MTY Store Closures
MTY Plans to Close 68 Underperforming Locations Following Weaker Second-Quarter Results
Key Points
MTY reported six-month sales of CAD 547.71 million, down from CAD 589.67 million a year earlier, with net income of CAD 52.38 million and diluted earnings per share of CAD 2.29 (vs. CAD 59.03 million and CAD 2.55 for six months prior).
Cash flow from operating activities rose 25% year over year to CAD 43.0 million in the quarter, highlighting improved operational liquidity despite weaker earnings.
An impairment charge of CAD 7.5 million was recognized on right-of-use assets in conjunction with the planned closure of 68 corporate locations.
CEO Eric Lefebvre emphasized that MTY’s asset-light and diversified model continues to generate strong free cash flow and that the company remains focused on its development pipeline and openings.
Q2 revenue declined 8.2% year over year to CAD 279.94 million, reflecting ongoing pressure on consumer spending and a challenging operating environment.
MTY Food Group plans to close 68 underperforming corporate-owned restaurants over the next nine months, the company announced alongside weaker second-quarter results. Market Screener reported that revenue fell 8.2% year over year to CAD 279.94 million for the quarter ended May 31, 2026, while net income dropped to CAD 15.45 million, or CAD 0.67 per diluted share.
The closures will trigger a CAD 7.5 million impairment charge on right-of-use assets. The move comes as same-store sales slipped 2.1% and consumer spending remained under pressure across MTY's restaurant network.
68 Locations Cut as Profit Slides for Second Quarter
MTY will shut 68 corporate locations by early 2027, taking a CAD 7.5 million charge to cover lease-related write-downs. Market Screener noted this is a direct response to weak performance at those sites. The closures are part of a broader effort to trim costs and focus resources on stronger-performing restaurants.
Q2 revenue of CAD 279.94 million was down from higher figures a year earlier. Net income fell to CAD 15.45 million. System-wide sales across all MTY brands reached about CAD 1.4 billion for the quarter, showing the scale of the franchise network even as profits shrink.
Six-Month Sales Fall CAD 42 Million From a Year Ago
The pain extended beyond a single quarter. For the first six months of 2026, MTY posted sales of CAD 547.71 million, down from CAD 589.67 million a year earlier — a drop of roughly CAD 42 million. Net income for the half-year fell to CAD 52.38 million from CAD 59.03 million, according to Market Screener.
Diluted earnings per share for the six-month period came in at CAD 2.29, compared with CAD 2.55 a year ago. The declines reflect a sustained squeeze on the casual and quick-service dining sectors as consumers pull back on discretionary spending.
Cash Flow Jumps 25% Even as Earnings Disappoint
Not everything in the report was grim. Cash flow from operating activities rose 25% year over year to CAD 43.0 million in Q2. That improvement shows the company is collecting cash more efficiently, even as headline profits fall. CEO Eric Lefebvre pointed to this as a sign of strength.
Lefebvre said MTY's "asset-light and diversified model" continues to produce strong free cash flow. He added that the company stays focused on its development pipeline and new openings. The asset-light model means MTY earns fees from franchisees rather than owning most locations outright, which limits its financial risk.
Dividend Held as MTY Signals Long-Term Confidence
Despite the weaker results, MTY declared a quarterly dividend of CAD 0.37 per share, payable on August 14, 2026, according to Market Screener. Maintaining the dividend signals that leadership believes the business can sustain payouts to shareholders even during a tough stretch.
MTY said it remains focused on efficiency and long-term profitability. The planned closures, while painful in the short term, are designed to remove drag from the portfolio. The company's franchise-heavy structure means the 68 shuttered corporate sites represent only a small slice of its total restaurant count.
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