Here We Grow Again

MTY continues to balloon in a floundering economy

Company of The Year

It’s been a busy day. Stanley Ma, president and CEO of the multi-concept MTY Group, has just flown in from head office in  Montreal to be greeted by a crippling traffic jam before arriving at his new Thai Express/Country Style co-branded unit on St. Clair Avenue in Toronto, only to find firemen attending to a gas leak just outside the front door. He has only an hour to meet and greet his franchisee, smile for the camera and sit for an interview. He apologizes, greets everyone, and calmly gets down to business without missing a beat.

These are the hallmarks of an astute business sense that began in Canada about 30 years ago, when Ma opened the single-unit Polynesian/Chinese restaurant, Le Paradis du Pacifique in Montreal, nearly 10 years after emigrating from China. Before long, the brand’s entrepreneurial spirit flourished with the launch of the quick-service concept Tiki-Ming in 1983. By 1995 the growing conglomerate had gone public with its first listing on the Vancouver Stock Exchange.

Fast-forward to 2010. MTY — an amalgamation of the surnames of its founding partners — logged $430 million in system-wide sales for the 12 months ending May 31 of this year. It boasts 25 distinct concepts with 1,700+ units spread over food courts and street corners across the country and includes a diverse portfolio with everything from Mexican (TacoTime) to Mediterranean (Villa Madina), Italian (Vanellis), Indian (Tandori) and North American (Cultures).

It sounds like a complex web of intricate detail, but, according to Ma, the secret to the company’s success is an adherence to simplicity. “MTY is a very disciplined company,” he says. “We have a very good team, and we have a good business model. The business model is we are a simple company.”

But, don’t confuse simple with simple-minded. Since 2008, the corporate team has launched three new banners, Tandori, Vie & Nam and O’Burger, the latter of which banks on Canadians’ growing taste for thick, juicy, premium burgers. “We developed that about a year and a half ago and have over 10 stores now,” says Ma, going to explain his interest in O’Burger’s North American concept, which operates predominately in Quebec. “Consumers understand the difference in a high-end burger. I’m not saying other burgers aren’t good, but customers are ready to pay for a premium burger, and our servings are four and six ounces; they’re like steak.” It’s proof to him that consumer appetite is only growing.  “We developed those concepts because we believe it’s necessary, and the consumer wants more.”

And, more they will get. Aside from building its own banners, MTY also has a healthy history of key acquisitions, including three in the last couple of years (TacoTime, Tutti Frutti and Country Style) and one this past fall when the Quebec-based quick-service comfort food chain, Groupe Valentine Inc. (Valentine) was welcomed aboard. Ask Ma about his decision to acquire a brand during the recession and he’s nonplussed, citing it as the perfect time to make better deals, with better prices.

But, it doesn’t end there. “In 2010, we got listed on the big board at the TSX; we’re with the big boys now,” jests Bill Hamam, director of Franchise for the parent company. “It was a major milestone and a big step forward for MTY after being listed in the Venture Exchange for 15 years,” adds Ma.

This year also marks the official launch of the MTY loyalty card, which allows customers to accumulate reward points towards a free menu item at 21 of its concepts (so far). “Right now we [have] about 90,000 members, and customers don’t just take the card home, they have to fully register and give their information,” explains Ma, alluding to the marketing possibilities.

It also provides one common thread for the diverse company. “Every brand is operated and marketed on its own, but this card really draws in all the brands together and makes us more of a unified group,” explains Jennifer Ma, senior marketing director.

And, unified they are. Spend five minutes with a handful of MTY executives, and it’s easy to see a common passion. Aside from exponential areas of growth, the leveraging possibilities are endless.

Rick Martens, president of Country Style, sees it first-hand with the freedom and power the coffee chain has been given under its new parent company. “We’re not pulling anything out of Country Style, we’re just going to add TCBY; another product, another brand into [our] stores. We’ve got about a dozen of those now,” he says, discussing the mandate at the chain, which, like many MTY acquisitions, retained much of its identity, save the ability to grow, co-brand and build on MTY’s market power.

The same goes for the banners created in-house. “If we have to launch something new, we have expertise to draw upon,” explains Nipun Sharma, VP of Business Development for MTY’s Tandori Indian Cuisine concept, with a palpable excitement. “There’s some similarities in operations, in purchasing channels and in administration. We have that as a leaping point to launch new brands.”

The franchisees benefit, too. “The common theme really works to the advantage of the franchisees where we collectively purchase from fewer suppliers. There’s more purchasing power, and there’s more savings passed on. The power of 1,700 stores is a lot of power,” adds Hamam with a grin.

James Yao agrees. The franchisee of four stores and three banners in Vaughan, Ont., and in Toronto, including the Thai Express/Country Martens agrees. Style combo, is grateful for the low prices he receives from his suppliers and he synergies of working for a successful Canadian company.

The story is especially poignant for the former architecture student who was welcomed to the MTY family with open arms after immigrating to Canada. “Not many people wanted to hire me,” recalls the franchisee. “I didn’t have experience, but I had a great opportunity with [MTY]… they gave me 100 percent support to set up shop and helped me get financing and training.” It’s all about the people, after all. “Franchisees like James are key for us,” confirms Ma. “They work hard, they believe in the concept, and they deliver on the MTY philosophy.”

Martens agrees. “Franchisees are our customers; we take care of them, they grow with us, we grow with them. It’s crucial we serve them properly and they uphold the standards,” he begins. “If you’re making them more money, they’ll pay you, they’ll be happy, they’ll say nice things about you, and they’ll open another store.

”Yao is already talking about opening a Tandori location following the success at his new dual-brand site, which feeds into the subway station and serves the morning, lunch and evening crowds with its coffee, sandwich and Thai food combination.

The company’s successful foray in co-branding continues in Mississauga, Ont., with the development of three concepts under one roof. “Five years ago, we were mostly in malls, food courts, and now with a few acquisitions [and time], we’re developing more and more on the street,” notes Claude St-Pierre, MTY’s chief financial officer. “It’s opening a lot of doors for growth.”

And, the growth and leveraging possibilities cross oceans. The opportunities rolled in years ago, and now MTY has a master franchisee in the Middle East where its Vanelli concept has exploded, with locations in Jordan, Bahrain, UAE and Qatar, to name a few. More recently, the company was welcomed to Morocco and invited to add a handful of its concepts to a food court in a new mall there. “They took Tandori, Thai Express, Tiki-Ming, Vanellis and Villa Madina,” rhymes off Sharma. “And, they opened up Sushi Shop. We opened up these six. So, we have a ready-set package for any food court; [in fact] we could fill an entire food court.”

That’s the beauty of having a diverse portfolio. As an added bonus, MTY offers brand executives “carte blanche” to innovate and create within their concept — to be entrepreneurs, like their president. “We strive to make all our concepts stand out from the competition, not only by focusing on menus that are authentic to the food type for each concept, but also by continuing to innovate with menu development and store design,” says the company head.

Of course, selling a trendy product is no mistake, either. “Ethnic foods are in, and if you look at all the predictions, the customer research, the forecasts, they’re going to continue to become more and more popular — not necessarily with ethnic people but with us mainstay Canadians who have been here forever,” offers Country Style’s Martens. “We love it.”

So does Ma. He even pays company success forward, supporting charitable causes like the Make-A-Wish foundation and the recent CIBC Run for the Cure. And, although the leader’s keeping quiet on specific plans, company growth isn’t likely to slow anytime soon. “We will continue to bring MTY higher, with regard to system sales, unit counts, same store sales, market shares, value and solid results to our shareholders, for years to come,” he predicts. In the meantime, back in Toronto, he’s off to the next business of the day — a 4 p.m. meeting.

photography by margaret mulligan

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