Pizza chain to close up to 50 locations as sales slump

A Canadian restaurant franchisor and operator is planning to close between 45 and 50 Papa Murphy’s stores amid a tough competitive environment for the pizza chain.

Papa Murphy’s is known for its take-and-bake pizzas that customers can pick up at the store after placing a walk-in, call-in or online order and cook at home. The brand is owned by MTY Food Group, which operates some locations and franchises others.

 MTY Food Group CEO Eric Lefebvre said on an earnings call that “Papa Murphy’s, in such a competitive environment for pizza, is currently suffering a little bit more.”

He said that the company repossessed three clusters of stores that it believed it could put on better footing, but that 45 to 50 Papa Murphy’s locations will be closed after the move didn’t deliver the desired results.

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“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,” Lefebvre explained.

Across MTY’s brands, the company is closing 68 underperforming corporate-owned stores that collectively lost over $10 million over the last 12 months with their performance “for the most part deteriorating.”

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Lefebvre called the closures an “important step” that will be the “right long-term action for the business” despite the smaller store count in the near term.

He said that while there is a larger weight of Papa Murphy’s restaurants in the closures across the MTY portfolio, they “don’t account for the majority of the losses or of the costs of the stores we’re going to close. There are a certain number of other locations that will cost more and that will also draw bigger benefits.”

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Lefebvre said the process of closing the locations will take “between six and nine months to complete, so we’re going to update the markets on where we’re at.”

“We have a first series of stores that are scheduled to close next week. And then we’re going to go systematically, and we don’t want to rush into any of these decisions and cause further damage.”

“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,” he added.

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Lefebvre indicated there might be additional store closures or sales where it makes sense for the company, saying that “it’s not a fire sale, but we’re also in a process where we can reduce the corporate store portfolio.”

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