Papa Murphy’s to close dozens more locations
MTY Food Group CEO Eric Lefebvre said the pizza category is challenged by a heavy promotional environment and lack of consumer loyalty.
July 13, 2026
Papa Murphy’s U.S. footprint is more than 20% smaller than it was in 2020 and its closures will continue in the near term. During parent company MTY Food Group’s second quarter earnings call last week, CEO Eric Lefebvre said the company will close 68 underperforming corporate-owned stores across its portfolio — some as early as this week and most within the next nine months — a majority of which will be Papa Murphy’s locations.
He said 45 to 50 of those 68 closures will come from the take-and-bake pizza chain, which is struggling amid a tough and “extremely competitive” category.
“We run different promotions and we see that there's very little loyalty in that market and the consumer will go where the pizza is the cheapest at any given time. The promotional activity is super productive, but we need to protect our franchisees and their profit margins,” he said.
Consumers, he added, are still going out to eat, but they’re harder to attract.
“We really need to work for each meal opportunity,” he said. “I don't know if the consumer has gotten a little bit more discerning, but it's definitely a little bit more challenging to get consumers. Gas prices in the U.S. always has an impact. Hopefully that's a short-term pressure and the market is going to go back to normal.”
MTY acquired three clusters of Papa Murphy’s stores two years ago to try and turn around soft sales, but Lefebvre said those efforts have largely been futile.
“We came to the conclusion that these markets are probably not appropriate for Papa Murphy's at this time, and we chose to close a lot of these stores in these locations,” he said.
MTY evaluated the performance, outlook, and economic profile of each of its stores to conclude where to close. The company is continuing to invest in stores where it believes there is a path to improvement. The locations set to close have lost over $10 million in the past year.
Lefebvre said the decision to close dozens of locations is the right “long-term action” for the business, reducing losses and improving the quality of the portfolio while sharpening the focus on units with stronger returns. The estimated cost of the closures and the termination of leases is expected to be between $10 million to $12 million. Chief Financial Officer Renée St-Onge added that the decision will allow the company to “consistently deliver corporate segment margins at the high single-digit level.”
Margins were 9% in the quarter compared to 12% in the same period last year, impacted mostly by inflation. The decline caused the company to scale down its promotional activity on certain products, which further pressured sales. St-Onge said “meaningful opportunities” exist for both topline and margin expansion, however, as the company continues to scale in underpenetrated markets.
Montreal-based MTY opened six locations during Q2 and expects to accelerate that pace in the second half of the year with particular strength at its Cold Stone Creamery and Wetzel’s Pretzels brands. Same-store overall declined 2.2% during the quarter and traffic also remained negative.
Some of those pressures have continued into Q3. Lefebvre said the Canadian market has seen improvement, but the U.S. trends are similar as they were in Q2.
“If we exclude Papa Murphy's from that trend, we're relatively flat in the U.S., but Papa Murphy's in such a competitive environment for pizza is currently suffering a little bit more.
Papa Murphy’s isn’t alone with its challenges. Pizza was the only category that experienced declining sales in 2025, according to Technomic data, with Pizza Hut and Papa Johns closing hundreds of locations between them. If Papa Murphy’s closes 50 restaurants, it will make up nearly 5% of its domestic system, which ended 2025 with 1,014 locations, per Technomic. For MTY, however, the impact of the 68 total locations is less significant, making up about 1% of its total store base.
Franchisees hindered by food costs
Lefebvre said most of MTY’s stores are “extremely profitable,” but there “are always a certain proportion of our stores that are unprofitable.” Franchisees continue to navigate an inflationary environment, though labor is “no longer a significant pressure point” for the company’s brands, he said.
“We’re not seeing major inflation on labor or shortage of labor. Labor is really stabilized now, and I think we're in a better place,” he said. “In general, rent is too expensive but not facing significant inflation because of long-term contracts.”
Food inflation has been a different story, however, especially with proteins like chicken and beef. Lefebvre said the company is trying to help franchisees navigate the environment by offering different menu items with different promotions.
“We had to take pricing in some of our restaurants to alleviate some of the pressure. Food inflation is definitely up there in our list of concerns,” he said. “We need to be careful how we choose to do price. And if we choose to do price on certain items, then we need to provide consumers with a proper entry point that's going to give them a good value product, if they choose to go for the cheaper option or the more value-oriented option, that they have one in each of our concepts.”
MTY Food Group initiated a strategic review in November, including the potential for a full or partial sale. Lefebvre said there are no updates to that process at this time.
Contact Alicia Kelso at [email protected]
Follow her on TikTok: @aliciakelso
About the Author
Alicia Kelso
Executive Editor, Nation's Restaurant News
Alicia Kelso is the executive editor of Nation's Restaurant News. She began covering the restaurant industry in 2010 for QSRweb.com, FastCasual.com, and PizzaMarketplace.com. When her son was born, she left the industry to pursue a role in higher education, but swiftly returned after realizing how much she missed the space. In filling that void, Alicia added a contributor role at Restaurant Dive and a senior contributor role at Forbes.
Her work has appeared in publications around the world, including Forbes Asia, NPR, Bloomberg, The Seattle Times, Crain's Chicago, Good Morning America, and Franchise Asia Magazine.
Alicia holds a degree in journalism from Bowling Green State University, where she competed on the women's swim team. In addition to cheering for the BGSU Falcons, Alicia is a rabid Michigan fan and will talk about college football with anyone willing to engage. She lives in Louisville, Kentucky, with her wife and son.
Follow her on TikTok @aliciakelso
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