Ma adds Country Style to plate

'King of food court': Fulfills dream to enter Ontario coffee market

Montreal Gazette, Wednesday, April 15, 2009

Robert Gibbens, Freelance

Stanley Ma, who in 25 years has built a Quebec-based Asian-style fast-food business into a 1,000-unit chain with 2008 system-wide sales of $253 million, is taking on his biggest challenge yet.

The "King of the Food Court," via his MTY Food Group Inc., is buying the 490-unit Country Style and Buns Master business in Ontario. It fulfills his long-standing ambition to enter the Ontario coffee market.

Country Style sells gourmet coffee in most of its outlets, but also soups, sandwiches, salads, doughnuts and other baked goods. They're almost all franchised, just like Ma's multi-brand outlets in Quebec.

But they compete with Tim Hortons, Starbucks and many other chains. Ma estimates its market share in Greater Toronto and across the province at between 12 and 15 per cent.

"It's a highly competitive market and you've got to move very fast, but we're not going after the big boys that have their own markets," Ma said.

"Country Style has very good coffee and it's soundly managed and profitable with 360 units attached to big Petro-Canada, Shell and Ultramar gas stations ... not everyone likes the big boys and there's still room to grow."

Ma, who is 60, said the deal will bring supply chain and administrative synergies and MTY can help Country Style speed up its growth plans.

MTY, with more than 20 brands from Tiki-Ming, Sushi Shop and Skiyaki to Yogen Fruz and Cultures, now has 68 people at its Laval head office and supports 10,000 full- and part-time jobs. Country Style has 40 staff and 3,000 full- and part-time workers. Together with its Western Canada office in Calgary, the enlarged MTY will have a total corporate staff of 105 and a full- and part-time payroll of 13,000 - there are 150 units in Western Canada.

MTY reported system-wide sales of $253 million, corporate revenue of $34.2 million and earnings of $9.9 million, or 52 cents a share, in the year ended Nov. 30. It will report for the first quarter of fiscal 2009 next week.

MTY's acquisition of Country Style Food Services Inc. closes May 1 and Ma said full details, including the cost, will be reported then. The seller is CAI Capital Partners, a well-known Montreal private equity fund specializing in buyouts, restructurings and acquisitions mostly in Canada.

Rick Martens, a former CFO at Burger King Restaurants of Canada and Cineplex Odeon and who joined Country Style in 2002 to return it from bankruptcy to good health, is staying on. "I've known him well for two years and he's a good leader," Ma said.

Country Style traces its roots back more than 40 years, he added, and by taking it over "we can protect the existing franchisees and seize any new opportunities." Country Style coffee could be sold in other MTY units and there could be location changes.

"Where do I go from here?" asked Ma rhetorically. "People asked me that after we got to 500 units and soon it was 1,000. Now with Country Style, we'll have more than 1,500 and MTY will keep on growing in Canada. I'd consider the U.S. only if an extraordinary deal came up."

Ma, who came to Canada from Hong Kong with his family in his teens, started out with one restaurant. MTY has grown by acquisition and developing its own brands and Ma took it public in 1996.