Papa Murphy’s owner has labor issues

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Papa Murphy’s Canadian owner MTY Global sees labor issues on both sides of the border. / Photo courtesy of Papa Murphy’s

For much of the past two years, Canada-based brand operator MTY Global has seen several of its restaurants closed during the week due to the pandemic.

He still has a problem with closed locations, especially in Canada. But the biggest problem seems to be with the workforce – it just can’t find enough workers to staff its restaurants.

“We have a number of our restaurants that can no longer open seven days,” Eric Lefebvre, CEO of MTY, told investors last week, according to a transcript posted on the financial services site Sentieo. “A number of our restaurants are limited and need to be open for fewer days. “

Workforce, or the lack of it, has been a major topic of conversation in the restaurant industry in recent months amid staff shortages in the United States and many other parts of the world. closer to being resolved than six months ago.

The result shifted the concern of many restaurant chains in the fight against the coronavirus and the worry of customers about eating inside restaurants to the reluctance of workers to work in the industry.

Although MTY is headquartered in Montreal, more than half of the more than 6,800 branches of its chains are located in the United States, including the take-out pizza chain Papa Murphy’s and the Cold Stone ice cream concept. The company’s comments – and questions from investors – foreshadow what is likely to dominate executives’ discussions on earnings calls over the coming weeks.

MTY has experienced workforce issues on both sides of the border, even as its sales and profits improve. Sales of the system increased 13% in the quarter ended Aug.31, the company said, while earnings before interest, taxes, depreciation and amortization (EBITDA) increased 15%.

Labor and supply chain issues have slowed the opening of new units. “Due to labor shortages and supply chain issues, the process of building a new restaurant is unfortunately taking much longer than before,” Lefebvre said, although he noted that the company’s pipeline of new franchisees was “healthy”. He also said the company expects store openings to return to normal after the issues are resolved.

Still, he doesn’t expect the supply chain or workforce issues to end soon. “I don’t see this problem going away in the next few months,” he said. “So we’re going to have to learn to live with it, find ways to be more efficient, find ways to provide good experiences to our customers with the amount of staff we have.”

Labor issues are forcing the company’s franchisees, who operate the vast majority of MTY-branded restaurants, to raise wages. Many of the company’s suppliers face similar challenges, driving up feed costs. And that leads to higher prices.

“Ultimately, this forces us to slightly increase our prices in our restaurants,” said Lefebvre. “It’s like that in 2021.”

Lefebvre said the company has tried to simplify its brands’ menus to make operations easier, while designing products to make them more profitable for franchisees. MTY is also pushing digital sales to improve efficiency, although digital sales were flat in the third quarter.

And then some locations cannot stay open. While some restaurants may have to reduce their opening hours, serving two parts of the day instead of three, for example, others close for entire days. “And even if a restaurant is open, sometimes you’re going to end up with a section closed because we just can’t serve it properly. We want to make sure the customer experience is right.

“It’s a problem for everyone,” he added.


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