Pizza seems like the perfect food for challenging economic times.
It’s cheap compared to most lunch and dinner options, and it both travels well and works great as leftovers. But the overall pizza business has struggled.
“The headlines are not kind to pizza right now. Pizzerias have fallen from Americans’ favorite restaurant category to sixth place, trailing coffee shops and Mexican restaurants. Restaurant counts have been declining since 2019,” according to Nation’s Restaurant News (NRN).
It’s not one thing hurting the industry. Inflation has led to customers ordering less often, and third-party delivery services have cut into margin, while taking valuable data that used to belong to the pizza chains.
“The result is visible in the numbers. Consumers are ordering smaller pizzas with fewer toppings, franchise owners are watching margins compress from both ends, and structural shifts like the rise of GLP-1 medications are quietly pulling portion sizes and order frequency down further,” NRN added.
That has forced a number of national pizza chains, including Papa John’s and Pizza Hut, to close hundreds of restaurants. Now, another national pizza chain, Papa Murphy’s, has decided to close 68 restaurants.
Papa Murphy’s closing restaurants
Papa Murphy’s uses a different business model than traditional pizza chains. Instead of delivering hot, fresh pizza, the chain sells take-and-bake pizzas that customers have to cook at home.
The company shared an explainer of its business model on its website.
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“As the franchisor of the largest Take ‘n’ Bake pizza brand, we aim to provide our guests with unparalleled service, quality, and innovation so they can create the best at-home meal experience. We also believe that pineapple belongs on pizza. In fact, we believe whatever you want on your pizza belongs on your pizza,” the chain shared.
It’s a challenging model, since customers still have to cook the pizza once they take it home, but that has not stopped Papa Murphy’s from growing to more than 1,000 locations across 34 states, according to the company’s store locator page.
Now, however, the chain has decided to shrink its portfolio.
“As part of our ongoing efforts to improve the quality and profitability of the business, we recently completed a detailed review of our corporate-owned store portfolio. Following that review, we’ve made the decision to close 68 underperforming corporate-owned stores,” CEO Eric Lefebvre shared during the company’s second-quarter earnings call.
Some of the locations are scheduled to close as early as next week, while the entire shutdown plan will take between six and nine months to complete.
“This was a store-by-store process where we evaluated the performance outlook and economic profile of each location. Where we saw a path to improvement, we chose to continue investing efforts into making our existing assets as productive as they can be. Where the fundamentals no longer supported that path, we made the decision to close the store, he added.
The impacted stores lost over $10 million in the past 12 months, and Lefebvre said their “performance was, for the most part, deteriorating.”
Papa Murphy’s is not alone
Pizza chains face a number of challenges that have impacted profitability.
“Labor costs average 23-28% of sales across the industry, and the average hourly wage rose 3.86% in 2025, with no indication of stabilizing. Ingredient costs are up broadly, with tariffs adding unpredictability to supply chains that operators were already managing on thin margins,” according to NRN.
The growth of third-party delivery has posed challenges as well.
“With 64% of customers now preferring to place orders digitally, operators who lack a first-party ordering channel are handing that relationship to a third party along with the margin and the data equity that comes with it,” NRN added.
That has led to major chains struggling. Papa John’s, for example, has seen sales drop.
“North America comparable sales decreased 6.4% from a year ago as comparable sales from Domestic Company-owned restaurants were down 5.2% and North America franchised restaurants were down 6.7%,” according to the company’s first-quarter earnings report.
The chain plans to close around 300 locations.
“We are making progress on our previously announced efforts to address locations that are failing to meet brand standards, lack a clear path to sustainable improvement or represent an opportunity for strong sales transfer to nearby restaurants,” CFO Ravi Thanawala said during the company’s first-quarter earnings call.
Pizza Hut, which was just sold by Yum Brands, according to CNBC, has also been closing locations.
“In the first half, in the U.S., we expect approximately 250 targeted closures of underperforming units tied to the Hut Forward program, which will result in a decline in global Pizza Hut units in the first half,” Yum Brands CFO Ranjith Roy said during the chain’s fourth-quarter earnings call.
Domino’s has been the pizza leader
Domino’s posted a modest 0.1% same-store sales increase in the second quarter, but CEO Russell Weiner thinks the numbers are better than they look.
“In the second quarter, Domino’s drove meaningful order count growth,” he said in the Q2 earnings release.
That, he noted, is a more important sign than growing the bottom-line sales number.
“I believe order growth is the most important driver of long-term success in our business. In a quarter where the broader U.S. QSR industry continued to face pressure on consumer demand, Domino’s generated order count growth across both our delivery and carryout businesses, bringing millions of new customers to our brand,” he added.
Domino’s has been winning because it has focused on value over everything else, RTMNexus CEO Dominick Miserandino told TheStreet.
“Fast-food pizza used to be the ultimate, cheap Friday night family luxury. When a delivery order for a family of four at a standard chain starts pushing past forty or fifty dollars, it completely breaks the value,” he said.
Domino’s, he added, has long accepted that its business revolves around selling acceptable pizza cheaply. That niche gives the company a clear identity in the struggling pizza space.
BTIG analyst Peter Saleh sees Domino’s as the clear category winner.
“We think Domino’s is executing its domestic strategy brilliantly, gaining market share and driving traffic with all income groups, while the broader industry is struggling,” Saleh told Yahoo Finance.
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