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The Groupe MTY offices stand in Montreal on Jan. 23, 2020.

Ryan Remiorz/The Canadian Press

MTY Food Group Inc. continued to grapple with the impact of the pandemic in its latest quarter as the drop in fast-food sales at malls and office towers took a bite out of profits.

The restaurant franchisor and operator behind more than 80 brands including food court staples like Thai Express and Tiki-Ming reported a first-quarter profit of $13.4 million on Friday – down from $19 million a year ago.

The Montreal-based company said sales at malls were down 69 per cent while office tower sales fell 89 per cent.

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The staggering decline in food court sales left restaurants with street access accounting for 84 per cent of MTY’s system-wide sales.

Eric Lefebvre, chief executive of MTY, said the pandemic’s disruption will have a lasting impact on the company but it’s unclear whether the shift in customer consumption patterns will be permanent.

“Everything that’s in an urban centre at the moment is under pressure,” he said during a conference call.

“Everything that depends on office towers, whether you’re in a mall food court that is close to office towers or in an office tower itself, it’s going to be under pressure.”

The situation has forced the company to “reassess the economic model for all these restaurants, reassess everything, how we do business and who we cater to,” Lefebvre said. “We need to reassess everything based on the information we have now, which unfortunately is incomplete.”

Lefebvre said while the “lesser malls” might disappear in the future, the “good malls will always exist.”

“It’s up to us to find a way to be attractive, find a way to ... serve the food to our customers that they’re going to want in the future,” he said.

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Meanwhile, the quarter was marked by unprecedented restrictions on its operations in Quebec and Ontario while the company’s U.S. business benefited from the gradual lifting of restrictions.

System sales were down 48 per cent in Canada and 32 per cent internationally, but U.S. system sales were down just four per cent.

Excluding the impact of foreign exchange fluctuations, MTY said the U.S. saw a growth in sales for the second quarter in a row.

MTY, which had a network of 6,949 locations at the end of the quarter, said 321 locations were still temporarily closed at the end of the quarter because of the pandemic. Those included 195 in Canada, 122 in the US and four international locations.

The restaurant franchising company said its profit amounted to 54 cents per diluted share for the quarter ended Feb. 28, down from 76 cents per diluted share a year earlier.

Revenue totalled nearly $119 million, down from $150.8 million a year ago.

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