The buyer of restaurant brands is itself looking for a buyer.
MTY Food Group, which over the years has acquired dozens of mostly fast-food chains like Papa Murphy’s, Wetzel’s Pretzels and Pinkberry, on Monday said that it is “exploring strategic alternatives,” including a potential sale of the company.
The statement followed a report in Reuters that MTY had hired TD Bank to explore a sale.
“The board of directors of the company has initiated a strategic review process and engaged a financial advisor to identify, review and evaluate potential strategic alternatives with a view toward continuing to enhance shareholder value,” MTY said in a statement. The Montreal-based company said there is “no assurance any transaction will occur.”
Stock in the company soared 13% on the news. Even so, the share price at the Montreal-based MTY is down nearly 8% this year amid weakening sales. System sales last quarter declined while earnings per share declined 16%.
The restaurant business has struggled, particularly in the U.S., with weakening sales as consumers slow spending, as menu-price inflation has tightened spending power, particularly for lower-income and younger consumers.
Over the years it has also acquired chains with a history of challenges, such as the take-and-bake pizza chain Papa Murphy’s, the company’s largest holding.
MTY’s U.S. same-store sales declined 2.5% last quarter and Papa Murphy’s has closed numerous locations as it seeks to reverse weak performance. Going into 2025, the pizza chain has closed 300 locations since 2019.
MTY operates more than 85 brands, most of which are small and acquired over the past two decades. Most of its holdings are limited-service chains, including a number of Canadian mall brands, though it owns some full-service brands such as Famous Dave’s. Most of its chains’ more than 7,000 locations are franchise owned. Among its brands are Cold Stone Creamery, Rocky Mountain Chocolate Factory and Planet Smoothie. More than half of its sales come in the U.S., though MTY has a major presence in Canada.
Executives last month had hinted they were still on the hunt for more acquisitions, saying that it had the financial flexibility to buy more concepts.
“I feel the market is starting to be in a better place now, and it’s just a matter of us to be at the table for those right deals when they come, and to be able to make them cross the finish line,” CEO Eric Levebvre told analysts in October, according to a transcript on the financial services site AlphaSense. “So the market seems to be a little bit more favorable at the moment for MTY.”
But it’s also a market more favorable for take-private deals as weak share performance leads companies to rethink strategies and consider different alternatives. Potbelly and Denny’s have been sold in recent weeks. Jack in the Box sold Del Taco. Noodles & Company is on the market, as is the Yum Brands-owned Pizza Hut. Buyers have been targeting Papa Johns for years.
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