Papa Murphy’s Holdings Inc. plans to close as many as 16 company-owned restaurants across several markets by the end of the year, the operator said on Monday.
The closures follow a strategic review of the take-and-bake pizza chain’s company-owned restaurant portfolio, as it seeks to franchise more locations.
Papa Murphy’s is closing restaurants to reduce losses and ensure that it sells only profitable locations to franchisees. The company operated 168 of its 1,566 units, as of April 3. The closures represent nearly 10 percent of company operations.
“We have a clear opportunity to reduce short-term losses while giving new owners a more profitable portfolio of stores from the start,” Papa Murphy’s interim CEO Jean Birch said in a statement.
The Vancouver, Wash.-based operator, which is struggling to recover from steep sales declines and financial losses, also announced a deal with the online ordering company Olo to improve mobile and online ordering capabilities.
Papa Murphy’s said its move to Olo’s digital platform will enable online and mobile ordering to be fully integrated with third-party delivery services and other online marketplaces.
“We continue to believe convenience is a big opportunity for us, and we are confident that Olo is the right partner as we upgrade our digital platform,” Birch said. “Two of our key near-term strategies include improving customer convenience and supporting our franchise owners with cost-effective tools to help them run better operations. Olo’s digital expertise and ability to integrate and simplify the ordering and delivery processes support both of these goals.”
Papa Murphy’s expects the new platform to be operational in the first quarter of 2018. It expects the platform to improve online and mobile ordering, a major business strategy, particularly in the pizza segment, where chains like Domino’s and Papa John’s have thrived.
Papa Murphy’s also has its eye on delivery. The company recently started delivery in the Portland, Ore., and Seattle areas through Amazon Restaurants. Birch has said it is a key element in the company’s future.
The costs associated with the move to Olo and the restaurant closures would result in a one-time charge of $7.4 million and impairment charges of as much as $6.6 million, Papa Murphy’s said.
The closures and online ordering are expected to improve earnings before interest, taxes, depreciation and amortization, or EBITDA, by $1.9 million.
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