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Papa Murphy’s revenue up 33%

Vancouver-based pizza chain's store sales rise 4.5%

By Gordon Oliver, Columbian Business Editor
Published: August 10, 2015, 5:00pm

Papa Murphy’s, the Vancouver-based take-and-bake pizza chain, reported a 33 percent increase in revenue, to $29.1 million, in its fiscal second quarter. Comparable store sales rose 4.5 percent from one year ago.

The company reported a net loss of $1.4 million stemming from the write-down of its interest in the California firm Project Pie and other one-time costs. Excluding the one-time charges, net income was $1.6 million. Income in last year’s second quarter was $1.1 million.

Papa Murphy’s opened 20 stores in the quarter ending June 29, including 16 in the United States. Six of the new stores were company owned. Its outlook is for 110 to 115 new domestic stores this year, and the company said it now expects 15 to 20 of those stores to be company owned, up from its previous estimate of 10 to 15.

At quarter’s end, Papa Murphy’s said it operated 1,485 stores, including 1,367 franchise-owned stores and 118 company-owned outlets. Ken Calwell, Papa Murphy’s CEO, said he sees the potential in the long term to at least triple the number of pizza outlets.

“We remain excited about the tremendous opportunities ahead,” Calwell said in a conference call with investors. “Our brand is resonating with an expanding customer base.”

Calwell said the company’s immediate emphasis is to fully implement its digital strategy, which includes the continued installation of point-of-sale technology that makes it easier to track consumer preferences, as well as expanding online ordering and digital marketing. Limited results so far show that online orders are 25 to 30 percent higher than those made in the store, he said. A new mobile app should be ready for use this year, and the full digital strategy should be in place by mid-2016, he said.

Papa Murphy’s is also expanding its menu offerings and working on improving customer service, Calwell said. One reason it is expanding the number of company-owned stores, both by new openings and the purchase of previously franchise-owned stores, is so that it can lead by example in terms of reducing customer wait times, improving efficiency and increasing sales.

“We believe we have started to build significant trust and significant leadership with franchise owners,” he said. “We have done all we can do teach and train, but we also want to show examples.”

Calwell said he expects the company’s growth rate to slow to about 3 percent by year’s end, in part because last year’s fourth quarter was so strong that it raises the bar for sales growth. But the implementation of the digital improvements will set the stage for a strong showing in 2016, he said.

Papa Murphy’s stock closed Monday at $19.04 per share, down nearly 5 percent. In the past 52 weeks prices have ranged from $8.35 to $22.72 per share.

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Columbian Business Editor