Papa Murphy’s is closing up to 50 locations after a costly turnaround bet by its parent company collapsed under the weight of $10 million in annual losses and falling sales.
Story Snapshot
- MTY Food Group plans to shut 68 underperforming corporate-owned restaurants over the next six to nine months, with up to 50 of them being Papa Murphy’s locations.
- The 68 stores lost more than $10 million combined in the past year, prompting MTY to spend $10 to $12 million upfront just to close them and end the bleeding.
- MTY bought Papa Murphy’s for roughly $190 million and converted dozens of franchise locations into corporate-owned locations as a turnaround strategy — a move that clearly did not work.
- Same-store sales dropped 2.1% across both the U.S. and Canada, and corporate segment profit was cut nearly in half, falling from $11.3 million to $5.7 million.
A $190 Million Bet That Did Not Pay Off
MTY Food Group bought Papa Murphy’s for roughly $190 million with a clear goal: fix a struggling brand and make it profitable again. Part of that plan involved taking franchise-owned stores and converting them to corporate ownership.
The idea was that direct control would allow MTY to cut costs, improve operations, and turn the numbers around. Instead, those converted stores became the biggest problem on the balance sheet.
Papa Murphy’s to close 50 restaurants over declining sales https://t.co/VxO3U513jo
— KFOR (@kfor) July 14, 2026
CEO Eric Lefebvre said plainly on the company’s second-quarter fiscal 2026 earnings call that Papa Murphy’s has been “struggling more than our other brands as of recent.”
That is a notable admission from a leader trying to reassure investors. The 45 to 50 Papa Murphy’s locations slated for closure represent the clearest evidence yet that the franchise-to-corporate conversion strategy failed to deliver.
The Numbers Tell a Brutal Story
The 68 underperforming stores MTY plans to close lost more than $10 million over the past 12 months. Corporate revenues across the segment dropped 15% to $111.7 million, and segment profit fell from $11.3 million to just $5.7 million.
To stop the losses, MTY will spend $10 to $12 million in upfront costs to terminate leases and shut the doors. That is a painful but calculated exit — paying now to stop a slow financial drain that shows no sign of reversing.
Same-store sales fell 2.1% across both U.S. and Canadian markets. That kind of broad decline points to more than just a few bad locations. It suggests the take-and-bake pizza model — where customers pick up raw, refrigerated pizzas to cook at home — is losing ground with today’s consumer.
Delivery apps, frozen grocery options, and fast-casual pizza chains have all crowded into the space Papa Murphy’s once dominated in suburban strip malls.
Papa Murphy’s Has Been Shrinking for Years
This round of closures is not an isolated event. Since early 2023, Papa Murphy’s has closed roughly 120 stores, a sharp reversal for a brand that was once a fixture in neighborhoods across the country. Most of those earlier closures were franchise locations, not corporate ones.
The fact that the corporate-owned stores — the ones MTY controlled directly — are now the ones failing is a significant detail. It suggests the problem runs deeper than franchisee management.
MTY Food Group is closing 68 underperforming restaurant locations, citing declining sales and rising costs. Affected by a closure or layoffs?
(604) 475-0041 | [email protected]#EmploymentLaw #Layoffs #JobLoss #WorkplaceRights #LabourRightsLawhttps://t.co/jSB2DrKWK5— Labour Rights Law (@LabourRightsLaw) July 13, 2026
Restaurant turnarounds are notoriously hard to pull off. Research on franchise chain performance shows cumulative failure rates approaching 57% over three years, even under experienced operators.
Converting franchise stores to corporate ownership adds another layer of risk — corporate teams rarely match the hustle and local knowledge of an owner-operator who has personal money on the line. MTY’s experience with Papa Murphy’s fits that pattern almost exactly.
What Comes Next for the Brand
MTY has not signaled it plans to sell or shut down Papa Murphy’s entirely. The closures are framed as a cleanup — cutting the worst performers to stabilize what remains.
The company expects the process to take six to nine months. Whether the surviving locations can grow from a leaner base is the real question. Papa Murphy’s still operates hundreds of franchise locations, and those franchisee-run stores are not part of this wave of closures.
MTY’s overall earnings missed Wall Street forecasts in the second quarter of fiscal 2026, reporting $0.97 per share against an expected $1.11. The stock slipped 0.66% on the news. Investors are watching to see whether cutting these 68 stores actually improves margins or simply reveals more problems beneath the surface.
For now, MTY is betting that a smaller, tighter Papa Murphy’s is better than a bigger, money-losing one. Given what the last few years have shown, that bet is hard to argue with.
Sources:
foxbusiness.com, investing.com, youtube.com, scanx.trade, tradingview.com
