“People have more choice than ever, they’re looking for healthier options, and food prices continue to rise,” Magana said.
If You’re a Baby Boomer You Probably Love Papa Murphy’s
“The cost of cheese, dairy, dough are all rising, and companies like Papa Murphy’s have not been able to raise prices to offset those cost increases, and that puts pressure on profits and margins.”
Following the announcement of the third-quarter 2018 results, equity analyst Andy Barish of Jefferies posted an evaluation in which he maintained a prior rating of “hold” for the company’s stock, with a target price of $6.
He noted that Papa Murphy’s sales, although still down, are starting to show signs of improvement, and online ordering is on the rise as the company continues to increase its digital presence and roll out home-delivery options.
“While these results are encouraging, we remain cautious on speed of franchisee adoption and significant competitive threats on both value and digital fronts from large peers,” Barish wrote in his report.
“Brand and digital work are improvements, but competitive risk on both those fronts remains high in pizza category.”
The sale discussion caps off a tumultuous few years that have seen Papa Murphy’s struggling to stay competitive following its initial public offering in 2014.
At the time, Papa Murphy’s had 1,349 franchised stores and 69 company stores, and the company said in its IPO filing that it saw potential for up to 4,500 stores in the United States.