A major pizza chain is preparing to close dozens of restaurants once again as its parent company works to eliminate underperforming locations following what executives describe as a “challenging period” for the business.
The restructuring is part of a broader effort to improve the performance of its corporate-owned restaurants, with the first shutdowns expected to begin during the week of July 13 and continue over the next several months.
The move comes as pizza chains across the industry grapple with higher operating costs, shifting consumer spending, and intense competition. In recent months, brands including Pizza Hut and Papa Johns have also announced significant store closures as they reshape their networks.
Now, another well-known pizza chain is joining a growing list of brands reducing their restaurant footprints.
Papa Murphy’s confirms restaurant closures
During MTY Group’s second-quarter fiscal 2026 earnings call, CEO Eric Lefebvre said the company plans to close 68 underperforming corporate-owned restaurants over the next six to nine months.
Up to 50 of those locations are expected to be Papa Murphy’s restaurants, while the remaining closures will affect other MTY Group brands.
Founded in 1979, MTY Group (MTY) is one of North America’s largest restaurant franchisors, operating more than 80 restaurant brands, including Papa Murphy’s, Wetzel’s Pretzels, Cold Stone Creamery, and others, across Canada, the U.S., and international markets.
Some restaurants are scheduled to close permanently during the week of July 13, though Lefebvre said the company is taking a measured approach to minimize disruption for employees, landlords, and suppliers.
“We’ve been slowly but gradually disposing of some stores where it makes sense for us,” said Lefebvre. “It’s not fire sale, but we’re also in the process where we can reduce the corporate store portfolio.”
He added that additional restaurant closures remain possible if other locations continue to underperform.
Why Papa Murphy’s is closing stores
According to Lefebvre, the company evaluated each restaurant individually based on its long-term financial outlook and local market conditions. The locations selected for closure collectively generated more than CAD 10 million in losses.
“Where we saw a path to improve, we chose to continue investing efforts into making our existing assets as productive as they can be,” said Lefebvre. “Where the fundamentals no longer support that path, we made the decision to close stores.”
Although the closures will temporarily shrink MTY Group’s overall restaurant count, executives believe the move will strengthen the business by reducing losses and allowing the company to focus on locations with stronger long-term growth potential.
The company estimates closure and lease termination costs of between CAD 10 million and CAD 12 million. While those expenses will weigh on free cash flow in the short term, MTY Group expects the restructuring to improve profitability going forward.
Executives also said the shutdowns are unlikely to have a meaningful impact on same-store sales because the affected restaurants were performing well below the system average.
Papa Murphy’s confirms plans to close up to 50 restaurants.Shutterstock
Papa Murphy’s has been shrinking for years
The latest closures continue a multiyear downsizing effort for Papa Murphy’s, which has struggled to regain momentum in an increasingly competitive pizza market.
About two years ago, MTY Group repossessed three groups of Papa Murphy’s restaurants that it believed could be turned around. After investing in those locations, the company ultimately concluded that many of the markets were no longer viable and decided to close the stores instead.
As a result, Papa Murphy’s total store count declined from 1,168 restaurants in 2023 to 1,014 in 2025, according to the company’s franchise disclosure document. Most of those reductions involved franchise locations.
The chain ended 2025 with just 49 company-owned restaurants, meaning the latest restructuring will affect the majority of its corporate-operated stores.
The company operated 7,040 locations, with approximately 97% franchised or managed under operator agreements.
Other pizza chains are also reducing their footprints
Papa Murphy’s is far from the only pizza chain trimming its restaurant base.
Pizza Hut: Closed approximately 250 restaurants during the first half of 2026, NRN reported.
Papa Johns: Plans to close up to 300 locations through the end of 2027, Fast Company reported.
The latest closures highlight how even established pizza chains continue to rethink their footprints as operators balance rising costs with softer consumer demand.
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