Stormy weather and ‘sluggish’ spending push down MTY Food Group profits

Inclement weather and “sluggish” consumer spending delivered a double whammy to MTY Food Group Inc. in its first quarter, pushing the fast-food chain owner’s profits down from a year ago.

The Montreal-based restaurant owner, whose collection of brands includes Thai Express, Manchu Wok, Mucho Burrito and Cold Stone Creamery, reported a profit of $17.3 million or 71 cents per diluted share, for the quarter ended Feb. 29. The result was down from a profit of $18.4 million, or 75 cents per diluted share, a year earlier.

“First-quarter results were adversely affected by extreme weather, primarily in January and the first two weeks of February,” MTY chief executive Eric Lefebvre told analysts on a Friday call. “Extreme cold temperatures throughout most of North America caused significant downward pressure on our system sales, especially to the frozen treats portion of our quick-serve restaurants, while poorly timed snowstorms affected sales in the northeast portion of our portfolio.”

He noticed the bad weather meant people in many of MTY’s key markets were “more or less sheltering in place” and not interested in seeking out some of the company’s more sun-suitable offerings.

“Ice cream and smoothies are not the most popular when it’s super-cold or when there’s a snowstorm,” he said.

Adding to the bad weather was a “challenging economic environment,” with interest rates and inflation remain high and are thus, curbing consumer spending.

The trends left MTY’s revenue for the quarter at $278.6 million, down from $286.0 million in the same quarter last year, while same-store sales fell three per cent year-over-year.

The first quarter of the year has long been considered a “challenging period,” especially for store openings and closures, Lefebvre said.

During MTY’s first quarter, it opened 75 locations, one shy of last year’s first-quarter total, and closed 79 others, down from 115 a year ago.