MTY Food Group Shakes Up Portfolio: Dozens of Papa Murphy’s Locations to Close

In a decisive move to stabilize its financial health and optimize operational efficiency, the Montreal-based MTY Food Group has announced plans to close 68 underperforming restaurant locations over the next six to nine months. This strategic downsizing comes in the wake of a challenging financial quarter characterized by a dip in both sales and overall profits.

The Impact on Papa Murphy’s

While MTY Food Group manages a vast portfolio of over 80 banners, the brunt of these closures will be felt by Papa Murphy’s, the well-known U.S.-based take-and-bake pizza chain. According to CEO Eric Lefebvre, approximately 45 to 50 of the planned closures are Papa Murphy’s locations.

The company noted that the majority of these closures will take place in the United States. For those wondering about the impact in Canada, Lefebvre confirmed that no locations in Quebec will be affected, although a small number of restaurants in other Canadian provinces may close.

The Financial Driving Force

The decision wasn’t made lightly. A comprehensive operational review revealed that the restaurants slated for closure had collectively lost more than $10 million over the past year. The company’s second-quarter financial results paint a stark picture of the current economic climate:

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• Net Income: Dropped to $15.4 million (down from $57.3 million in the previous year).
• Revenue: Decreased to $279.9 million from $304.9 million.
• Same-Store Sales: Declined by 2.1%.

Lefebvre attributed these weaker results to continued pressure on consumer spending and a volatile business environment, reflecting a broader trend seen across the global hospitality industry. You can read more about current economic trends impacting consumer behavior on Bloomberg.

A Long-Term Vision for Growth

Despite the immediate reduction in store count, MTY Food Group views this as a necessary correction. The company expects the cost of ending these leases to be between $10 million and $12 million, but believes the long-term health of the business depends on shedding non-profitable assets.

“This is an important step for MTY… we believe it is the right long-term action for the business,” stated CEO Eric Lefebvre during a recent analyst call.

With over 7,000 locations worldwide across brands like Thai Express and Mr. Sub, MTY Food Group continues to be a powerhouse in the quick-service industry, now focusing its energy on sustainability and profitability over sheer volume.