Imvescor Restaurant Group Reports Results for Q4 and Fiscal 2016

Company Reports Sixth Consecutive Quarter of Same Restaurant Sales Growth & Second Consecutive Fiscal Year of System Sales and Same Restaurant Sales Growth

MONTREAL, Dec. 20, 2016 /CNW/ - Imvescor Restaurant Group Inc. ("IRG" or the "Company") (TSX: IRG), a leading franchisor of restaurants operating 223 locations in Eastern Canada, reported financial results today for the 13 and 53 weeks ended October 30, 2016 ("Q4 2016" and "fiscal 2016"). This press release should be read in conjunction with the Company's management discussion and analysis and financial statements for fiscal 2016 which are available on the Company's website at and have been posted on SEDAR at

"Fiscal 2016 was a good year for Imvescor as we made steady progress on our four pillar focus on improvement on food, service, quality and ambience. In fiscal 2016, we accelerated our rejuvenation plan and completed the renovation of 28 restaurants. The result of our efforts was an increase in both System Sales and Same Restaurant Sales of 4.3% and 1.4% respectively." said Frank Hennessey, President and Chief Executive Officer of Imvescor Restaurant Group Inc.

"Same Restaurant Sales increased in the fourth quarter of 2016 by 0.4% over strong growth of 2.4% in Q4 2015.  While our System Sales for Q4 2016 declined, this was the result of planned restaurant closures due to renovations and a significant impact due to a shift in comparable operating weeks from the previous year. Since we announced our strategic plan in April 2015, we have made steady progress.  With today's announcement of the acquisition of Ben & Florentine along with our steady focus on improving the four pillars of our core business, we continue to feel optimistic about the Company's long term prospects." commented Frank Hennessey

Q4 and Fiscal 2016 Financial and Operational Highlights

  • Renovated 13 restaurants under the Restaurant Rejuvenation Plan (the "RRP") in Q4 2016, compared to one in Q4 2015. For Fiscal 2016, 28 restaurants were renovated, for a total of 33 since inception of the RRP.
  • Repaid the balance of the credit facility of $12 million during fiscal 2016.
  • Q4 2016 System Sales of $95.1 million were 0.9% lower than Q4 2015 and were impacted by a shift in comparable weeks resulting in a higher sales week included in the third quarter of fiscal 2016 compared to the fourth quarter in fiscal 2015, negatively impacting System Sales by $1.6 million (1.7%). Normalized System Sales[1] for fiscal 2016 increased 2.4% driven by new openings, SRS growth of 1.4%, partially offset by the 2.5% fewer restaurant operating weeks from fewer restaurants and planned temporary closures as part of the RRP.
  • Q4 2016 SRS grew 0.4% over SRS growth of 2.4% in Q4 2015, representing six consecutive quarters of positive overall SRS growth. Fiscal 2016 SRS growth was 1.4%, with all four brands achieving positive SRS for the year. The positive impact of the initiatives around the four pillars was partially offset by the related temporary closures due to the renovations. Restaurants temporarily closed for renovations as part of the RRP amounted to 28 equivalent restaurant operating weeks and a decrease of SRS by $0.9 million (1.0%) for Q4 2016 and 52 equivalent restaurant operating weeks and a decrease of SRS by $1.5 million (0.4%) for fiscal 2016.
  • Q4 2016 revenue increased 3.6% to $11.5 million from increased retail revenues and supplier coordination fees. Fiscal 2016 revenues increased 19.2% partly from the Company temporarily taking over the operations of the manufacturer of certain Toujours Mikes licensed retail products, as well as the additional week of operations, System Sales growth and increased retail promotional activities.
  • Q4 2016 operating expenses increased 20.7% versus Q4 2015, of which 12% was due to the impairment reversal recognized in Q4 2015 and 5% from the increased RRP expenses in Q4 2016. Fiscal 2016 operating expenses increased 24.8%, of which 18% was due to the temporary manufacture of certain Toujours Mikes licensed retail products, and 2% each from the additional week of operations, the increased RRP expenses and the impairment reversal recognized in Q4 2015.
  • Q4 2016 EBITDA of $4.1 million decreased by 20.2% over Q4 2015 and stemmed mostly from the impairment reversal on IRG rights recognized in Q4 2015 and increased RRP expenses. Fiscal 2016 EBITDA increased by 5.3% over fiscal 2015.
  • Q4 2016 Operating EBITDA decreased 2.8% to $4.4 million versus $4.6 million in Q4 2015 mostly from increased operating expenditures in the Franchising segment. Fiscal 2016 Operating EBITDA increased 11.9% from fiscal 2015, primarily from the increased System Sales and retail promotional activities in the Franchising segment.
  • Net earnings of $3.2 million for Q4 2016 decreased 10.9% versus Q4 2015. For fiscal 2016, net earnings of $11.6 million increased 14.0% over fiscal 2015, primarily due to increased EBITDA and lower finance costs.


1 "Normalized System Sales" is defined as System Sales less the sales from the additional week of operations in the first quarter of fiscal 2016, and adjusted for the resulting shift in the comparability of the weeks which impacts the second, third and fourth quarters.

Highlights Subsequent to Quarter End

The Company announced today that it has entered into a binding agreement to acquire Ben & Florentine, a leading franchisor in the breakfast and lunch category with over 40 locations across Quebec, Ontario and Manitoba. It will be an asset transaction with total consideration of approximately $17.7 million payable 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:

  • A growth oriented brand. Since opening its first restaurant in 2009, Ben & Florentine has demonstrated rapid growth to 12 locations by 2010, opening its first location in Ontario in 2012, and now boasts over 40 locations across Quebec, Ontario and Manitoba with $35 million in system sales and significant growth potential;
  • Ability to generate economies of scale while leveraging IRG's shared services and operating track record;
  • Increases IRG's critical mass in Quebec, cementing the Company's strong position;
  • Single digit accretion to earnings per share while keeping debt leverage at approximately 1x EBITDA.

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 for the three following years, including an investment by the Company of up to $5.5M over that period of time to rejuvenate its restaurant network under the RRP. To date, the Company has renovated 33 restaurants, and expects to renovate over 125 restaurants in total under the RRP. The trading price of the common shares of the Company has increased 73%, from $1.79 to $3.10. Finally, the Company fully repaid its long-term debt over fiscal 2016.

On January 13, 2016, 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 instituted a normal course issuer bid, which allows for the repurchase and cancellation of shares, which was approved by the Toronto Stock Exchange on January 18, 2016.

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 Quebec or expand our geographic footprint outside of Quebec, 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.

Q4 2016 and Fiscal 2016 Selected Financial Data

(in thousands of dollars, where applicable)



October 30,


October 25,



October 30,


October 25,



Number of weeks






System Sales (i)

$ 95,116

$ 96,027



$ 387,877


$ 371,939



SRS (i)







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







Net earnings and comprehensive income







Net earnings 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




Total debt





System Sales, SRS, 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 of directors of the Company (the "Board") today declared a dividend of $0.0225 per common share. The quarterly cash dividend will be paid on January 20, 2017 to shareholders of record as of the close of business on January 6, 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 Q4 and fiscal 2016 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, December 27, 2016 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 26204905.    

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 four 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, and Scores® and Toujours Mikes, operating primarily in Québec in the family and casual dining segments and the take-out and delivery segments. 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 and, through its wholly-owned subsidiary, Groupe Commensal Inc., manufactures and sells vegetarian branded food products in grocery stores and retail outlets under the Commensal® brand.

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

"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, gain 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, gain or loss on derivative financial liability and earnings or loss from discontinued operations. 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.

"EBITDA" is defined as earnings or loss before interest income, interest expense, depreciation and amortization and income tax expense.

The Company uses EBITDA and Operating EBITDA because those measures enable management to assess the Company's operational performance and are financial indicators of the Company's ability to service and incur debt. Those measures should not be considered by an investor as an alternative to earnings, an indicator of operating performance or cash flows, or as a measure of liquidity.  Refer to the Reconciliations of Non-IFRS Measures section of this 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.

"System Sales" is the aggregate sales achieved by all "Bâton Rouge", "Pizza Delight", "Scores" and "Toujours Mikes" restaurants, whether they are company-owned restaurants or franchised restaurants.  This performance measure indicates the Company's overall growth and reflects the direct impact of restaurant openings and closures, and temporary closures for renovations under the restaurant rejuvenation plan (the "RRP").

"Same Restaurant Sales" or "SRS" 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 helps explain what portion of sales growth can be attributed to growth in established locations. The Company defines SRS as sales generated by 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 believes this is a meaningful measure of operating performance.

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 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, the Company's dependence on royalty stream, franchise development and growth of the retail licensing opportunities, changes in consumer preferences, adverse changes to economic conditions, the Company's retail products dependence on the strength of the Company's restaurant brands, the protection of the Company's intellectual property, 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 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 Company's dividend policy, the impact of seasonality and other factors on quarterly operating results, the risk of uninsured losses, 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.

In particular, the forward-looking statements in this press release include statements relating to IRG's expectations with respect to the completion of the Ben & Florentine acquisition and the timing thereof, IRG's ability to achieve the expected benefit of the Ben & Florentine acquisition, the anticipated impact of the Ben & Florentine acquisition on IRG business and IRG outlook for the financial and operating performance of the Ben & Florentine division.

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.


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; Our brands: Pizza Delight®:; Scores®:; Toujours Mikes:; Bâton Rouge®:


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