MONTREAL, July 16, 2026, 07:08 EDT
- MTY Food Group Inc. TSE:MTY said it will shut down 45 to 50 Papa Murphy’s stores, in line with the 49 company-run units on its books at the end of 2025.
- MTY plans to close 68 stores, or 29% of its corporate stores. That’s under 1% of its total network worldwide. Exit costs are estimated at C$10 million to C$12 million, about what the business lost over the last year.
MTY Food Group Inc. TSE:MTY plans to shut down 45 to 50 Papa Murphy’s locations, a move that would leave it with almost no direct company-run sites if the year-end store count stays about the same. The cuts signal MTY is stepping back from running Papa Murphy’s outlets itself, not just trimming its store network.
The headline number looks smaller than it is for MTY. The company’s plan to shut 68 stores is only 1% of its 7,040 restaurants worldwide, but it’s about 29% of the 232 corporate-owned locations as of the end of May. Corporate stores run all revenue and costs through MTY’s books, while franchised stores mostly add fees and royalties.
The selected locations posted a loss of over C$10 million in the last 12 months, measured on a four-wall EBITDA basis, which counts store-level profit before corporate costs. MTY is planning for another C$10 million to C$12 million in charges from shutting stores and breaking leases. The upfront impact lands at about a year’s worth of the losses and comes to 31% to 37% of second-quarter free cash flow, if those losses drop out without big leftover overhead.
The numbers swing a lot based on which denominator investors pick:
| Measure | Reported or derived figure | Investor read-through |
|---|---|---|
| MTY global network | 7,040 locations | 68 closures works out to about 1.0% |
| MTY corporate-owned estate | 232 locations | 68 closures is nearly 29.3% of corporate sites |
| Papa Murphy’s company-operated base, November 2025 | 49 locations | That’s where the closures hit hardest for the brand |
| Planned Papa Murphy’s closures | 45–50 | That comes out to 92%–102% of year-end company locations |
| Closure costs versus trailing losses | C$10–12 million versus more than C$10 million | Payback looks about a year |
| Q2 free cash flow after lease payments | C$32.2 million | Charges are 31%–37% of a quarter’s cash |
Percentages are based on what the companies reported. The number of Papa Murphy’s stores could have changed since November. CEO Eric Lefebvre said he was remembering the 45 to 50 range from memory during the call.
MTY posted weaker second quarter numbers, as revenue slid 8.2% to C$279.9 million. Normalized adjusted EBITDA dropped C$9.8 million to C$60.2 million. Corporate-store margin slipped to 5% from 9%. CFO Renée St-Onge said the smaller store base should keep margin in the “high single-digit level” range after the latest closures. GlobeNewswire
Lefebvre said Papa Murphy’s makes up 66% to 74% of the restaurant closures, but not the bulk of losses or exit charges. That points to the other MTY brands, making up roughly 18 to 23 sites, as smaller in count but more costly mistakes. The C$10 million and change in losses shouldn’t be blamed just on the pizza chain.
Papa Murphy’s is shutting down stores after two years trying to turn around three groups of locations it took back from franchisees. While some stores saw gains, management decided many areas just don’t work for the take-and-bake model. Lefebvre said U.S. pizza shoppers have “very little loyalty in that market” and chase prices, so deals can pull in customers but hurt franchise profits. Investing.com
The chain’s total store count slipped 13% to 1,014 in 2025 from 1,168 in 2023. Out of those, 965 are franchised. The upcoming closures hit only about 4.4% to 4.9% of the whole network, but most of MTY’s company-run locations will go. This could push revenue down, but MTY would likely get more from royalties and face less in restaurant operating costs.
MTY said closures start this week, most of the activity will come in its fiscal third quarter, and the company expects the whole process to last six to nine months. There’s no public list of locations closing. Lefebvre said management didn’t want to “rush into any of these decisions” because they need to protect workers, work with landlords and sort out distribution. Delish
The numbers might not add up as planned. Lease-termination fees could end up higher than forecast, some central expenses could stick around even after closures, and MTY won’t see all the cost cuts at once. There’s also a franchise risk: Lefebvre said the company doesn’t have precise profitability data for each franchisee, so it doesn’t know for sure if more underperforming Papa Murphy’s stores are still out there.
Investors are watching corporate-store margin and U.S. same-store sales, excluding Papa Murphy’s, over the next two quarters. Management said same-store sales were about flat in June, and they expect margins could get back to the high single digits. If both pick up as restaurant closures take effect, the C$10 million to C$12 million charge could end up being just a fast fix. If not, MTY’s issues are bigger than just the sites set to close.
