Operational Shift at MTY Group
MTY Group, one of North America’s largest restaurant franchisors, has announced plans to shutter 68 underperforming corporate-owned restaurants over the next six to nine months. The restructuring effort, aimed at eliminating locations that weigh on the company’s bottom line, will see up to 50 of those closures come from the Papa Murphy’s pizza chain.
During the company’s second-quarter fiscal 2026 earnings call, CEO Eric Lefebvre characterized the move as a measured strategy to improve the firm’s overall health.
“We’ve been slowly but gradually disposing of some stores where it makes sense for us,” said Lefebvre. “It’s not a fire sale, but we’re also in the process where we can reduce the corporate store portfolio.”
Financial Rationale and Performance Trends
The decision to close these specific sites follows an exhaustive internal review based on long-term financial viability and local market conditions. According to the company, the affected locations were collectively responsible for more than CAD 10 million in losses. MTY Group estimates that the process of closing these stores and terminating leases will incur costs between CAD 10 million and CAD 12 million. While these expenses are expected to impact free cash flow in the short term, management anticipates that shedding these underperforming assets will enhance profitability in the long run.
The company reported a challenging quarter, with revenue declining 8.2% year-over-year. Segment data indicated that franchise revenue dropped 4% during the same period.
A Shrinking Footprint in a Competitive Market
The current downsizing represents a continuation of a multi-year effort to streamline the Papa Murphy’s brand. Data from franchise disclosure documents show the chain’s total store count fell from 1,168 in 2023 to 1,014 by 2025. With only 49 company-owned locations remaining at the end of 2025, the upcoming closures will significantly impact the brand’s corporate-operated network.
MTY Group’s decision reflects broader pressures currently facing the quick-service restaurant industry. Operators across the sector are contending with elevated operating costs, evolving consumer spending habits, and high levels of competition. Other major players have recently initiated similar restructuring plans:
- Pizza Hut: Reported closures of approximately 250 restaurants during the first half of 2026.
- Papa Johns: Announced plans to close up to 300 locations by the end of 2027.
Despite the reduction in the number of physical storefronts, MTY Group executives maintain that the closures are unlikely to have a meaningful impact on same-store sales, noting that the shuttered locations were already performing well below the system average.
