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1. Company Snapshot

1.a. Company Description

MTY Food Group Inc.franchises and operates quick-service, fast-casual, and casual dining restaurants in Canada, the United States, and internationally.The company also sells retail products under a multitude of banners.


As of November 30, 2021, the company had 6,719 locations comprising 6,603 franchised, 23 joint ventures, and 93 corporate locations.The company was formerly known as iNsu Innovations Group Inc.and changed its name to MTY Food Group Inc.


in July 2003.MTY Food Group Inc.was founded in 1979 and is headquartered in Saint-Laurent, Canada.

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1.b. Last Insights on MTY

MTY Food Group's recent momentum is driven by a 12% dividend hike, signaling management's confidence in the business. This increase underscores the company's commitment to returning cash to shareholders. A conference call to discuss Q4 and year-end results is scheduled, which may provide insight into the company's financial health. Institutional ownership is relatively low at 23%, with retail investors holding a significant 60% stake, indicating a diverse shareholder base.

1.c. Company Highlights

2. MTY Food Group Q1 2026 Earnings: A Tough Quarter, Steady Foundation

MTY Food Group delivered a first‑quarter 2026 report that underscored the lingering macro‑economic headwinds: revenues slipped 2.5% on a like‑store basis, while normalized adjusted EBITDA held steady at $60.1 million, matching the prior year. Net income attributable to owners rose to $36.9 million, translating to $1.62 EPS—well above consensus at $0.81, and above the analyst estimate of $0.98. The company’s P/E of 5.76 and EV/EBITDA of 6.12 suggest a modest valuation cushion despite the revenue dip.

Publication Date: 08:05

📋 Highlights
  • 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.

3. NewsRoom

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Toast Announces Fourth Quarter and Full Year 2025 Financial Results

Feb -12

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MTY Food Group Inc Will Hold a Conference Call to Discuss its 2025 Fourth Quarter and Year End Results

Feb -12

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A Look At MTY Food Group (TSX:MTY) Valuation After Dividend Hike And Top Pick Recognition

Jan -30

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How MTY Food Group’s 12% Dividend Hike Will Impact MTY Food Group (TSX:MTY) Investors

Jan -27

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MTY Increases Its Quarterly Dividend by 12%

Jan -21

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While institutions own 23% of MTY Food Group Inc. (TSE:MTY), retail investors are its largest shareholders with 60% ownership

Dec -11

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Are Investors Undervaluing MTY Food Group Inc. (TSE:MTY) By 41%?

Nov -27

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Papa Murphy’s parent company under strategic review

Nov -18

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (-1.31%)

6. Segments

Corporate Stores

Expected Growth: -2%

Decline in corporate stores for MTY Food Group Inc. is driven by increased competition, cannibalization from own brands, and declining same-store sales. Additionally, high labor costs, menu pricing pressures, and inefficient store operations contribute to the -2% growth rate.

Franchising

Expected Growth: -1%

MTY Food Group Inc.'s franchising growth decline of -1% is driven by increased competition in the QSR industry, cannibalization of sales from existing locations, and high royalty fees. Additionally, rising labor costs, food inflation, and declining consumer spending power have negatively impacted franchisee profitability, leading to a decrease in new franchise openings and existing location closures.

Processing, Distribution and Retail

Expected Growth: -1%

MTY Food Group Inc.'s -1% growth is driven by declining same-store sales in Processing (-2%) due to reduced demand from foodservice clients, Distribution (-1.5%) affected by supply chain disruptions, and Retail (-0.5%) impacted by intense competition and changing consumer preferences.

Promotional Funds

Expected Growth: 0%

MTY Food Group Inc.'s Promotional Funds growth is stagnant at 0%. This is likely due to intense competition in the quick-service restaurant industry, limited marketing budget allocation, and ineffective promotional strategies. Additionally, changing consumer preferences and behavior may have also contributed to the lack of growth.

Intercompany

Expected Growth: 0%

No growth in intercompany sales from MTY Food Group Inc. is attributed to lack of diversification, stagnant market share, and absence of innovative products or services, resulting in flat revenue.

7. Detailed Products

Casual Dining

MTY Food Group Inc. offers a range of casual dining restaurants that provide a relaxed atmosphere and a variety of menu options.

Quick Service

MTY Food Group Inc. operates quick service restaurants that offer convenient and affordable meals on-the-go.

Franchising

MTY Food Group Inc. offers franchising opportunities for entrepreneurs to own and operate their own restaurants.

Food Processing

MTY Food Group Inc. provides food processing services, including meat processing and bakery products.

Cafeterias and Institutional Food Services

MTY Food Group Inc. offers cafeteria and institutional food services to businesses, schools, and other institutions.

Retail

MTY Food Group Inc. operates retail stores that offer a range of food products and services.

8. MTY Food Group Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

MTY Food Group Inc. operates in the quick-service restaurant industry, where substitutes are readily available. However, the company's diverse brand portfolio and strong brand recognition mitigate the threat of substitutes.

Bargaining Power Of Customers

MTY Food Group Inc. has a large customer base, which reduces the bargaining power of individual customers. Additionally, the company's brands are well-established, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

MTY Food Group Inc. relies on a network of suppliers for ingredients and materials. While the company has some bargaining power due to its size, suppliers can still exert some pressure on prices and quality.

Threat Of New Entrants

The quick-service restaurant industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This limits the threat of new entrants and allows MTY Food Group Inc. to maintain its market position.

Intensity Of Rivalry

The quick-service restaurant industry is highly competitive, with many established players competing for market share. MTY Food Group Inc. faces intense rivalry from competitors, which can lead to pricing pressure and marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 52.02%
Debt Cost 5.13%
Equity Weight 47.98%
Equity Cost 13.82%
WACC 9.30%
Leverage 108.43%

11. Quality Control: MTY Food Group Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Nathan's Famous

A-Score: 6.8/10

Value: 5.5

Growth: 6.6

Quality: 7.0

Yield: 7.0

Momentum: 7.5

Volatility: 7.0

1-Year Total Return ->

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MTY Food Group

A-Score: 5.4/10

Value: 7.0

Growth: 6.1

Quality: 4.2

Yield: 6.0

Momentum: 2.5

Volatility: 6.7

1-Year Total Return ->

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Dine Brands

A-Score: 5.3/10

Value: 7.5

Growth: 3.3

Quality: 5.0

Yield: 9.0

Momentum: 3.0

Volatility: 4.3

1-Year Total Return ->

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FAT Brands

A-Score: 5.0/10

Value: 10.0

Growth: 3.3

Quality: 5.1

Yield: 10.0

Momentum: 0.0

Volatility: 1.3

1-Year Total Return ->

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Papa John's

A-Score: 4.8/10

Value: 6.0

Growth: 4.6

Quality: 4.7

Yield: 6.0

Momentum: 3.5

Volatility: 4.0

1-Year Total Return ->

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El Pollo Loco

A-Score: 4.5/10

Value: 5.8

Growth: 4.7

Quality: 4.4

Yield: 3.0

Momentum: 3.0

Volatility: 6.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

38.85$

Current Price

38.85$

Potential

-0.00%

Expected Cash-Flows