MTY Food Group to Close 45-50 Papa Murphy’s Stores by Year End

MTY Food Group announced it will close 45 to 50 Papa Murphy’s locations over the next six to nine months as part of a broader restructuring. The Canadian franchisor is eliminating 68 underperforming corporate-owned stores across all its brands that collectively lost over $10 million in the past 12 months. CEO Eric Lefebvre said the take-and-bake pizza chain faces intense competition and declining consumer loyalty.

Why Papa Murphy’s is struggling

Papa Murphy’s operates a take-and-bake model where customers pick up pizzas and cook them at home. The chain faces intense competition in the pizza market and lacks consumer loyalty, forcing it to rely on heavy promotions to drive sales. CEO Eric Lefebvre stated on an earnings call that “Papa Murphy’s, in such a competitive environment for pizza, is currently suffering a little bit more.”

MTY’s broader store closure strategy

MTY Food Group operates 7,040 locations across 80 restaurant brands including Thai Express, Manchu Wok, and Bâton Rouge. Of the 68 corporate stores being closed, 50 are Papa Murphy’s locations and 18 are other MTY brands. The closures will span six to nine months and are expected to reduce losses and improve the quality of the corporate store portfolio. The 68 locations collectively lost more than $10 million in the last year, with performance deteriorating for the most part.

Failed turnaround efforts

MTY repossessed three clusters of Papa Murphy’s stores nearly two years ago, believing it could improve their performance. After nearly two years of efforts and some successful turnarounds in those markets, the company concluded those markets are not appropriate for Papa Murphy’s. The company chose to close many stores in these locations after the turnaround strategy did not deliver the desired results.

What this means for investors

Meyka rates MTY.TO a B+ with a buy recommendation, but the stock has fallen 17.9% over the past month and 16.3% year-to-date. The company’s debt-to-equity ratio stands at 1.24, indicating elevated leverage. While the closures reduce near-term store count, management views the restructuring as necessary for long-term shareholder value. Additional closures remain possible if other MTY restaurants continue to underperform.

Final Thoughts

MTY Food Group’s decision to close 45-50 Papa Murphy’s stores reflects structural challenges in the pizza market. With Meyka grading the stock B+ but the share price down 17.9% in one month, investors should monitor whether the restructuring improves profitability.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.