Market Overview

Imvescor Restaurant Group Reports Results for Fourth Quarter of Fiscal 2017


Company Reports Tenth Consecutive Quarter of Same Restaurant Sales Growth

MONTREAL, Dec. 19, 2017 /CNW Telbec/ - Imvescor Restaurant Group Inc. ("IRG" or the "Company") (TSX: IRG), a leading franchisor of restaurants with 262 locations in Eastern Canada, reported financial results today for the 13 and 52 weeks ended October 29, 2017 ("Q4 2017" and "fiscal 2017"). This press release should be read in conjunction with the Company's management discussion and analysis (the "MD&A") and consolidated financial statements for fiscal 2017 which are available on the Company's website at and have been posted on SEDAR at

"We are very proud of our franchisees and brand teams as they delivered another strong quarter of Same Restaurant Sales growth of 4.9%.  This represents the 10th consecutive quarter and third consecutive fiscal year of positive Same Restaurant Sales growth.  Importantly, all brands were positive for both the quarter and the fiscal year," said Frank Hennessey, President and Chief Executive Officer of IRG. "Our franchisees' commitment to continual improvement on IRG's four pillars of food, service, value, and ambiance has played an integral role in the execution of our turnaround strategy the past three years."

Q4 2017 Financial and Operational Highlights

(All comparable figures are to the fourth fiscal quarter 2016 ("Q4 2016") unless otherwise specified. Note that Q1 2017 had 13 weeks compared to 14 weeks in Q1 2016 and the fiscal year highlights include variances on a normalized basis, removing the impact of the additional week in Q1 2016.)

  • For Q4 2017, all five of the Company's brands achieved Same Restaurant Sales ("SRS") growth which resulted in overall SRS growth of 4.9% over Q4 2016 SRS growth of 0.4%, representing the tenth consecutive quarter of positive overall SRS growth for the Company. For fiscal 2017, SRS grew 3.4% over SRS growth of 1.4% in fiscal 2016, with all five brands positively contributing, led by Toujours Mikes, Scores and Ben & Florentine. SRS growth was fueled by an increase in guest count.
  • 16 restaurants participated in the Restaurant Rejuvenation Plan (the "RRP") in Q4 2017 and 34 in fiscal 2017. Since the inception of the RRP, 67 restaurants have participated in the RRP.
  • Q4 2017 System Sales increased 12.1%, primarily from the newly acquired Ben & Florentine brand and SRS growth of 4.9%, partially offset by a 3.6% decrease due to net restaurant closures. For fiscal 2017, System Sales increased 6.9% on a normalized basis.
  • Q4 2017 Operating EBITDA increased 26.7% mostly from the contribution of the Ben & Florentine brand and revenues earned on the renegotiation of supplier agreements, partially offset by fewer retail promotions offered by grocers compared to Q4 2016. Operating EBITDA increased 15.1% on a normalized basis for fiscal 2017.
  • Despite the increase in Operating EBITDA, results from operating activities and net earnings for Q4 2017 decreased 22.8% and 33.7%, respectively, as a result of an additional investment in the RRP of $0.8 million, reorganization costs of $0.5 million and $0.4 million for the re-measurement of the contingent consideration related to the Ben & Florentine acquisition. For fiscal 2017, results from operating activities decreased 4.3% while net earnings increased 0.3% on a normalized basis over fiscal 2016.
  • In Q4 2017, the Company continued to invest in its network – $1.1 million for the construction and renovation of company-owned restaurants and $0.2 million for signage replacement for the Toujours Mikes brand. For fiscal 2017, the Company has invested $3.2 million for the purchase, construction and renovation of company-owned restaurants and $0.5 million for signage replacement.
  • Free Cash Flow decreased 3.1% from Q4 2016 and 24.9% on a normalized basis over fiscal 2016. The decrease is mainly attributed to the increased investment in corporate restaurants and signage, partly offset by lower income taxes paid. Free Cash Flow was also impacted by the timing of cash payments and receipts and changes in inventory levels which were impacted by the acquisition of Ben & Florentine, the timing of payments received from suppliers and retailers, the construction and renovation of company-owned restaurants, turnkey operations and the timing of payments related to retail promotional activities, advertising campaigns, and sales taxes.

Capital Allocation

On January 13, 2016, the board of directors of the Company (the "Board") approved an increase of 12.5% in the Company's quarterly cash dividend payable under the Company's dividend policy from $0.02 to $0.0225 per common share. The dividend policy has been designed to allow sufficient flexibility to continue investing in the Company's growth and its franchise network, while providing returns to its shareholders. The Company also renewed its normal course issuer bid, which allows for the repurchase and cancellation of up to 3,024,297 common shares during the period commencing January 20, 2017 and ending no later than January 19, 2018, representing approximately 5% of the 60,485,954 common shares outstanding as at the close of market on January 9, 2017.

Dividend Declaration

Pursuant to its previously announced dividend policy, the Board today declared a dividend of $0.0225 per common share. The quarterly cash dividend will be paid on January 19, 2018 to shareholders of record as of the close of business on January 5, 2018.

The declaration and payment of any future dividend remains at the discretion of the Board and will depend on the Company's current and anticipated cash requirements and surplus, capital expenditures requirements, regulatory restrictions, financial results, future prospects, current and future contractual restrictions, such as restrictions under credit or other arrangements, the satisfaction of solvency tests imposed by the Canada Business Corporations Act for the declaration of dividends and other factors deemed relevant by the Board. Any dividend policy established by the Board, including the Company's current dividend policy, can be changed at any time and is not binding on the Company. There can be no guarantee that the Company will maintain its current dividend policy or any dividend policy or that any dividend will be declared or paid. Furthermore, the definitive combination agreement with MTY Foods Group Inc. ("MTY") referred to under the Updates Subsequent to Quarter End section of this press release, requires that the payment of any further dividend be approved by MTY.

Updates Subsequent to Quarter End

On December 12, 2017, the Company announced that it had entered into a definitive combination agreement with MTY under which a wholly owned subsidiary of MTY will acquire all of the outstanding IRG common shares (the "Shares") for $4.10 per IRG Share, representing a total consideration of approximately $248 million and a premium of 13.3% to IRG shareholders based on an unaffected 10-day volume weighted average price of the common shares of IRG on October 26, 2017, subject to customary closing conditions including receipt of regulatory and IRG shareholder approvals (the "Transaction"). Under the terms of the Transaction, IRG shareholders will receive approximately $50 million in cash and the remainder in common shares of MTY, equivalent to $0.8259 in cash and 0.0626 common share of MTY for each IRG Share held, such that the aggregate consideration paid to IRG shareholders will consist of approximately 20% in cash and approximately 80% in MTY common shares. In connection with the Transaction, approximately 3.8 million common shares of MTY will be issued based on a reference price of $52.26 consisting of the 10-day volume weighted average price of the common shares of MTY on December 8, 2017, will represent a pro forma ownership of approximately 15% of the outstanding common shares of MTY upon closing of the Transaction. At which time, IRG will also have one nominee on MTY's Board of Directors. The Transaction offers IRG's Canadian shareholders the opportunity to participate in the combined upside by rolling over their common shares in a tax deferred manner. The combination of MTY and IRG will create a multi-brand industry leader with a portfolio of over 5,700 stores under 75 brands and approximately $2.9 billion in System Sales with significant runway for growth.  Please see IRG's press release dated December 12, 2017 for details on the Transaction. There is no assurance the Transaction will be completed as described above or at all, or that the anticipated closing date will materialize.

On January 31, 2018, Tania Clarke, Chief Financial Officer ("CFO"), will be leaving the Company to pursue another opportunity. The Board wants to thank Ms. Clarke for all of her efforts these past three years in helping the Company pursue its goals.

On November 30, 2017, consistent with the Company's desire to focus on its core business of restaurant franchising, the Company's wholly owned subsidiary, Groupe Commensal Inc., completed the sale of substantially all of its assets related to the manufacturing of Commensal products for an aggregate sum of approximately $4.25 million, subject to customary purchase price adjustments. Commensal has been presented as a discontinued operation.


Q4 2017 Selected Financial Data

(in thousands of dollars, where applicable)



October 29,


October 30,



October 29,


October 30,



Number of weeks





System Sales (i)

$  106,643

$  95,116


$  407,247

$  387,877


SRS (i)







Restaurant operating weeks







Restaurant count









Consolidated results:








Operating expenses







Results from operating activities














Restaurant rejuvenation plan expense







Operating EBITDA (i)







% of System Sales







Profit from discontinued operations, net of tax







Net earnings and comprehensive income







Net earnings as a % of revenues






















Cash flow:

Free Cash Flow (i)







Dividends paid











Adjusted Working Capital (i)




Total debt





System Sales and SRS are key performance metrics. EBITDA, Operating EBITDA, Free Cash Flow, and Adjusted Working Capital are non-IFRS measures. Refer to the "Key Performance Metrics and Non-IFRS Measures" section of this press release for the respective definition of such terms.


Conference Call Details

Frank Hennessey, President and Chief Executive Officer, and Tania M. Clarke, Chief Financial Officer will host a conference call to discuss Q4 and fiscal 2017 results on Wednesday, December 20, 2017 at 8:30 am (ET). To access the conference call by telephone, dial 1-888-231-8191 (Toll-Free), 514-807-9895 (Montreal) or 647-427-7450 (Toronto). 

A live audio webcast of the conference call will be available at A recording of the conference call will be archived for replay by telephone until Wednesday, December 27, 2017 at midnight. To access the archived conference call, dial 1-855-859-2056 (Toll-Free), 514-807-9274 (Montreal) or 416-849-0833 (Toronto) and enter the reservation number 5966979.

About Imvescor Restaurant Group Inc. Imvescor Restaurant Group Inc. is a dynamic and innovative organization in the family and casual dining restaurant industry. The Company is a franchise and licensing business that operates restaurants in Eastern Canada under five banners: Bâton Rouge®, operating in Québec, Ontario and Nova Scotia in the casual dining segment, Pizza Delight®, operating primarily in Atlantic Canada, in the family/mid-scale segment, Scores® and Toujours Mikes, operating primarily in Québec in the family and casual dining segments and the take-out and/or delivery segments, and Ben & Florentine®, operating primarily in Québec, with individual stores in Ontario and Manitoba, in the breakfast and lunch industry. The Company also licenses to third parties the right to manufacture and sell prepared food products under the Bâton Rouge®, Pizza Delight®, Scores® and Toujours Mikes brands.

This press release refers to trademarks, such as Pizza Delight®, Toujours Mikes, Scores®, Bâton Rouge® and Ben & Florentine®, which are protected under applicable intellectual property laws and are the property of the Company or of one of its subsidiaries. Solely for convenience, such trademarks and tradenames referred to in this press release may appear without the ® or ™ symbol, but such references are not intended to indicate, in any way, that the owner of any such trademarks will not assert, to the fullest extent under applicable law, its rights to these trademarks and tradenames.

Key Performance Metrics and Non-IFRS Measures: The information contained in this press release includes some measures that are not performance measures consistent with International Financial Reporting Standards ("IFRS"). The key performance metrics and non-IFRS measures include measures that are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. Because the measures included in the key performance metrics and the non-IFRS measures do not have standardized meanings prescribed by IFRS, they may not be comparable with similar measures presented by other issuers. 

Key Performance Metrics

"System Sales" is the aggregate sales achieved by all "Pizza Delight", "Toujours Mikes", "Scores", "Bâton Rouge" and "Ben & Florentine" restaurants, whether they are company-owned restaurants or franchised restaurants.  System Sales include sales from existing locations as well as new restaurants. This performance measure indicates the Company's overall growth and reflects the direct impact of restaurant openings and closures. The Company's franchisee and supplier royalty revenues vary directly with the level of System Sales in its franchisee restaurant network.

"Net New Restaurants" represents the aggregate number of restaurant openings net of restaurant closures.

"Normalized System Sales" is defined as System Sales less the sales from the additional week of operations in the first quarter of fiscal 2016.

"Same Restaurant Sales" or "SRS" or "SRS growth" is a metric used in the restaurant industry to compare sales earned in established locations over a certain period of time, such as a fiscal quarter, for a given period against sales in the same period in the previous fiscal year. SRS growth provides the portion of System Sales growth that is from established locations rather than from the opening of Net New Restaurants. The Company defines SRS as sales generated by company-owned and franchised restaurants that have been open for at least one year compared to the sales from the same group of restaurants in the comparable period. 

Non-IFRS Measures

The Company uses non-IFRS measures to complement IFRS measures, to provide investors with supplemental information of its operating performance and to provide further understanding of the Company's results of operations from management's perspective. The Company also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Non-IFRS measures should not be considered in isolation nor as a substitute for an analysis of the Company's financial information reported under IFRS. The definition and rationale for the use of each non-IFRS measure used by the Company in this press release is as follows:

"EBITDA" is defined as earnings or loss before interest income, interest expense, depreciation and amortization and income tax expense. The Company believes this measure is used by investors to compare and value companies in the Company's industry. The Company uses EBITDA because the measure enables management to assess the Company's operational performance and is a financial indicator of the Company's ability to service and incur debt. The most comparable IFRS financial measure is results from operating activities. Refer to the "Reconciliations of Non-IFRS Measures" section of the MD&A for more details.

"Operating EBITDA" is defined as EBITDA adjusted for the following items: impairment or impairment reversal of non-current assets, impairment or impairment reversal of IRG rights, gains or losses on sale of property, plant and equipment, change in onerous contract provisions, change in fair value of contingent consideration, costs of special committee, shareholder proposal costs, impairment of goodwill, bargain purchase gains, reorganization costs, Restaurant Rejuvenation Plan expenses, acquisition and disposition costs, gains or losses on derivative financial liability and earnings or losses from discontinued operations. The Company excludes these items because they affect the comparability of the Company's financial results from period to period and could potentially distort the analysis of trends in the performance of its business. Excluding these items does not imply they are non-recurring. The definition of Operating EBITDA can change from time to time to account for unusual items or items not considered to be consistent with the Company's normal recurring operations. The Company uses this measure and believes it is useful to investors because it can facilitate period-to-period comparisons as it excludes items which, amongst other things, do not necessarily arise as part of the Company's day-to-day operations or are not reflective of the Company's underlying business operations. The most comparable IFRS financial measure is results from operating activities. Refer to the "Reconciliations of Non-IFRS Measures" section of the MD&A for more details. 

"Free Cash Flow" is calculated as cash flows from operating activities less cash used for the purchase of property, plant and equipment and intangible assets. The Company believes this measure is used by investors to value businesses and their underlying assets and to evaluate their financial strength and performance. The Company uses Free Cash Flow because it enables management to assess the Company's ability to generate cash and profits. The most comparable IFRS financial measure is cash flows from operating activities and investing activities. Refer to the "Reconciliations of Non-IFRS Measures" section of the MD&A for more details.

"Adjusted Revenues" is calculated as revenues less restaurant construction sales related to the Company's turnkey operations and sale of manufactured goods related to the manufacture of certain Toujours Mikes licensed retail products on a temporary basis. The Company believes this measure is useful to investors since it facilitates period-to-period comparability by excluding the new revenue stream earned on the transfer of turnkey franchised restaurants and revenues earned in the first three quarters of fiscal 2016 from the temporary manufacturing of certain Toujours Mikes licensed retail products. The most comparable IFRS financial measure is revenues. Refer to the "Reconciliations of Non-IFRS Measures" section of the MD&A for more details.

"Adjusted Working Capital" is calculated as current assets less current liabilities excluding the gift card liability and the current portion of long term debt. The Company believes this measure is used by investors to assess the Company's ability to pay its liabilities as they come due by excluding liabilities that are classified as current but not expected to be repaid in the next 12 months. The most comparable IFRS financial measure is current assets less current liabilities. Refer to the "Liquidity and Capital Resources" section of the MD&A for more details.

These non-IFRS measures should not be considered by an investor as alternatives to earnings, indicators of operating performance or cash flows, or as measures of liquidity.  Refer to the "Reconciliations of Non-IFRS Measures section of the MD&A" for more details.

Cautionary Note Regarding Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of applicable securities laws, including but not limited to, IRG's business objectives, estimates, outlook, strategies and priorities and all other statements other than statements of historical facts. Forward-looking statements may include estimates, intentions, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Forward-looking statements are often, but not always, identified by the use of words such as "may", "should", "would", "will", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential, "targeting", "intend", "could", "might", "continue", "outlook" or the negative of these terms or other comparable terminology. All such forward-looking statements are made pursuant to the "safe harbour" provisions of applicable securities laws.

Forward-looking statements involve known and unknown risks, uncertainties and other factors outside of the Company's control. A number of factors could cause the actual results of the Company to differ materially from the results discussed in the forward-looking statements, including, but not limited to: risks associated with the acquisition of Ben & Florentine, risks associated with quality control, food borne illnesses and health concerns, the Company's reliance on suppliers and availability and quality of raw materials, the Company's ability to retain certain key personnel, the Company's ability to respond to various competitive factors affecting its operations, franchise development and growth of the retail licensing opportunities, changes in consumer preferences, the Company's retail products dependence on the strength of the Company's restaurant brands, the protection of the Company's intellectual property and brand, the success of the RRP, the Company's dependence on its franchisees' ability to generate revenues and pay franchise fees and other amounts to the Company, changes in the Company's relationships with its franchisees, the Company's ability to open new restaurants, the closure of restaurants, the impact of an increase in company-owned restaurants, the Company's ability to renew leases and limit lease exposure, negative publicity and its impact on the Company's reputation, compliance with regulations governing confidentiality and privacy of guest information, potential litigation and other complaints, compliance with government regulations, the Company's dependence on third parties, changes in laws concerning employees, changes in the Company's relationships with its employees, the Company's ability to ensure workplace health and safety, franchise regulations, compliance with regulations governing alcoholic beverages, environmental risks and regulations, public safety issues, the Company's dependence on technology, underreporting of sales by franchisees, inherent risks associated with internal control over financial reporting, the indebtedness of the Company and the restrictive covenants to which it is subject, the impact of sales tax upon System Sales, payment of dividends, the impact of seasonality and other factors on quarterly operating results, uninsured losses or claims that the Company believes are not economically reasonable to insure, changes in commodity prices and other factors referenced in the Company's Annual Information Form and the Company's other continuous disclosure filings which are available on SEDAR at These factors are not intended to represent an exhaustive list of the factors that could adversely affect the Company and its results but should, however, be considered carefully.

Risks and uncertainties inherent in the nature of the Transaction include without limitation the failure to receive all required approvals and consents including regulatory, Toronto Stock Exchange, shareholder and any other approvals or to otherwise fulfill all of the conditions precedent to the Transaction, in a timely manner, or at all; significant transaction costs or unknown liabilities; failure to realize the expected benefits of the Transaction; and general economic conditions. Failure to receive all required approvals and consents including regulatory, Toronto Stock Exchange, shareholder and any other approvals or to otherwise fulfill all of the conditions precedent to the Transaction may result in the Transaction not being completed on the proposed terms, or at all. There can be no assurance that the anticipated strategic benefits and operational, competitive and cost synergies resulting from the Transaction will be realized. Furthermore, the failure of IRG to comply with the terms of the Agreement may, in certain circumstances, result in IRG being required to pay a fee to MTY, the result of which could have a material adverse effect on IRG's financial position and results of operations and its ability to fund growth prospects and current operations.

Further, although the forward-looking statements contained herein are based on information currently available to the Company's management and on the current intentions, plans, expectations, estimates, opinions, forecasts, projections and other assumptions made by the Company's management in light of its experience and perception of historical trends, current conditions and expected future developments (such as the Company's future growth, results of operations, performance and opportunities as well as the future of the economic environment in which it operates), as well as other factors that the Company's management believes are appropriate and reasonable in the circumstances and on the date of this press release, there can be no assurance that such intentions, plans, expectations, estimates, opinions, forecasts, projections and other assumptions will prove to be correct or that actual results will not differ materially from those anticipated in such forward-looking statements.  Unless otherwise noted or the context indicates, forward-looking statements in this press release speak only as of the date of this press release.

Forward-looking statements are provided herein for the purpose of assisting the Company's security holders, investors and others in understanding its current strategic priorities, expectations and plans, as well as its financial position and results of operations as at and for the periods ended on the date presented. Readers are cautioned, however, that such information may not be appropriate for other purposes and should not place undue reliance on the forward-looking statements contained in this press release. The Company assumes no obligation to update or revise such forward-looking statements to reflect new information, future events or otherwise, except as required by applicable securities laws. Except as otherwise indicated, forward-looking statements do not reflect the potential impact of any non-recurring or other special items or of any transactions that may be announced or that may occur after the date of this press release. The financial impact of these transactions and non-recurring and other special items can be complex and depends on the facts particular to each of them. The Company therefore cannot describe the expected impact in a meaningful way or in the same way it presents known risks affecting its business. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement.


Our brands:

Pizza Delight®:


Toujours Mikes:

Bâton Rouge®:

Ben & Florentine®:


SOURCE Imvescor Restaurant Group Inc.

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