A well-known pizza chain is set to close multiple locations as part of a restructuring effort to improve performance. The parent company of the chain is taking action to eliminate underperforming restaurants following a challenging period for the business.
The closures are expected to begin in July and continue over the next few months, as the company aims to enhance the performance of its corporate-owned restaurants. This decision comes amidst higher operating costs, changing consumer spending habits, and fierce competition in the pizza industry. Other popular pizza brands like Pizza Hut and Papa Johns have also announced significant store closures in recent months as they reshape their networks.
During a recent earnings call, the CEO of MTY Group, the parent company of the pizza chain, revealed plans to close 68 underperforming corporate-owned restaurants in the coming months. Approximately 50 of these closures will affect Papa Murphy’s locations, with the rest impacting other brands under the MTY Group umbrella.
The closures are part of a strategic move to strengthen the business by reducing losses and focusing on locations with greater long-term growth potential. Despite the short-term impact on free cash flow due to closure and lease termination costs, the company expects improved profitability in the future.
The decision to close specific restaurants was based on individual evaluations of their financial outlook and local market conditions. Locations that collectively generated over CAD 10 million in losses were selected for closure, while efforts will continue to enhance the productivity of existing assets.
Papa Murphy’s has been downsizing for years, with the latest closures adding to a trend of shrinking store counts. The chain has struggled to regain momentum in a competitive market, leading to a reduction in the number of company-owned and franchise locations.
Other pizza chains are also undergoing similar restructuring efforts, with Pizza Hut closing around 250 restaurants in the first half of the year and Papa Johns planning to shut down up to 300 locations by the end of 2027. These closures reflect a broader trend in the industry as operators adjust to rising costs and evolving consumer preferences.
In conclusion, the pizza chain closures highlight the ongoing challenges faced by established brands in the industry. By making strategic decisions to streamline operations and focus on profitable locations, companies aim to position themselves for long-term success in a competitive market.
