MTY Food Group Inc Q3 2021 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : I'm just wondering if you can give us some perspective on supply chain challenges and labor challenges and how that's impacting your restaurants, and maybe if you expect those challenges to get worse in the future.

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. With respect to inflation, obviously, another major topic in the industry, and we're hearing indications from companies that they're increasing wages for employees to attract and -- attract employees. Can you comment on the pressures that your franchisees are seeing and the inflation that you have in your P&L? And what should we expect looking forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 08, 2021 / 12:30PM, MTY.TO - Q3 2021 MTY Food Group Inc Earnings Call

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And lastly, with respect to organic growth, obviously, that was a focus for MTY prepandemic, and it seems like it's -- all lies back on organic growth looking forward. So can you give us some comments on what you think will be the major drivers to establish sustainable organic growth for MTY.

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And are we talking about marketing investments or maybe other investments into infrastructure to help them as well, is that as a major factor?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. Congrats to the team on the results.

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : Just I guess a question on your comment earlier around just trying to adjust to the current environment with rejigging menus where possible so forth to address the labor shortage. I guess how are you guys thinking about it? Because -- and I would think adjusting the menu, training staff might take a little while and by then things could get better. How are you guys managing or balancing kind of the short-term solutions versus maybe just adjusting to this as maybe this could go on for a long time?

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : Okay. And then just, I guess, a commentary on digital sales earlier. Based on the investments or how you're going about it now, are you assuming -- do you have an assumption for HELOC going forward coming out of the pandemic, X percent of your sales are going to be digital, so let's invest to get to that level? Or is this still -- just want to understand how you're making those decisions.

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : Okay. And then just a follow-up there. I guess as digital continues to grow and as a franchisor, I guess, does the focus maybe shift to some extent on more productive stores versus just expanding store count, if the same-store can do a lot more volume with digital and in-store? And is that something you guys are thinking about?

Question: George Doumet - Scotiabank Global Banking and Markets, Research Division - Analyst : Congrats on the good quarter, Eric. I just wanted to talk a little bit about Cold Stone. Maybe how the outlook looks over the next 12 months as the cold weather comes, and as we lap a very successful last 12 months, just wondering your view on the ability for that banner to continue to grow on top of the solid growth.

Question: George Doumet - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And last question, I promise, on labor shortage. Are there any banners that you'd like to call out that are maybe facing the more acute challenges there or any geographies? Any flavor you can give us there?

Question: George Doumet - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And just a follow-up on -- you used to mentioned there's a new round of price increases. I think you mentioned that earlier. Can you maybe quantify that? Is it low single digits? Is it mid-single digits? Is it more than that? And what do you think the likelihood of you getting any pushback from your franchisees, just maybe worried about losing sales there?

Question: George Doumet - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. No, that's helpful. And can you talk to the 139 locations that remain closed in the quarter. I understand that there's a large number of [nontrade]. I'm just trying to get a sense of the likelihood of all of them reopening maybe over the next couple of quarters.

Question: George Doumet - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And last one for me. Can you maybe remind us of the rationale for the divestiture of Houston last quarter? And I guess, how do you think of future divestitures, especially given the high valuations out there. Is that something that we can see MTY maybe do more of?