(Montreal) The franchisor MTY Food Group has managed to stabilize its network of restaurants while the gap between the openings and closings of new establishments narrowed last spring.
The company opened 73 locations during the second quarter ended May 31, compared to 77 closures during the same period. This represents a negative difference of four establishments. “We narrowly missed our goal of growing our store count, excluding acquisitions, but this is our best result in nine years,” MTY President and CEO Eric Lefebvre told a conference call. telephone call on Tuesday with analysts.
Historically, the Montreal company, which owns 85 brands including Valentine, ThaÏŠ Express and Sushi Shop, has managed to grow by acquiring new chains, but its existing activities have stagnated.
The situation has been even more difficult in recent years. The operational environment (pandemic, labor shortage) has led several franchisors to hang up their aprons. In February, MTY reported that the number of closures was three times higher than the number of openings.
“We make an effort to have tough discussions with our franchisees to avoid surprises as much as possible,” says Lefebvre. When a franchisee wants to leave the network, we try to find a solution where the franchisee can sell their assets rather than closing. »
The narrowing of the gap between closings and openings is good news, comments analyst Derek Lessard of TD Securities. “However, network shrinkage has been a weakness of MTY in the past and we need to see consistent network growth before we can say recent numbers are trending.” »
MTY also posted an increase in comparable sales across its network. They grew by 6% in Canada, 4% in the United States and 2% internationally. The company had stopped publishing this indicator during the pandemic.
“The company has made significant progress towards achieving its objective of enhancing its growth by acquisition with organic growth by investing in its brands, supporting its franchisees and improving its operations”, comments its big boss.
Mr. Lefebvre clarified that the increase was mainly attributable to an increase in traffic and not to an increase in menu prices. He also mentioned that economic uncertainty and rising interest rates do not seem to have spoiled consumer appetite.
However, he acknowledges that the situation remains difficult in the food courts of shopping centers and office towers, which represent 15% of the activities. This sector has not experienced as strong a recovery as the restaurant industry in general.
“I would say that, in category A malls, we have regained our pre-pandemic sales, if not more. This is not the case for Category B and C centers and some of them will probably never have a full recovery. »
MTY announced results that exceeded analysts’ expectations with a net profit of 30.4 million, compared to 28.6 million in the same period last year. Diluted earnings per share is $1.24.
Sales, for their part, nearly doubled, from 162.5 million to 305.2 million. The company says the main contributors to the revenue growth were its acquisitions of BBQ Holdings, Wetzel’s Pretzels and Sauce Pizza and Wine.
Prior to the earnings release, analysts had expected earnings per share of 95 cents and revenue of 305.22 million.
MTY stock rose $2.66, or 4.34%, to $64.02 on the Toronto Stock Exchange around noon.