Parent company MTY Group acquired about 50 underperforming locations from franchisees last year and their turnaround is ‘more complicated than anticipated’

MTY Food Group, parent company of Papa Murphy’s and several other brands, reported first quarter results late last week, including a same-store sales decline of 2.5%. System sales were $1.3 billion for the quarter, compared to $1.36 billion in Q1 2025.

Though MTY doesn’t break out individual chain’s sales, take-and-bake pizza chain Papa Murphy’s — the company’s largest concept — continued its struggles.

“Papa Murphy’s is certainly facing headwinds in terms of sales right now,” chief executive officer Eric Lefebvre said during the call Friday before market. “Papa Murphy’s had a reasonable 2024, but then ’25 was complicated, and that’s continuing in 2026.”

MTY acquired about 50 underperforming locations from Papa Murphy’s franchisees last year. During the company’s second quarter 2025 earnings call, Lefebvre said the stores’ turnaround was expected to take between nine and 12 months. On Friday, however, he took a more cautionary tone.

“It’s proving to be more complicated than anticipated. We do see somewhat of a sales lift and some improvement in the way we operate the business, but it’s taking longer than we thought to turn those around. We are suffering losses with these restaurants,” he said. “We’re not giving up. We still believe in these restaurants. The fundamentals that were there in the markets still exist. But it’s not impossible that we might have to make decisions with certain stores if we’re continuing to incur losses, and we see that there might be less hope.”

MTY completed its acquisition of Papa Murphy’s in May 2019 for approximately $190 million. Since 2020, sales have declined by 11.4%, while over 21.5% of the system has closed.

Lefebvre said Papa Murphy’s is deploying customer-facing tech tools, including a relaunch of its loyalty program, that will ideally “create a dent in the trajectory.”

“There’s many goals — you have customer acquisition and then you have your customer win-back — consumers you might have lost or that might have forgotten about you. Then, you have initiatives for existing consumers to improve frequency or basket,” he said. “We’re also revising the way we do marketing and which promotions we want to push a little bit harder for Papa Murphy’s. We have the Detroit pizza out now. It seems to be creating some excitement around the brand and, hopefully, that’s going to result in more repeat business going forward.”

During the company’s fourth quarter call in February, Lefebvre said Papa Murphy’s had showed signs of stabilization, but the overall environment remained tough.

“It’s hard to know exactly when that’s going to happen because we have good periods and then sometimes there’s periods that are a little bit more challenging that follow,” he said. “We are in a volatile environment where we’re trying a lot of things and improve sales on a sustainable basis. But it remains challenging. Pizza is super competitive and a lot of our competitors have very aggressive promotions that are hard for us to match.”

In addition to acquiring underperforming franchised locations, MTY also closed some stores last year and shifted its capital and focus back to local marketing.

In 2025, the take-and-bake chain’s systemwide sales fell 3% year-over-year to $706.5 million, while its unit count fell by 2.9% to end the year with 1,014 locations, according to new data from Technomic Ignite. That is nearly 20% lower sales and 500 fewer units than just 10 years ago.

Notably, Papa Murphy’s isn’t the only pizza chain navigating a tough environment. In 2024, the pizza segment overall struggled significantly, with Technomic’s Top 500 Restaurants data showing 61% of pizza chains experienced declining sales.

Contact Alicia Kelso at Alicia.Kelso@informa.com

Follow her on TikTok: @aliciakelso

Source https://www.nrn.com/restaurant-finance/papa-murphy-s-challenges-continued-in-q1