Imvescor Restaurant Group Reports Results for First Quarter Fiscal 2017

Company Reports Seventh Consecutive Quarter of Same Restaurant Sales Growth

MONTREAL, March 7, 2017 /CNW/ - Imvescor Restaurant Group Inc. ("IRG" or the "Company") (TSX: IRG), a leading franchisor of restaurants with 218 locations in Eastern Canada, reported financial results today for the 13 weeks ended January 29, 2017 ("Q1 2017"). This press release should be read in conjunction with the Company's management discussion and analysis (the "MD&A") and unaudited condensed consolidated interim financial statements for Q1 2017 which are available on the Company's website at and have been posted on SEDAR at

"Same Restaurant Sales increased for the seventh consecutive quarter," said Frank Hennessey, President and Chief Executive Officer of IRG. "In the first quarter of fiscal 2017 Same Restaurant Sales increased by 1.0% over strong growth of 2.9% in Q1 2016. Adjusting for the additional week of operations in Q1 2016, our net earnings increased 3.4% and increased 2.3% as a percentage of revenue, and our Operating EBITDA increased 3.6%."

"Since we announced our strategic plan in April 2015, we have made steady progress. With the recent announcements of the acquisition of Ben & Florentine and the divesture of Commensal, we are well positioned to grow our asset light business model, with a renewed focus on our core business.  In the first quarter of fiscal 2017, we made investments in training with the re-opening of two completely renovated corporate training restaurants and the hiring of new training managers. This investment is critical as we move into a new phase of new restaurant growth.  Our goal will always be to build restaurants that are successful and key to that success is ensuring our franchisees receive the tools and the training that they require to deliver a great guest experience."

Q1 2017 Financial and Operational Highlights

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

  • SRS grew 1.0% over SRS growth of 2.9% in Q1 2016, representing seven consecutive quarters of positive overall SRS growth. The positive impact was partially offset by restaurants closed due to renovations. The negative impact on SRS due to renovations was 0.4%.

  • Renovated three restaurants under the Restaurant Rejuvenation Plan (the "RRP") in Q1 2017, compared to five in Q1 2016. A total of 36 restaurants have been renovated since the inception of the RRP.

  • System Sales of $92.0 million were 7.8% lower than Q1 2016 (1% lower than Normalized Q1 2016 System Sales), primarily due to restaurants permanently closed.

  • Revenue of $10.5 million decreased 13.1% (6.4 % on a normalized basis) from the temporary takeover of the operations of the manufacturer of certain Toujours Mikes licensed retail products in Q1 2016, partially offset by increased corporate restaurant sales in Q1 2017 from two additional company-owned restaurants.

  • Operating expenses decreased 11.3% (4.5% on a normalized basis) from the temporary takeover of the operations of the manufacturer of certain Toujours Mikes licensed retail products in Q1 2016, partially offset by increased operating expenses for company-owned restaurants, increased training costs, and the professional fees of $0.4 million incurred in the acquisition of Ben & Florentine.

  • Results from operating activities decreased 17.4% (11.0% on a normalized basis) primarily due to the professional fees incurred in the acquisition of Ben and Florentine, the pre-opening costs for company-owned restaurants and costs associated with closures for renovations, and an increase in the investment for the RRP and training, partially offset by decreased consulting and compensation expenses and increased retail royalties and supplier coordination fees.

  • Normalized Operating EBITDA of $3.8 million increased 3.6% mostly from increased retail royalties and supplier coordination fees, lower consulting and compensation expenses, partially offset by the pre-opening costs for company-owned restaurants and costs associated with closures for renovations.

  • Net earnings of $2.5 million decreased 4.0% (increased 3.4% on a normalized basis) and increased 2.3% as a percentage of revenue.

  • During Q1 2017 management committed to a plan to sell the assets of the Commensal manufacturing operations, and as such, Commensal is presented as a discontinued operation.

Highlights Subsequent to Quarter End

On December 20, 2016, the Company announced that it had entered into a definitive agreement to acquire substantially all of the assets of Ben & Florentine, a leading franchisor in the breakfast and lunch category with over 40 locations across Québec, Ontario and Manitoba. On February 27, 2017, the Company announced the successful completion of the Ben & Florentine acquisition. The Company has acquired Ben & Florentine for a total consideration of approximately $17.7 million paid at closing with an additional earn-out payment of up to $7.3 million payable in the first quarter of 2018 based upon the achievement of certain financial results driven principally by the successful opening of new restaurants. The acquisition of Ben & Florentine adds a leading brand to IRG's portfolio. Management believes that the acquisition presents several compelling strategic benefits including:

  • Significant growth potential; Ben & Florentine has grown rapidly since opening its first restaurant in 2009, expanding to 12 locations by 2010, opening its first location in Ontario in 2012, and today boasting more than 40 locations with $35 million in system sales;
  • Ability to generate economies of scale while leveraging IRG's shared services and operating track record;
  • Increased critical mass in Québec, cementing the Company's strong position in this market; and
  • Single digit accretion to earnings per share while keeping debt leverage at approximately 1x EBITDA.

The Company announced today that it has entered into a binding definitive agreement to sell substantially all of the assets of its wholly-owned subsidiary Groupe Commensal Inc., to an affiliate of Pasta Romana Foods Inc. for an aggregate total sum of approximately $4.2 million payable upon closing. Management believes that the divesture of Commensal is consistent with IRG's desire to remain focused on its core restaurant franchising business and to remain an asset light entity.  The transaction is expected to close prior to the end of the second quarter of fiscal 2017 and is subject to certain customary closing conditions and purchase price adjustments.

Capital Allocation Strategy

On April 15, 2015, the Company formally announced a strategic plan and approach to capital allocation that charts a roadmap for the transformation and growth of the Company until the end of fiscal 2018, including an investment by the Company of up to $5.5 million over that period of time to rejuvenate its restaurant network under the RRP. To date, the Company has renovated 36 restaurants, and expects to renovate over 125 restaurants in total under the RRP. Since April 15, 2015, being the date of the announcement of the strategic plan, the trading price of the common shares of the Company has increased 76%, from $1.79 to $3.10. Finally, the Company fully repaid its long-term debt in fiscal 2016.

On January 13, 2016, the board of directors of the Company (the "Board") approved an increase of 12.5% in the Company's quarterly dividend 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.

In addition to continuing growing our business through a combination of organic growth, including through the investment in the RRP and other infrastructure areas, we are actively pursuing a strategic acquisition strategy of brands that complements IRG's existing brands and that could either consolidate our solid position in Québec or expand our geographic footprint outside of Québec, and broaden our customer base and leverage our platform. We plan on using cash on hand and available capital under our credit facility to finance the cash portion of such acquisitions while using the common shares of the Company as an attractive acquisition currency when appropriate. In evaluating any potential acquisition candidates, the Company will take into account whether such acquisition is accretive for the Company and whether it provides an opportunity for substantive growth while allowing the Company to leverage the fixed cost of its shared services platform. There is no certainty that the Company will be able to identify targets that will fit its objectives or that the Company will be able to complete a transaction.

The Company carefully explores, as it has done from time to time, any commercially reasonable strategic opportunity that could maximize the value of the Company.

Q1 2017 Selected Financial Data


(in thousands of dollars, where applicable)




January 29,




January 31,






Number of weeks



System Sales










Restaurant operating weeks




Restaurant count









Consolidated results:





Operating expenses




Results from operating activities








EBITDA as a % of Revenue 




Restaurant rejuvenation plan expense




Operating EBITDA (i)




% of Revenue




% of System Sales




Profit from discontinued operations, net of tax




Net earnings and comprehensive income




Net earnings and comprehensive income as a % of Revenue













Cash flow:

Free cash flow (i)




Free cash flow as a % of Revenue




Dividends paid








Working capital excluding gift cards liability




(i) EBITDA, Operating EBITDA and Free cash flow are non-IFRS measures. Refer to the "Non-IFRS Measures and Financial Metrics"
section of this press release for the definition.


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 April 4, 2017 to shareholders of record as of the close of business on March 21, 2017.

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.

Conference Call Details

Frank Hennessey, President and Chief Executive Officer, and Tania M. Clarke, Chief Financial Officer will host a conference call to discuss Q1 results today at 8:30 am E.S.T. 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 Tuesday, March 14, 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 67370530.   

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 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.

Non-IFRS Measures and Key Performance Metrics: The information contained in this press release includes some figures that are not performance measures consistent with International Financial Reporting Standards ("IFRS"). Both non-IFRS measures and key performance metrics are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be comparable to similar measures presented by other companies. Because they do not have a standardized meaning 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", and "Bâton Rouge" restaurants, whether they are company-owned restaurants or franchised restaurants.  System Sales includes 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 restaurants openings net of 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 the current period against sales in the same period in the previous year. SRS growth provides the portion of 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.  The Company's franchisee and supplier royalty revenues vary directly with the level of System Sales in its franchisee restaurant network.

Non-IFRS Measures

These measures are provided as additional information to complement IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. The Company uses non-IFRS measures to provide investors with supplemental measures of its operating performance and also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. 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 "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, costs of special committee, shareholder proposal costs, impairment of goodwill, bargain purchase gains, reorganization costs, restaurant rejuvenation plan expense, acquisition costs, gain or loss on derivative financial liability and earnings or loss from discontinued operations. The Company excludes these items because they affect the comparability of the Company's financial results and could potentially distort the analysis of trends in business performance. 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 exclude 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 "Reconciliations of Non-IFRS Measures" section of the MD&A for more details.

"Normalized Operating EBITDA" is defined as Operating EBITDA less the estimated impact from the additional week of operations in the first quarter of fiscal 2016.

"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 that measure 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 "Reconciliations of Non-IFRS Measures" section of the MD&A for more details.

"Adjusted revenue" is calculated as revenue less 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 comparisons by excluding 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 revenue. Refer to "Reconciliations of Non-IFRS Measures" section of this 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, the Company'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 Ben & Florentine acquisition, including the impact of such acquisition on the Company's business, financial and operating performance, risks relating to the Company's expectations with respect to the potential sale of its manufacturing segment, including the completion of a transaction, if any, and the timing thereof, risks associated with quality control, food borne illnesses and health concerns, the Company's ability to respond to various competitive factors affecting its operations, the success of the restaurant rejuvenation plan, 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 success of the marketing and advertising programs of the Company, the protection of the Company's intellectual property and brand, the Company's dependence on its franchisees' ability to generate revenue and pay franchise fee and other amount to IRG, 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 identify potential strategic acquisition candidates and/or to complete a transaction, 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, the risks associated with negative publicity and its impact on the Company's reputation, compliance with regulations governing confidentiality 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, risks associated with franchise regulations, compliance with regulations governing alcoholic beverages, environmental risks and regulations, public safety issues, the Company's dependence on technology, risks of underreporting of sales by franchisees, inherent risks associated with internal control over financing reporting, the indebtedness of the Company and the restrictive covenants to which it is subject, the impact of sales tax upon System Sales, the risk associated with the payment of dividends, the impact of seasonality and other factors on quarterly operating results, the risk of 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.

Further, although the forward-looking statements contained herein are based on information currently available to the Company's management and on the current assumptions, 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 assumptions, 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 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 the 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.

For further information: Imvescor Restaurant Group Inc: 514.341.5544,; Investor Relations:, Frank Hennessey, President and Chief Executive Officer; Tania M. Clarke, Chief Financial Officer; Media Relations: ACJ Communication, Daniel Granger, 514.840.7990


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