Dive Brief:
- Papa Murphy’s, a take-and-bake pizza chain with about 1,000 units, has closed a number of underperforming restaurants over the past year as part of an initiative to strengthen the overall system, Eric Lefebvre, CEO and president of parent company MTY Food Group, said during an earnings call Friday.
- Lefebvre didn’t indicate how many closures have occurred, but said they have helped the chain focus on markets and locations where Papa Murphy’s has stronger growth potential and guest engagement, he said. For example, a recent opening in Deer Park, Washington, currently generates sales that are twice the brand's average unit volume, Lefebvre said.
- Papa Murphy’s isn’t the only chain to close underperforming units this quarter, with Salad and Go, Noodles & Company and Starbucks all closing large numbers of units.
Dive Insight:
The brand has faced immense competition within the pizza segment, as competing brands have invested upwards of $30 million to $40 million in marketing over the past few quarters — a level of spending MTY can’t match, Lefebvre said. MTY is working with its franchisees to boost marketing efforts, especially as some franchisees have not put sufficient money into marketing, Lefebvre said. Pizza is very marketing-driven, so franchisees see a dip in sales if marketing efforts wane, he added.
“We're trying to work with them to have the right material to have the right campaigns for them to be, I guess, motivated to deploy some capital and invest in marketing,” he said.
Papa Murphy’s also has seen a decline in digital sales, which account for 40% of the brand’s transactions, Lefebvre said. However, the chain plans to update its rewards program from a surprise-and-delight platform to a “rewards-based” system to attract new guests and boost the frequency of its existing loyal customers, he added. The relaunch will include aggressive incentives that could help generate interest and help guests reconnect with the brand.
Papa Murphy’s is also working on “menu optimization, SKU rationalization and an entirely new lineup of exciting pizzas launching next year, all aimed at driving innovation, simplifying operations and enhancing the guest experience,” Lefebvre said.
Outside of marketing and closures, the brand has been doing relatively well, he said, though he added that there could be more closures in the future. Papa Murphy’s store count declined from 1,239 at the start of 2022 to 1,044 at the end of 2024 for a loss of 195 units, according to the chain’s franchise disclosure document. That decline was most severe in 2024, when the chain lost 83 units.
Going forward, Lefebvre said he doesn't expect future closures to reach “the magnitude we’ve seen in the last two years.”
The company also expects to open more stores from its development pipeline, and its sales team has been doing well with selling more units to operators. The pace of openings could pick up within the next year because of this momentum, Lefebvre said.
