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Papa Murphy’s owner delays earnings over an employee’s allegations

MTY Group said it needs time to address complaints made by a whistleblower, which it deemed “frivolous.”
Photograph: Shutterstock

MTY Group, the Montreal-based collector of restaurant chains, on Friday delayed its fourth-quarter earnings call that had been scheduled for Tuesday over apparent allegations made by a “whistleblower employee.”

“While MTY believes that these allegations are baseless and frivolous, the board of directors, out of extreme precaution, will take the required amount of time to address the matter in an appropriate manner,” the company said in its release.

MTY did not provide any details on the allegations. But it did note that it expects its regular earnings report to be released on time.

MTY is a major collector of mostly smaller brands that it typically acquires at bargain prices. In the U.S. it operates 25 concepts, led by Papa Murphy’s, which it acquired last year for $190 million.

The vast majority of MTY’s U.S. concepts, which also include Cold Stone Creamery, Pinkberry, Baja Fresh, Planet Smoothie and Blimpie, operate under the Kahala Brands umbrella.

Globally, the company operates 85 restaurant chains, including 60 in Canada. The vast majority of them are fast-food concepts, though it acquired a trio of casual dining concepts late last year.

Papa Murphy’s now generates 21% of MTY’s system sales, which in the third quarter last year exceeded $1 billion. MTY has been closing some of Papa Murphy’s locations since making the acquisition.

“We’re reassessing a lot of different things on the operations for Papa Murphy’s,” Eric Lefebvre, CEO of MTY, said in October, according to a transcript on the financial site Sentieo. He noted that the company is working to “optimize” the operations of 100 company stores, with plans to sell “as many as possible” to franchisees.”

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