Montreal, July 12, 2026, 11:13 (EDT)
MTY Food Group Inc. TSE:MTY said Friday it plans to close 68 company-owned stores in the next nine months after posting lower second-quarter revenue and profit. CEO Eric Lefebvre called it “the right long-term action for the business.” CityNews Halifax
68 closures don’t look like much against MTY’s 7,040 locations—less than 1%. But that’s 29.3% of the 232 restaurants MTY runs itself. Most of those are in the U.S. (190) and the rest in Canada (42). The stores picked for closure lost more than C$10 million over the last year. Shutting them down will cost C$10 million to C$12 million, including lease exits. On a pre-tax basis, stopping those losses could pay for the closures in about 1.2 years once done.
Investors shrugged off the math. With the Toronto Stock Exchange shut for the weekend, MTY shares last closed Friday at C$33.75, down C$3.99, or 10.57%. That price drop wiped about C$91 million off MTY’s market cap, based on 22.84 million shares outstanding. That’s around nine times the company’s stated annual loss minimum from the stores being shut down. The spread hints the market fears a bigger hit to traffic and unit economics, not just a single lease charge.
Investors saw reasons to be careful this quarter. Net income slid 73%, though the underlying business didn’t fall as sharply. Foreign exchange hit MTY hard, with a C$42.7 million swing from a C$35 million gain to a C$7.6 million loss year-over-year. Normalized adjusted EBITDA, which leaves out acquisition and software costs, dropped 14%.
| Second-quarter measure | 2026 | 2025 | Change |
|---|---|---|---|
| Revenue | C$279.9 million | C$304.9 million | -8.2% |
| Normalized adjusted EBITDA | C$60.2 million | C$70.0 million | -14.0% |
| Company-run segment margin | 5% | 9% | -4 percentage points |
| Free cash flow after lease payments | C$32.2 million | C$17.8 million | +80.7% |
| Net income attributable to owners | C$15.4 million | C$57.3 million | -73.0% |
The numbers are for the 13 weeks through May 31. Free cash flow after lease payments is cash left after capital spending and leases.
The franchise segment kept driving results, turning out C$50.6 million in profit from C$98.6 million in revenue, a 51% margin. Company-owned restaurants brought in more revenue, C$111.7 million, but only C$5.7 million in profit, a margin of 5%. Profit at those company stores dropped C$5.6 million and made up over half of MTY’s C$9.8 million fall in normalized adjusted EBITDA. CFO Renée St-Onge said the store closures should help MTY “consistently deliver corporate segment margins at the high single-digit level.” Investing.com
Cash flow got a boost, but the details are murky. Working capital swung C$24.7 million year-on-year, well above the C$14.4 million jump in free cash flow. Stripping out working capital, taxes, interest and other items, cash from operations dropped to C$60.0 million from C$69.4 million. The sustainability of the cash increase is in question.
Papa Murphy’s makes up 45 to 50 of the 68 stores closing, or 66% to 74%. The company runs a take-and-bake setup, with customers finishing the pizza at home. At the end of 2025, it listed 49 corporate stores, so most or all could be gone under this plan. The first stores shut the week of July 13. Lefebvre said more stores might get sold but called it “not a fire sale.” Restaurant Dive
The scale doesn’t match the biggest pullbacks in the pizza business, but this move hits MTY’s own stores much harder.
| Operator or brand | Announced closures | Scope and timing |
|---|---|---|
| MTY / Papa Murphy’s | Shutting 45 to 50 company stores, part of a 68-location target | To happen over six to nine months |
| Papa Johns International NASDAQ:PZZA | Plans to close about 200 North American shops in 2026 and reach 300 by end of 2027 | Mainly at franchise locations |
| Pizza Hut / Yum! Brands NYSE:YUM | Roughly 250 sites planned to close in the U.S. | Closures in first half of 2026; impacts close to 4% of U.S. total |
Papa Johns said those restaurants didn’t have a path to sustainable gains. Pizza Hut also aimed its efforts at weaker U.S. stores.
The avoided-loss figure isn’t a projection. Lease buyouts are still up for negotiation and may change as contracts wind down. MTY will have to pay cash out sooner than it will see the full benefit. U.S. traffic was still soft in June, and protein prices continue to weigh on some segments. MTY’s strategic review may lead to selling the whole company, part of it, or no deal at all.
Restaurants start shutting down this week, putting U.S. demand in focus. The U.S. Census Bureau plans to release June retail and food-service sales at 8:30 a.m. EDT on Thursday, July 16. Investors want to see if MTY can cut losses while the rest of its company-run stores show more weakness.
