MTY Food Group Inc., one of the largest franchisors and operators of multiple restaurant concepts worldwide, reported Friday financial results for its second quarter of fiscal 2025 ended May 31, 2025 and declared a quarterly dividend of 33.0¢ per share, payable on August 15, 2025 to shareholders registered in the Company’s records at the end of the business day on August 5, 2025.
“From a same-store sales standpoint, the second quarter reflected a tale of two geographies. In the U.S., what began as volatility in Q1 evolved into broader macroeconomic pressure in Q2, which impacted both traffic and average check across much of our network. That said, Village Inn stood out as a bright spot, and we’re actively rolling out initiatives aimed at reinvigorating the guest experience across our key banners,” said Eric Lefebvre, CEO of MTY.
“We believe these are near-term challenges, and we’re confident that the steps we’re taking will position us well as
the environment improves. In contrast, Canada continued to shine, with strong momentum driving solid results,
particularly in the casual dining segment. This strength underscores the value of our diversified platform and the
resilience of our brands in varied market conditions.
“While we’re not satisfied with the year-over-year EBITDA performance this quarter, it’s important to note that the
impact was primarily concentrated within our Corporate segment, with our Franchise and Retail segments performing
better.The softness in the Corporate segment was largely driven by some specific banners. We’re actively evaluating strategic options — ranging from accelerating our franchising efforts with one of the banners to implementing broader, transformative changes with the other. We’re confident that these initiatives will strengthen the segment and enhance long-term profitability.”
Key financial results:
- Net income attributable to owners increased to $57.3 million, or $2.49 per diluted share compared
to $27.3 million, or $1.13 per diluted share in Q2-24. - Cash flows provided by operating activities were $40.2 million compared to $40.6 million in Q2-24,
a decrease of $0.4 million mainly attributable to lower segment EBITDA. - Franchise segment normalized adjusted EBITDA increased by 3% to attain $54.0 million in the
quarter, compared to $52.6 million in Q2-24. - Normalized adjusted EBITDA decreased 5% to reach $70.0 million in the quarter, compared to
$73.7 million in Q2-24. - System sales for the quarter increased slightly at $1.5 billion compared to Q2-24.
- Free cash flows net of lease payments decreased to $23.6 million in the quarter compared to
$24.3 million in Q2-24. Free cash flows net of lease payments per diluted share(3) were $1.03 for the
quarter compared to $1.01 in Q2-24. - Ended the quarter with 7,046 locations compared to 7,079 location at the end of the last fiscal year.
Stable store count compared to prior quarter with a net decrease of one location. - Adjusted earnings per share of $1.17 per diluted share compared to $1.25 in Q2-24.
- Repurchased and cancelled 297,000 shares for a consideration of $12.6 million in Q2-25, bringing
the year-to-date total to 584,400 shares for a consideration of $26.4 million.
Headquartered in Montreal, MTY Food Group operates and franchises quick-service, fast-casual, and casual dining restaurants under 85 different banners across Canada, the U.S., and internationally. With a network of 7,079 locations, MTY continues to expand its presence through strategic growth initiatives, acquisitions, and franchise development.
“MTY continues to navigate a dynamic operating environment. Second-quarter same-store sales performance highlighted a clear contrast between its two core markets. While macroeconomic conditions created short-term headwinds in the U.S., the Company is actively implementing a range of strategic initiatives to position the business for growth once the environment improves. These include, and are not limited to, driving menu innovation, maintaining product quality and consistency, enhancing both online and in-store customer experiences, and reinforcing a strong value proposition across its banners,” said the company.
“The pipeline of future locations remains strong. This quarter’s net openings came in slightly below plan, however MTY anticipates an improvement in the pace of openings in the coming quarters and continues to see strong demand for its brands, especially the larger ones.
“To date MTY has only seen modest direct impacts from tariffs, however the landscape remains fluid and management is actively monitoring developments while implementing mitigation strategies. In both Canada and the US, the Company primarily sources products domestically, which helps limit the potential exposure. Management remains confident in its ability to navigate potential impacts through its strong supply chain and procurement capabilities, strategic menu adjustments, and, when necessary, pricing actions.
“For 2025, management expects stability in normalized adjusted EBITDA margins across all three of its segments, though the Company may experience some fluctuations in corporate store margins, such as this quarter. Overall, management remains confident about its ability to drive margin improvement through positive unit growth, enhanced efficiencies, and an ongoing reduction in the number of less profitable corporate stores. Management expects to continue to drive strong free cash flows in 2025. This will be supported by lower capex than prior year.”
Related Retail Insider stories:
