Report: Papa Murphy's explores IPO

The parent to the Papa Murphy’s Take N’ Bake Pizza chain may be preparing for an initial public offering, according to a Reuters report Monday.

The Vancouver, Wash.-based chain, known for its freshly prepared pizzas that customers take home to bake, is close to selecting banks for the possible IPO that would come later this year, the report said, citing unnamed sources.

The 1,350-unit mostly franchised chain is owned by New York-based private-equity firm Lee Equity Partners, which acquired parent Papa Murphy’s International in 2010 from Charlesbank Capital Partners.

Both Papa Murphy’s and Lee Equity Partners declined to return calls by press time.

This is not the first time Papa Murphy’s name has popped up on lists of possible IPO candidates, in part because the chain has grown steadily in recent years.

In this year’s Top 100 report from Nation’s Restaurant News, Papa Murphy’s ranked fifth among pizza chains nationally with U.S. systemwide sales of  $733.8 million in fiscal 2012, an increase of more than 5 percent compared with the prior year. That sale-growth pace slowed slightly from the prior year’s increase of more than 7 percent year-over-year.

In fiscal 2012 the chain added 46 domestic units at a growth rate of close to 4 percent, and the estimated sales per unit among U.S. locations was $561,900, an increase of close to 2 percent over the prior year.

In an interview with NRN earlier this year, Papa Murphy’s chief executive Ken Calwell said the chain saw its highest two-year sales growth ever in 2011 and 2012, but that increased volume challenged efforts to maintain consistency.

The chain has been working to broaden its audience by introducing new premium pizzas and higher-quality ingredients while maintaining a value-focused positioning.

Officials have long argued that, because the chain offers no dine-in service and restaurants don’t even have ovens, Papa Murphy’s can focus on ingredients and the build-your-own-pizza customization.

Like many U.S.-based restaurant chains, Papa Murphy’s is also pushing growth overseas. Last year the company announced a franchise agreement that would bring 100 units to the Middle East.

Some observers have predicted restaurant chain IPOs would pick up this year after the successful offering by Denver-based Noodles & Company in June. After launching the IPO at $18 per share, the fast-casual pasta chain’s stock price more than doubled in the first year of trading, and it has remained over $40 per share since.

Contact Lisa Jennings at [email protected].
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