising costs. Affected by a closure or layoffs?
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Industry research shows that restaurant turnarounds often fail when new owners lack the grit and day-to-day focus of local franchise operators. Franchise chains and independent restaurants fail at similar long-term rates, but acquirer-led “fixes” frequently stumble when costs stay high and traffic softens.
That pattern fits Papa Murphy’s. MTY tried to bring problem stores in-house, likely to standardize operations and improve quality. Without enough loyal traffic and with higher labor and food costs, the math simply did not work, and unit economics collapsed.
What this means for workers, customers, and the future of the brand
The decision to close these stores will cut jobs and shrink local choice, especially in smaller markets where Papa Murphy’s was one of the few affordable family dinner options.
MTY has framed the move as a strategic reset meant to protect the brand’s long-term health, a way to “concentrate our efforts, resources, and support on markets and locations” with better growth and customer engagement.
From a free-market standpoint, this is how a business corrects course: close what does not work, double down where people still show up and spend.
There are still open questions. MTY has not broken out detailed financials for Papa Murphy’s alone in this batch of closures, and some of the $10 million loss and the 68 stores involve other brands.
No internal deep dive into why the franchise-to-corporate conversion failed has been shared, and former franchisees have remained mostly silent in public reports. Still, the big picture is clear enough.
A high-priced acquisition, years of declining sales, and a misfired turnaround left Papa Murphy’s overbuilt for a world where people can tap an app and have cooked pizza show up at the door. The company is now pruning hard and hoping a leaner network can finally stop the bleeding.
Sources:
foxbusiness.com, investing.com, youtube.com, finance.yahoo.com, ground.news, scanx.trade, tradingview.com, newswire.ca, restaurantdive.com, nasdaq.com, chrie.org
