Papa Murphy’s Challenges Continued in Q1

Why It Matters

Papa Murphy’s struggles highlight the broader challenges facing the U.S. pizza segment, where declining traffic and aggressive competitor promotions pressure margins and franchise viability.

Key Takeaways

• Same‑store sales down 2.5% in Q1, system sales $1.3 B
• Sales down 11.4% since 2020; 21.5% of stores closed
• MTY acquired 50 underperforming locations in 2024
• Loyalty program relaunch and Detroit‑style pizza aim to boost traffic
• Turnaround timeline extended to 12‑month horizon, risk of more closures

Pulse Analysis

Papa Murphy’s ongoing decline underscores how even established take‑and‑bake concepts are vulnerable in a saturated pizza market. After MTY’s 2019 $190 million acquisition, the brand has struggled to regain momentum, with system‑wide sales falling 11.4% since the pandemic and a 21.5% reduction in its footprint. The recent Q1 report shows a modest 2.5% same‑store sales dip, but the broader trend remains negative, reflecting consumers’ shift toward delivery‑focused competitors and deep‑discount promotions that Papa Murphy’s finds hard to match.

In response, MTY is deploying a multi‑pronged revitalization strategy. The company acquired roughly 50 underperforming franchised locations last year, betting on operational improvements and localized marketing. Simultaneously, it relaunched a digital loyalty platform and introduced new menu items such as Detroit‑style pizza to re‑engage lapsed customers and increase basket size. While early signs suggest incremental sales lifts, executives caution that the turnaround is taking longer than the projected nine‑to‑12‑month window, and continued losses could trigger additional closures.

The challenges facing Papa Murphy’s mirror a broader industry slowdown. Technomic data shows 61% of U.S. pizza chains experienced sales declines in 2024, driven by intense price competition and evolving consumer preferences toward fast‑delivery and specialty offerings. For investors and franchisees, the key takeaway is that operational agility, technology‑enabled loyalty, and differentiated menu innovations are becoming essential for survival. Papa Murphy’s future will hinge on its ability to convert these initiatives into sustainable traffic growth before further store rationalizations become inevitable.