Papa Murphy’s, one of the most popular pizza chains in North America, is preparing to close dozens of restaurants as part of a major restructuring plan aimed at improving its financial performance. The move comes after its parent company, MTY Group, said several company-owned locations have struggled to remain profitable despite efforts to turn them around, reported The Street.
The restaurant closures are expected to begin during the week of July 13 and continue over the next six to nine months. According to MTY Group, up to 50 Papa Murphy’s restaurants will shut down, while the remaining closures will involve other brands owned by the company, reported The Street.
The decision comes at a time when many restaurant chains face higher operating costs, cautious consumer spending and fierce competition. Several major pizza brands have already announced similar plans to reduce the number of outlets they operate.
Why is Papa Murphy’s closing restaurants?
MTY Group chief executive officer Eric Lefebvre said the company carefully reviewed each restaurant before deciding whether to keep it open or close it, as reported by The Street. The company looked at the long-term financial outlook of every location and whether it still had the potential to become profitable.
“We’ve been slowly but gradually disposing of some stores where it makes sense for us,” Lefebvre said during the company’s second-quarter fiscal 2026 earnings call. “It’s not fire sale, but we’re also in the process where we can reduce the corporate store portfolio,” he added, as reported by The Street.
According to the company, the restaurants selected for closure generated combined losses of more than CAD 10 million. Executives said continuing to invest in those locations no longer made financial sense.
“Where we saw a path to improve, we chose to continue investing efforts into making our existing assets as productive as they can be,” Lefebvre said. “Where the fundamentals no longer support that path, we made the decision to close stores,” he added.
The company also said more restaurant closures could follow if additional locations continue to perform below expectations.
MTY Group expects to spend between CAD 10 million and CAD 12 million on closure and lease termination costs, reported The Street. Although these expenses will affect short-term cash flow, the company believes the restructuring will improve profitability over the long term.
Executives also said the closures are unlikely to significantly affect same-store sales because the restaurants being shut down have performed well below the rest of the system.
What challenges has Papa Murphy’s faced?
Papa Murphy’s has struggled for several years as competition in the pizza industry has intensified. Rising food costs, labour expenses and softer consumer demand have made it harder for many restaurant operators to maintain profits.
About two years ago, MTY Group took back control of several Papa Murphy’s restaurants that it believed could recover with additional investment. After reviewing their performance, however, the company concluded that many of those markets no longer offered a sustainable future, reported The Street.
The chain’s footprint has already shrunk in recent years. According to the company’s franchise disclosure document, Papa Murphy’s operated 1,168 restaurants in 2023. That number dropped to 1,014 by 2025, with most of the closures involving franchised locations, reported The Street.
By the end of 2025, Papa Murphy’s had only 49 company-owned restaurants. The latest restructuring means a large share of those corporate-operated outlets will now close.
The decision comes as MTY Group also reported weaker financial results for the second quarter of fiscal 2026. Revenue fell compared with the same period last year, while same-store sales, system-wide sales and franchise revenue also declined.
Papa Murphy’s is not the only pizza chain reducing its footprint. Pizza Hut closed around 250 restaurants during the first half of 2026, while Papa Johns has announced plans to shut up to 300 locations by the end of 2027, reported The Street.