MTY Food Group Inc. has ended a strategic review without finding a buyer for the restaurant franchisor and will instead return more capital to shareholders through share buybacks and a higher dividend.
The Montreal-based company, which operates and franchises brands including Thai Express, Manchu Wok and Mr. Sub, said its review found that few potential acquisition targets offered the value and quality it was seeking.
MTY said it will restore its normal course issuer bid, allowing it to repurchase its own shares for cancellation, while also evaluating the possibility of a substantial issuer bid.
The company also announced a 35% increase in its quarterly dividend, from C$0.37 to C$0.50 per share. The next payment is scheduled for November 13, 2026, to shareholders registered by November 3.
Strategic review ends without a buyer
MTY began its strategic review in November 2025 amid pressure on its stock, rising costs, competition in the restaurant sector and broader economic uncertainty.
The review had included the possibility of a sale of the company. However, MTY's board ultimately concluded that selling the business would not provide the value it was seeking.
CEO Eric Lefebvre said the company believes the better opportunity for shareholders at present is MTY itself.
Rather than pursuing an acquisition or accepting an offer from a potential buyer, the company plans to focus on improving its existing business and returning capital directly to shareholders.
MTY plans to become more asset-light
Alongside the buyback and dividend increase, MTY plans to further shift toward its traditional asset-light franchising model.
The company said it will optimize its portfolio of brands, restructure some functions and offices, and continue reducing its exposure to company-operated restaurants.
MTY had previously announced plans to close 68 underperforming corporate-owned locations over nine months. During the third quarter, it closed 50 locations, with the remaining closures expected during the fourth quarter.
The company could also sell some brands in the future.
Lefebvre said MTY would consider divesting brands where management does not see a clear path to creating additional value. However, the company has indicated that it does not have a broad plan to sell its strongest brands.
MTY currently has about 6,966 locations across its network, while corporate-owned restaurants account for only about 2.6% of its locations.
Third-quarter revenue falls
The strategic announcement came alongside MTY's third-quarter financial results for the period ended August 30.
The company reported C$277.7 million in revenue, down 7.1% from the same period a year earlier.
Net income attributable to shareholders declined to C$24.8 million, or C$1.08 per diluted share, from C$27.9 million, or C$1.22 per share, a year earlier.
However, adjusted earnings per share increased to C$1.26 from C$1.19, while free cash flow after lease payments rose to C$28.5 million from C$25.8 million.
MTY said consumer spending remained challenging during the quarter, while volatile consumer behaviour and higher protein costs also affected the business.
The company also noted that Labour Day fell later in September this year, meaning the third quarter did not benefit from the long-weekend sales boost it normally receives.
Focus shifts from acquisitions to shareholders
MTY has historically expanded largely through acquisitions, building a portfolio of more than 80 restaurant banners across Canada, the United States and international markets.
The conclusion of the strategic review represents a shift in emphasis. Instead of using capital primarily to acquire additional restaurant businesses, MTY intends to direct more of its cash toward shareholders while simplifying its existing portfolio.
The company said restoring its share-buyback program and potentially launching a substantial issuer bid will allow it to reduce the number of outstanding shares, while the higher dividend provides shareholders with an immediate increase in cash distributions.
MTY's board said the decisions reflect its confidence in the underlying business and its approach to capital allocation.
For investors, the strategy now depends on whether the company can improve performance through cost reductions, franchising, portfolio optimization and a smaller corporate-operated footprint while maintaining the cash flow needed to support increased shareholder returns.
