In a move aimed at progression on two of its strategic initiatives, pizza chain Papa Murphy's (FRSH 4.70, -0.06 -1.26%) trades a fraction lower today.
Namely, FRSH today announced the company will incur a one-time after-tax charge of up to $7.4 million related to the aforementioned actions, including one-time non-cash impairment charges after-tax of up to $6.6 million. These actions are expected to benefit annual EBITDA by about $1.9 million and improve annual diluted earnings per share by about $0.09.
Further, FRSH announced plans to accelerate its convenience strategy through a partnership with Olo, the leading provider of online and mobile ordering capabilities. FRSH’s move to Olo’s digital platform will enable online and mobile ordering to be fully integrated with third-party marketplace and delivery services, where available, providing a seamless convenient experience for both customers and franchise-owners. The new platform, which FRSH expects to be operational in the first quarter of 2018, is expected to improve the online and mobile ordering experience, making it easier for FRSH’s customers to find their local store, customize their order, and pay for their meal. Through Olo’s Dispatch delivery network, which leverages delivery service providers such as Uber, Favor, and DeliverLogic, and its Rails marketplace platform, which seamlessly integrates with services such as Postmates, DoorDash, and delivery.com, FRSH’s customers will be able to enjoy their favorite fresh pizzas with the convenience of home delivery.
In all, FRSH estimates the cost efficiencies from a move to Olo’s digital platform will benefit go-forward annual EBITDA by about $0.9 million and improve annual diluted earnings per share by around $0.04. As part of the transition, the company will recognize a one-time non-cash after-tax charge of about $5.1 million related to the impairment of its current online ordering platform.
FRSH also announced plans to close up to sixteen company-owned stores across several markets by the end of the year. The closures are a result of an ongoing strategic review of the company store portfolio as FRSH prepares markets to be refranchised. FRSH estimates that the closures will benefit annual EBITDA by roughly $1.0 million and benefit annual diluted earnings per share by around $0.05. As a result of the closures, FRSH is expected to incur an after-tax charge of up to $2.3 million, including a non-cash after-tax impairment charge of up to $1.5 million related to the current carrying value of the stores to be closed. FRSH expects most closures to take place in Q2, with final closure decisions to be made by the end of Q3.