Vancouver, Wash.-based pizza joint Papa Murphy’s is employing a tactical retreat: up to 16 stores will be closing by the end of the year.
Papa Murphy’s lost $5.4 million in the first quarter, with same-store sales dropping by 5 percent. Company-owned stores suffered the most, with same-store sales plummeting by as much as 10 percent over the year for some. Revenue fell $1 million to $32 million.
The brand’s end goal is to re-franchise company-owned stores in a way that sets up new owners for success while shifting focus toward digital ordering and delivery. The 1,500-store chain believes this will boost annual EBITDA by about $1 million.
“We have a clear opportunity to reduce short-term losses while giving new owners a more profitable portfolio of stores from the start,” said interim CEO and board Chairman Jean Birch.
Papa Murphy’s is partnering with online and mobile ordering platform Olo to introduce home delivery. The Olo platform integrates with third-party marketplace and delivery services and will enable Papa Murphy’s to leverage modern delivery service providers such as Uber and DoorDash to better serve its clientele.
Olo launched in New York in 2005 with the idea that no one should have to wait in line for food. Back then, the platform let customers order takeout through text messaging. All they had to do was set up their favorite orders online and pay by text when they wanted to place an order.
Twelve years later, the platform offers digital ordering solutions for multi-location restaurants by syncing with their existing systems and brand. It enables restaurants to tap into on-demand delivery options while maintaining control over the customer experience. Olo now serves more than 40 million guests for takeout and delivery.
“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,” Birch said. “Olo’s digital expertise and ability to integrate and simplify the ordering and delivery processes support both of these key goals.”