The owner of Papa Murphy’s, Cold Stone Creamery, and dozens of other concepts opted not to sell itself, and is planning some “portfolio optimization.” “Everything is for sale if the price is right.”

MTY Group has spent its history buying up brands, and in the process built up a portfolio of more than 80 brands, including notable U.S. concepts such as Papa Murphy’s, Cold Stone Creamery, and Wetzel’s Pretzels.

Yet the company now appears set to start selling some of these brands off. The Montreal-based brand operator on Friday said that it may offload some of its weaker-performing chains to “optimize its portfolio of brands.”

“The goal here is not to sell the crown jewels, for sure,” Eric Lefebvre, MTY’s CEO, told analysts on Friday, according to a transcript on the financial services site AlphaSense. “Everything is for sale if the price is right, I would say that. But there’s no strong desire to divest of good brands.”

Lefebvre said that every brand will be “evaluated for its potential and for the plan we have to make it grow.”

That will likely include the company’s underperforming brands. But it also could include brands where “we don’t have plans or we can’t come up with value creation.”

The announcement came as the Montreal-based company said that it had opted not to sell itself, after running a months-long strategic review process. MTY said that it plans to close corporate stores, and closed 50 of them in the period, as it shifts its focus to more “asset-light” franchising. But another 24 franchisee-owned locations across its different brands also closed in the period.

Same-store sales at the company declined 1.9% in the third quarter, including 2.7% in the U.S., which accounts for a majority of its sales.

MTY’s Canadian brands include concepts like Thai Express, Mucho Burrito, Sushi Shop, Toujours Mikes, Mr. Sub and several others. In the U.S., the company owns Famous Dave’s, Baja Fresh, Village Inn, Granite City Brewery, and many others.

According to data from Restaurant Business sibling company Technomic, its best-performing concepts include Cold Stone Creamery, whose sales over the past three years have grown more than 7% to $578 million last year.

Wetzel’s Pretzels, meanwhile, has grown 15% over that same period, to nearly $263 million.

But on average, MTY’s U.S. chains’ sales have declined 3.6% over that period, and the overall portfolio has declined 1.3%, according to Technomic.

Among its worst-performing concepts is Famous Dave’s, whose sales have declined 13% over the past three years, Baja Fresh Mexican Grill (down 13%), and Granite City Brewery (down 8.3%).

Three concepts worth noting include Bakers Square, Blimpie, and Papa Murphy’s.

MTY acquired Bakers Square in 2022 when it acquired Famous Dave’s. Two decades ago, the brand had 143 locations, according to Technomic, but it has been on a steady decline since then. It is now down to seven locations. Its sales have fallen 28% over the past three years.

Blimpie, meanwhile, had more than 1,500 locations 20 years ago. It finished last year with 88 locations. Its sales over the past three years are down 15%.

A bigger question may be Papa Murphy’s, the take-and-bake pizza chain MTY bought in 2019. The chain has closed more than a third of its locations over the past decade, according to Technomic. Many of MTY’s corporate store closures were of that brand’s locations, which it had acquired from franchisees to turn them around. Its sales are down 7% over the past three years.

Lefebvre suggested the brand has some potential. “Our franchisees who are doing well at Papa Murphy’s are doing extremely well,” he said. “The business model and the economic model and the margins we drive with Papa Murphy’s are really good, even when sales are going down slightly.

“But there are pockets where it’s a little more challenging, where sales need a serious lift for franchisees to be able to turn a good, healthy profit.”

Source https://www.restaurantbusinessonline.com/financing/mty-group-which-made-name-buying-brands-may-sell-some