Franchiser swallowing up Country Style

Country Style's 490 coffee and doughnut outlets are being eaten by MTY Food Group Inc. (TSXV:MTY), which franchises and operates Sukiyaki, Cultures, Yogen Fruz and other restaurants. The deal will fulfil MTY's publicly stated objective to enter the coffee service business and pit the Montreal-based MTY against Tim Hortons of Oakville and Seattle-based Starbucks.

The Toronto Star
April 13, 2009

Franchiser swallowing up Country Style
David Friend, The Canadian Press

Country Style's 490 coffee and doughnut outlets are being eaten by MTY Food Group Inc. (TSXV:MTY), which franchises and operates Sukiyaki, Cultures, Yogen Fruz and other restaurants.

The deal will fulfil MTY's publicly stated objective to enter the coffee service business and pit the Montreal-based MTY against Tim Hortons of Oakville and Seattle-based Starbucks.

While Country Style has been around since the early 1960s, it has been overshadowed for many years by Tim Hortons, which had nearly 3,000 outlets in Canada at the end of last year.

MTY didn't disclose the value of the proposed cash deal, though it said the Country Style chain had $94 million of system-wide sales in the past year.

"It's something they never had the opportunity to have," said Jean-Francois Dube, head of MTY Food's investor relations.

Under the deal, MTY will have 114 Country Style traditional shops selling coffee, doughnut and sandwiches, 360 Country Style kiosks and 16 BunsMaster outlets. All but four of these locations are franchised.

However, Country Style doesn't currently have a presence in Montreal-based MTY's home province of Quebec.

Dube said it's too early to tell whether MTY will expand the Country Style brand into the province, but noted the challenge of marketing an English-branded name in the primarily French-language region.

With the proposed acquisition of Country Style, expected to close May 1, MTY said it will "strengthen its position and foothold in the Ontario quick-service franchise industry and launches itself as a major player in the coffee and sandwich segment."

MTY has two dozen franchise brands such as Cultures, Thai Express, Veggirama, TacoTime and Mrs. Vanelli's, and said it will be aiming for annual sales of $435 million after the takeover of Country Style.

Shares of the company slipped nine cents to $7.41 in early afternoon trading on the Toronto Stock Exchange.

http://www.thestar.com/Business/article/617726


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