Customers at Thai Express, a quick service restaurant that is part of MTY Food Group Inc., at a mall in Montreal.Christinne Muschi/The Canadian Press
The chief executive of MTY Food Group Inc. MTY-T says the company’s brands are walking a fine line between over-discounting menu items and offering deals to value-hunting consumers.
“Consumers right now are feeling the pinch, especially the lower-income consumers,” CEO Eric Lefebvre told analysts on a Thursday call discussing the company’s fourth-quarter results.
Lefebvre said value deals are a way to create a habit among customers to visit its stores, which include Thai Express, Manchu Wok, Wetzel’s Pretzels, Mr. Sub, Country Style and Papa Murphy’s.
The restaurant franchisor and operator is “trying to create a habit to come to our stores and avoiding creating a habit of going to our competitors because the wind back is always more expensive than the maintenance of a customer,” he said.
The Montreal-based company reported a profit in its latest quarter compared with a loss a year earlier as its revenue rose.
Its net income attributable to owners amounted to $32.1-million or $1.40 per diluted share. The result compared with a loss of $55.3-million, or $2.34 per diluted share, a year earlier when the company recorded larger impairment charges.
MTY opened 19 locations in the fourth quarter. Lefebvre said ice cream chain Cold Stone Creamery and Wetzel’s Pretzels remain its champions for the number of store openings and the growth in those two brands.
Across all the brands, it has more than 7,000 locations. More than half are in the U.S., with about 35 per cent in Canada and seven per cent in other markets.
But the company continues to face headwinds from high operational costs, especially the high cost of meat.
Beef prices have skyrocketed as unfavourable weather has affected cattle herd numbers and raised the cost of feedstock.
“We’re taking many actions on a day-to-day basis to try to help that, whether it’s purchasing distribution, any different types of products or services they need in their locations,” Lefebvre said.
The company is also seeing aggressive promotions when it comes to pizza, which is hurting its bottom line for its pizza franchisees, Papa Murphy’s.
“A lot of our competitors have very aggressive promotions. And promotions, to be honest, that are hard for us to match,” Lefebvre said. “We need our franchisees to have a chance to turn profitability. And if you give the product away, it makes it difficult for them to achieve that.”
Revenue totalled $305.4-million, up from $284.5-million, boosted by growth in its franchise operations in the U.S. and the processing, distribution and retail segment, partially offset by a decline in its corporate segment.
Same-store sales fell 1.7 per cent year-over-year in the fourth quarter.