Restaurant conglomerate CEO Eric Lefebvre says Canadian fast-food diners are proving resilient in the face of tariffs and pricing pressures, but their counterparts in the U.S. are faring much worse.
Lefebvre’s Montreal-based MTY Food Group Inc. has 7,046 restaurants in North America across dozens of brands like Mr. Sub, Manchu Wok and Thaï Express.
In its latest quarter, he said the portfolio revealed “a tale of two geographies.”
“U.S. consumers have been particularly affected by economic uncertainty, which is being reflected in our results and that of the broader restaurant industry,” he said on a conferernce call with financial analysts Friday.
“On the other hand, Canada was a bright spot throughout Q2.”
Lefebvre isn’t sure why there’s been a divergence. Both countries have faced tariff threats and both have brands warning any escalation in tensions could necessitate a dramatic rise in prices.
Lefebvre’s best guess as to why these factors are bringing more “volatility” to his U.S. business than in Canada one comes down to his company’s recent history.
“If you look at the past few years, we’ve certainly been a lot stronger in the U.S. than we’ve been in Canada,” he said. “Canada is a little bit more stable on the upwards trend, whereas the U.S. is probably taking a pause after many, many years of great results.”
To get the company through the current uncertainty, Lefebvre said MTY is investing in digital operations, focusing more on fine tuning the timing of limited time offers it rolls out to diners and “trying to come up with price increases in areas that might not necessarily affect traffic.”
MTY doesn’t dictate prices for its U.S. franchisees, but its corporate stores haven’t passed on higher costs to diners.
But now more pressure on food and labour costs has emerged.
“We reached a point where it was no longer sustainable to not take price, so we have to use a surgical approach and take price on certain commodities that are a little bit more expensive these days,” Lefebvre said.
The pricing pressures developed at the same time as MTY is rethinking its footprint. It opened 76 locations and closed 77 in its most recent quarter. Most of those closing were underperforming.
“I’d like to close fewer, but this is probably what we should expect on average for the next quarters,” Lefebvre said. “I don’t expect that we would close dramatically fewer stores or dramatically higher stores unless there’s a surprise out there.”
Another 108 locations are under construction.
Lefebvre shared such numbers the same day as MTY revealed its second-quarter net income attributable to owners increased to $57.3 million, or $2.49 per diluted share.
Those results for the period ended May 31 compared with a net income attributable to owners of $27.3 million, or $1.13 per diluted share a year earlier.
MTY’s revenue topped $304.9 million, up from $303.7 million a year prior.
On an adjusted basis, MTY earned $1.17 per diluted share compared to an adjusted profit of $1.25 cents per diluted share in the same quarter last year.
This report by The Canadian Press was first published July 11, 2025.
Companies in this story: (TSX:MTY)
