MTY Food Group, a Canadian restaurant franchisor and operator, announced plans to close between 45 and 50 Papa Murphy's locations due to a challenging competitive environment and underperformance in certain markets [1]. Papa Murphy's, known for its take-and-bake pizza model, has struggled despite nearly two years of turnaround efforts in some regions. CEO Eric Lefebvre stated that the company repossessed three clusters of stores in an attempt to improve performance, but ultimately determined that these markets were not suitable for the brand at this time, leading to the decision to close a significant number of stores [1].
Across all MTY brands, a total of 68 underperforming corporate-owned stores will be closed, which collectively lost over $10 million in the past 12 months, with most of these stores experiencing deteriorating performance [1]. Lefebvre emphasized that while Papa Murphy's represents a large portion of the closures, it does not account for the majority of the losses or costs associated with the closures. Other locations within the MTY portfolio are expected to incur higher costs and yield greater benefits from closure [1].
The closure process is expected to take between six and nine months, with the first series of stores scheduled to close next week. Lefebvre noted that the company will proceed systematically to avoid causing further damage, ensuring proper negotiations with landlords and addressing distribution issues, while also protecting store staff [1].
Lefebvre also indicated the possibility of additional closures or sales where appropriate, clarifying that the company is not conducting a fire sale but is open to reducing its corporate store portfolio as needed [1]. Despite the announcement, MTY Food Group's stock (MTYFF) closed up 1.29% at $23.51, reflecting a modest positive market reaction [1].
CONCLUSION
MTY Food Group's decision to close up to 50 Papa Murphy's stores highlights ongoing challenges in the competitive pizza market and the company's focus on long-term profitability. While the closures represent a significant restructuring, the market response was relatively muted, with shares posting a slight gain. The company remains open to further portfolio adjustments as it seeks to improve overall performance.