Labor shortages are restricting hours and sales at some MTY Food Group restaurants as minimum wage increases drive up costs, the company said Friday.
The operator and franchisor of some 80 restaurant banners in Canada, including Thai Express, Scores and Allô mon coco, said its profits fell in the last quarter despite rising revenues. Staffing shortages, combined with higher minimum wage rates in some areas, are expected to drive up overtime and labor costs while dampening some potential sales, according to MTY.
Some restaurants have reduced hours or removed a meal like lunch, while others have closed a section due to a lack of staff, MTY President and CEO Eric Lefebvre said. “Sometimes our owners decide to consolidate their work in fewer restaurants,” he said in a call with analysts. The job market is stabilizing…but I don’t think we’ve found the right balance yet. »
Widespread supply chain challenges have also slowed construction of some new locations, the Montreal-based company said. “It takes longer to access the materials. You are always missing something, added Mr. Lefebvre. It takes longer to get permits… It even takes longer to get branches inspected before they can open in some cities. »
Despite the setbacks, the company has more than 150 new restaurants under construction, he said. “We have a very good pipeline of banners for the future. The environment seems to be stabilizing. It’s certainly not perfect yet, but we’re headed in the right direction,” said Mr. Lefebvre.
The company is also closely monitoring consumer price sensitivity as inflation remains high. “So far, customers are still showing up. We are not seeing a drop in traffic, observed Mr. Lefebvre. Obviously, price sensitivity is something we look at and track because we just don’t want to cross that line where the price gets out of proportion. »
Separately, the company acquired BBQ Holdings on September 27 for $284.2 million. The deal adds brands such as Famous Dave’s, Village Inn, Barrio Queen and Granite City to MTY’s growing portfolio. “Through the agreement with BBQ Holdings, we are building an additional line in the United States and expanding our casual dining footprint,” Lefebvre said.
MTY reported net income attributable to owners of $22.4 million, or $0.92 per share, for the quarter ended August 31. That’s down from earnings of $24.3 million, or $0.98 per share, in the same period last year. Revenue for the quarter totaled $171.5 million, up from $150.8 million a year earlier, as franchise revenue in Canada increased 15%.