Franchise Deep Dive: Papa Murphy’s Franchise Costs, Fees, Profit and Data

With a uniquely low cost of entry, this take-and-bake pizza franchise bills itself as one of the most affordable businesses to own in the booming pizza industry.

NUMBER OF LOCATIONS: 1,231

REPORTED COST TO GET IN: $308,469 to $557,879

REPORTED ROI (Item 19): $806,539 (AUV for 2022)

Company overview

Papa Murphy’s is a take-and-bake pizza franchise that serves up made-to-order, high-quality pizzas at an affordable price. Today, as the fifth largest pizza franchise in the country, Papa Murphy’s competes against brands like Papa John’s, Dominos and Little Caesars.

How Many Papa Murphy’s Locations Are There?

The origins of Papa Murphy’s started in 1984, when Robert Graham opened Murphy’s Pizza, developing a pizza dough that could be baked at 425 degrees in a conventional home oven. Although Graham’s pizza was good, he struggled to run the business efficiently as this was his first time in the fast-food industry.

In 1988, Graham met entrepreneur Terry Collins and sold him a controlling 51% interest in the seven-store Murphy’s Pizza chain. In 1990, Collins acquired the rights to another take-and-bake pizza chain, Papa Aldo’s Pizza, which had the opposite problem of Murphy’s Pizza — strong management and operations but an inferior product. So, five years later, Collins decided to combine the best of both worlds into one franchise called Papa Murphy’s.

Throughout the next decade, Papa Murphy’s continued to expand around the United States. In 2010, the company was sold to Lee Equity Partners of New York. Growth continued and, by 2012, there were 1,350 stores in operation. In 2019, Papa Murphy’s was acquired by Canadian private food conglomerate MTY Food Group for $190 million.

Over the last few years, Papa Murphy’s sales have slumped, and there have been many store closures. Today, Papa Murphy’s includes a little over 1,200 locations in the United States, Canada and United Arab Emirates.

Business model

What Is Papa Murphy’s Business Model?

Unlike many pizza chains that focus on delivery or dine-in, Papa Murphy’s is all about takeout. Guests come into stores to pick up their made-to-order pizza, and then they take it home to bake it. This take-and-bake pizza model requires a small footprint since franchisees don’t need any ovens or dine-in capacity. This not only allows for a lower cost of entry but also reduces labor costs. Additionally, the streamlined business model allows franchise owners to focus on building guest relationships and creating the best product possible.

How Much Can Papa Murphy’s Franchise Owners Make?

Papa Murphy’s 2022 Item 19 is based on the unaudited sales and operating costs reported for the 819 franchised stores that were open and operating for all of the trailing 52 weeks ending on September 27, 2021.

• Highest Net Sales: $2,495,542

• Lowest Net Sales: $146,368

• Average Gross Sales: $806,539

• Median Gross Sales: $727,715

• Average Discounts (on gross sales): 13.5%

• Median Discounts (on gross sales): 13.7%

• Average Net Sales: $697,417

• Median Net Sales: $622,937

• Number of Stores Exceeding Average Net Sales: 333

• Percentage of Stores Exceeding Average Net Sales: 40.7%

• Average Cost of Goods Sold (COGS): 31.2%

• Median COGS: 31.2%

• Average Employee Labor: 18.7%

• Median Employee Labor: 18.4%

• Average Management: 4.8%

• Median Management: 5.2%

• Average Payroll Taxes and Benefits: 3.1%

• Median Payroll Taxes and Benefits: 2.9%

• Average Advertising: 7.3%

• Median Advertising: 7.7%

• Average Rent and Common Area Maintenance (CAM): 5.8%

• Median Rent and CAM: 6.1%

• Average Other Store Expenses: 9.0%

• Median Other Store Expenses: 9.4%

• Average Royalties: 5.0%

• Median Royalties: 5.0%

• Average Store Contribution: 15.1%

• Median Store Contribution: 12.7%

Franchise costs

How Much Does It Cost to Open a Papa Murphy’s?

Papa Murphy’s franchise costs, based on Item 7 of the company’s 2022 Franchise Disclosure Document (FDD):

• Franchise Fee: $25,000

• Lease and Utilities Deposits and Payments: $2,500 to $6,000

• Leasehold Improvements: $91,015 to $201,969

• Signs: $7,500 to $11,500

• Stamped Architectural Drawings: $6,250 to $9,350

• As Built Survey: $2,500 to $3,700

• Opening Package (including Equipment and Supplies), Decor, Cabinets, Point-of-Sale System, and Smallwares: $134,344 to $198,139

• Miscellaneous Development Service Fees: $0 to $1,270

• Inventory: $5,000 to $7,000

• Initial Marketing Fees and Expenses — Six Months: $15,000

• Franchise Premises Rent — Three Months: $3,090 to $10,526

• Materials and Supplies: $500 to $2,000

• Travel and Living Expenses for In-Store Compatibility Check, Operations In-Store Training, Enterprise Solutions Training, and Foundations Class: $3,395 to $12,150

• Employee Training: $500 to $1,500

• Insurance — Three Months: $375 to $1,175

• Bookkeeping/Payroll Service — Three Months: $1,500 to $1,600

• Additional Funds, Working Capital, and Miscellaneous Expenses — Three Months: $10,000 to $50,000

• Total Estimated Papa Murphy’s Franchise Costs: $308,469 to $557,879

What Is the Franchise Fee for Potbelly?

Papa Murphy’s requires a franchise fee of $25,000.

Who is the Leadership of Papa Murphy’s?

• Eric Lefebvre — Chief Executive Officer and Board of Managers

• Rene?e St-Onge — Chief Financial Officer and Board of Managers

• Nik Rupp — Chief Operating Officer and Board of Managers

• Kim McBee — Senior Vice President of Guest Experience and Brand Marketing

• Shauna Walker — Senior Vice President of Franchise Performance and Engagement

• Dan Rudolph — Vice President of Field Operations

• Shemar Pucel — Senior Director of Franchise Sales

• Rhonda McGrew — Director of Franchising

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