- Same-store Sales Decline: Overall 2.5% decrease with Canada down 0.8%, US up 3.6%, and weaker international performance.
- Digital Sales Stability: Maintained at 23% of total sales, growing 3% excluding foreign exchange impacts.
- Store Network Activity: Net closure of 38 locations (52 opened, 90 closed), but 200 new stores under construction.
- Normalized Adjusted EBITDA: $60.1M, matching prior year; Corporate Stores segment rose 8% to $13.2M.
- Cash Flow Generation: $40.9M in operating cash flow and $29M in free cash flow, with flat working capital expected in 2026.
Same‑Store Sales & Geographic Mix
Same‑store sales fell 2.5% overall, driven by a 0.8% decline in Canada and weaker International segments. U.S. locations bucked the trend with a 3.6% increase, reflecting stronger domestic demand. Management noted that “low consumer confidence and spending” were the primary catalysts for the Canadian slide, while the U.S. rebound was attributed to targeted marketing and menu innovation.
Digital Sales Momentum
Digital sales remained a steady 23% of total sales, with a 3% growth excluding foreign exchange. First‑party digital transactions—characterized by larger order sizes and no commission fees—offered better economics for franchisees. The brand‑by‑brand data science team, funded internally, continues to refine site‑selection algorithms that have already improved conversion rates at new openings.
Store Network Dynamics
MTY opened 52 new stores and closed 90, resulting in a net closing increase YoY. Nevertheless, a robust pipeline of nearly 200 locations under construction positions the company for a positive net store opening year in 2026. The firm’s favorable leverage (Net Debt/EBITDA = 3.29) and flat working‑capital outlook support continued expansion.
Franchise vs Corporate Performance
Franchise normalized adjusted EBITDA topped $43.2 million, while the corporate store segment saw an 8% rise to $13.2 million. Food Processing, Distribution and Retail contributed $3.7 million, underscoring the diversified revenue mix that cushions the core restaurant operations.
Cash Flow & Capital Efficiency
Operating cash flow hit $40.9 million, generating free cash flow of $29 million and a free‑cash‑flow yield of 17.11%. The company’s ROIC of 7.74% and ROE of 18.59% signal efficient use of capital and solid shareholder returns, reinforcing management’s confidence in long‑term fundamentals.
Strategic Outlook & M&A
MTY remains open to M&A opportunities and maintains a favorable leverage position. Management expressed confidence in the business’s long‑term fundamentals, citing the adoption of new technologies—especially site‑selection tools—as a catalyst for future lift. The firm also highlighted its focus on seasonal promotions over discounting to avoid “cheat code” consumer behavior.
Papa Murphy's Challenges
Papa Murphy's reported an 8% decline in organic system sales, prompting a strategic shift toward new products like Detroit pizza. The acquisition of 50 underperforming locations last year is still in turnaround mode, taking longer than anticipated. A one‑time employee retention credit was recorded, but management expects no further such credits.