Company of the Year: MTY Food Group

Photo by David Curleigh

People call Stanley Ma “king of the food court,” but at the speed he moves, there’s no way this restaurateur could keep a crown on his head.

MTY Food Group is a Canadian franchise superstar, the 40-year-old testament to founder Ma’s vision to provide opportunities for Canadian immigrants looking for the same start in the restaurant industry he once had.

Today, this multi-branded franchisor, whose 700-plus employees work out of seven offices, operates approximately 6,000 casual-dining, fast-casual and quick-service restaurants under more than 70 brand names — most of them serving ethnic-based cuisine. Inside this constantly expanding list you’ll find comfort-food familiars such as Thai Express, Extreme Pita, Cultures and Country Style.

Though MTY’s real-estate landscape has changed in recent years, a significant chunk of these restaurants still operate inside shopping mall food courts (the rest are in power centres, office buildings, hospitals, airports, universities and street-front locations). This explains Ma’s crown. But, outsiders assume an MTY cookie-cutter at their peril. Ma takes pride in his company’s diversified mix that has extended its Asian-cuisine foundation to include Greek, Middle Eastern, Italian, South Asian, European, burger and frozen-treat concepts.

Ma arrived in Canada from his native Hong Kong in 1968, when he was just 20 years old. “I came here because I was told there was no snow,” Ma deadpans. He landed in Vancouver but quickly moved to Montreal. His first restaurant job was as a dishwasher in a Chinese restaurant. He left the kitchen on day one in tears. “I said this is not the job I came a thousand miles for.”

There were other kitchens and a stint with a restaurant supplier. Then, in 1978, Ma quit his post, took out a bank loan and started to build a restaurant empire. “I had a gut feeling about it,” he says, with the soft-spoken assurance folks who know him well, know well.

Le Paradis du Pacifique was in a class by itself when it opened in 1979 in downtown Laval outside of Montreal. There weren’t a lot of full-service Polynesian restaurants half a century ago. There weren’t a lot of restaurants period. In any case, this 7,500-sq.-ft. curio with its Hawaiian music and South-Pacific take on Oriental food surfaced from a challenging initial six months with aplomb. Ma’s first shop was a fledgling success.

But he had his sights set on bigger things. Ma was watching the steady flow of Chinese immigrants into Canada. He was also watching them struggle as he had, weeping through their own first-day dishwashing disasters. He wanted to help. Lucky for everyone, the demand for food-court choices was on the ascent. Enter Tiki-Ming, a Hawaiian-food novelty that planted the MTY dynasty’s roots in a landscape still fresh to the franchise concept. The first Tiki-Ming in the bottom of a Montreal office building is gone now, but its legacy of high-quality, innovative, franchise-friendly fare lives on in the massive network of restaurants it spawned.

Ma’s early foray into franchising — in whose development he eschews any suggestion he played a pioneering role — included a steep learning curve for all. Tiki-Ming franchisees had to learn what a franchise system was and oversight had to be rigorous to ensure adherence. “There was a lot of education for both sides,” Ma says.

The concept took off and MTY swelled its ranks in fast order. Indeed, MTY Group has grown pretty steadily since the beginning — and particularly so in the last several years. The company more than doubled its restaurant count between 2007 and 2010 and today’s MTY has almost triple the units it did in 2013.

MTY has created some of its chains — such as KimChi — from scratch, but much of its growth has come from acquisitions. In the last 15 years, the organization has acquired and integrated more than 50 brands. Year after year, Ma and his team have looked for new ideas to augment their base, steadily extending the company’s reach across concepts and geographies. “Pay as little as possible, make as much money as possible,” Ma sums up of his company’s acquisition strategy.

This past year has been no exception to MTY’s streak. In June 2017, MTY Group acquired Steak Frites, Giorgio and The Works Burger. The same month, it added the Houston Avenue Bar & Grill and Industria Pizzeria & Bar restaurant brands. In September, MTY purchased the 20-location Dagwood Sandwiches & Salads. In November, it announced plans to acquire burger restaurant chains The Counter Custom Burgers and Built Custom Burgers from Built Franchise Systems LLC and CB Franchise Systems LLC — for $24.6 million in an all-cash deal. And, in March 2018, MTY bought Imvescor Restaurant Group Inc. for $248 million. Imvescor banners — most of which are in the casual-dining sector — include Bâton Rouge Steakhouse and Mike’s Subs. “Imvescor opened up a very big venue for us,” Ma raves.

Most recently, MTY picked up Arizona-based SweetFrog for US$35 million in October 2018. SweetFrog’s 332 mostly American-located frozen-yogurt restaurants expand MTY’s presence in not only the U.S. market, but the frozen-treat category (it already owns TCBY Canada and Yogen Früz).

MTY Group went public in 1995 through a reverse takeover of a shell company in Vancouver, when it had about 70 restaurants. Today, its shares are still on a climb. This year, MTY posted a second-quarter historic-high EBITDA of $35.5 million and system sales of $744.7 million, and it grew by 30 per cent in the summer of 2018.

Today, MTY Group operates about 2,600 to 2,700 stores in Canada and the U.S., with the rest mainly in Asia and the Middle East. A full 98 per cent of them are franchised. According to number of units, the company is among the top-three restaurant franchisors in Canada, says Ma. In the world? “Probably top 50 or top 75.”

Ma’s got a quick response for why he’s always put the gas on so hard. “Because I’m hungry.”

As for the success of the yields of his appetite, he demurs. “It’s hard to pinpoint what happened. I tell my team there’s no formula for business — otherwise, everybody would do the same thing.” At last, he lands on the following: a lot of hard work and commitment, a little bit of vision and luck — and constant judgement. “You have to understand what’s happening.”

But it’s the team that’s at the heart of MTY’s success. “They’re very passionate,” says Ma. “We pull together. There are no politics at MTY. We all just know we have a job to do.”

No question, agrees Murat Armutlu, MTY’s accountant, board member and former CFO. “It’s the dedication of the people.” And that dedication is the product of a population that feels well treated all the way up the chain. “They’re very focused on their franchisees and take care of them. They amp the menus and do lots of interior renovations to keep stores up to date and drive same-store sales. That’s what separates MTY from the others: [management’s] keen interest in keeping the brands alive, always looking for innovative solutions to keep their franchisees relevant.”

MTY Group’s annual Christmas parties, which the company holds in different cities across Canada, are testament to the brass’s investment in their people. These sprawling celebrations extend invitations to employees’ children and the on-site Santas are generous. “That family atmosphere in such a large organization is impressive,” notes Harley Oberfeld, CEO of Oberfeld Snowcap, a Montreal-based tenant-representation firm that handles MTY’s real estate. “Stan and [CEO] Eric [Lefebvre] have big hearts. They love the people. You can’t build an organization the size they’ve built if they didn’t.”

And the MTY family embrace extends into the community — and needs to, says Ma. With fewer units swallowed up inside food courts — only about 22 per cent today compared to almost 100 per cent 25 years ago — a show of solidarity with environmental surroundings is critical. “If you’re not part of the community, if you’re not passionate with them, you’re not going to make it. [Customers] can go next door or across the street.” For example, when an ice storm knocked out power in parts of Ontario, affected MTY stores donated food to residential neighbours who couldn’t cook at home.

Today’s restaurant scene, says Ma, is different from the one he entered when another Trudeau was in office. There’s a lot more competition, for one. The four or five operators in a typical food court 50 years ago have been joined by another 35. And everyone’s trying to be a specialist. Says Ma, “You’ve always got to improve and upgrade. You sit back and be complacent, you’re going to lose.”

Ma still feels a buzz when he opens a new restaurant. He wishes his father was still alive so he could walk him around his company and show him what’s gone on there in the last 10 or 15 years. His three children all work for MTY and he’s very proud of them (“Though I seldom tell them,” he admits). And, as for his fourth child, he’s psyched about its next chapter — even though it’ll mostly be written by its 700-plus employees and not so much by him.

In May, MTY announced that Ma, its founder and CEO of nearly 40 years, would step down from the executive post in early November, though he’ll continue as chairman of the board. Eric Lefebvre, who’s been with MTY since 2009, most recently as CFO, has taken the helm. Lefebvre joined the organization as vice-president and controller in 2009 and was promoted to CFO in 2012. As CFO, Lefebvre oversaw a store-count hike from 1,570 to 5,700 locations.

The company’s COO, Claude St-Pierre, also stepped down to focus on acquisitions as MTY’s director and secretary. Three people will replace her as co-COOs in Canada (there’s also an American COO). “People often forget Claude’s contribution with all the focus on Stanley,” Lefebvre raves. “She [leaves] big shoes to fill.”

The new team will pick up where the last left off. “Even though we’ve been growing a lot, we try to never lose sight of where we come from,” Lefebvre decalres. “And where we come from is each individual franchise partner we have in the system, each individual brand, each individual meal we serve to our customers. In other industries, they say not to sweat the small stuff. I think it’s the opposite. You need to sweat the small stuff, to pay attention to detail, if you’re going to make it.”

Story by Laura Pratt

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