Examples of Lessons
Created for the October 11,2010
issue of Canadian Business
Magazine
INSIDE…
Entrepreneurship /
Economics, p. 1
Human Resource
Management /
Organizational
Behaviour, p. 4
Business Management,
p. 5
Trade / Economics,
p. 7
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Course
Business Management
Applications:
Level 2
Difficulty Level:
Article:
“The food court king”, p. 42
Article Summary: This feature story discusses the business management philosophy and business
strategies behind the phenomenal growth of MTY Food Group, the franchisor and
operator of 26 brands such as Yogen Fruz, Taco Time, TCBY, as well as Thai Express,
Koya Japan and Sukiyaki and more recently, Country Style. MTY was is run—and was
founded by —Stanley Ma, an entrepreneur with a conservative approach to
management and growth. It’s not just MTY’s growth that’s impressing industry
observers but the company’s consistently strong performance. MTY’s most recent
quarterly results widely beat market expectations. Although analysts credit this success
to Ma’s low-risk-high-returns strategies and MTY’s business model, some are
concerned about the company founder’s reluctance to exploit the stock market to
further benefit the company.
Comprehension / Discussion
1) What kind of company is MTY?
 MTY Food Group is a franchisor and operator of many fast-food restaurants operating under different brand
names (banners). Its founder and chief executive is Stanley Ma. The Hong Kong immigrant has developed,
licensed or acquired 26 brands of quick-service fare— from Mexican to Japanese, from doughnut to health nut—
and he’s busy expanding his company.
2) What is Stanley Ma’s business management approach and philosophy?
 Stanley Ma is a growth-focused entrepreneur with a deeply conservative streak. He avoids debt, only buys
profitable companies with clear synergies for MTY, and he’s wary of easy money.
 Known as a very private individual who says no to business deals much more than he says yes, he seems to
prefer to fly under the market’s radar. Few people outside the industry have heard of him or his company, and
investor interest remains muted despite the rapid proliferation of MTY banners.
3) How did Stanley Ma start his business career? What strategies did he employ in launching and growing
MTY? What is MTY’s business model?
 Ma opened his first venue, a Chinese and Polynesian restaurant, in 1979, at the age of 29. Within a few years,
however, he switched to fast-food franchising—then a novel business model in Canada—seeing an opportunity in
supplying immigrants like himself with a chance to run their own operations.
 For Ma, food courts in malls presented ideal locations for his new brands which had little name recognition,
since consumers tend to choose where they take their trays based on their appetites rather than brand loyalty. As
such, there is little need for marketing beyond menu boards and frequently changing specials. And, as Ma added
new banners to his original Chinese chain Tiki Ming, he was able to leverage his landlord relationships. “He would
typically own the lease, so if one brand didn’t work out, he could put in another.”
 MTY’s multiplying offerings allowed it to match the cuisine to each location and demographic. Ma has tended
to look for master franchisees with strong financial know-how and expansionist ambitions. MTY simply collects
royalties, with little need for capital investment,
4) Why did Ma acquire Country Style which had just emerged from bankruptcy and was a more risky
investment for him?
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 For MTY with most of its businesses in Quebec, Country Style represented a quick surge within Canada’s
biggest province. Ma also saw co-branding opportunities, and within months of purchase, he started teaming more
than a dozen Country Styles with his TCBY yogurt chain. He points out that in a 3,000-square-foot store, Country
Style can do $600,000 per year in revenue and, say, Thai Express another $750,000, thus raking in $1.3 million
from a single venue. The approach fits MTY’s operating philosophy: “The returns are good, the investment small,”
says Ma. “Coffee is a good business,” he says, “The profit margins are very good, and it will help MTY’s other
brands because of the buying power of the coffee bean.”
5) What is one MTY’s major strengths as it pursues growth?
 One of MTY’s strengths is its willingness and ability to respond to consumers’ changing tastes. Of the 26 brands
MTY controls today, 10 were developed in-house to exploit new trends. The past few years have been all about
Asian food, says Ma—Korean, Indian, Vietnamese. Thai Express became MTY’s most successful brand after Ma
bought the small chain in 2004 and merged it with his Pad Thai.
6) What are Ma’s growth plans for MTY?
 Ma is eager to keep growing his Ontario business where, thanks to the Country Style purchase, MTY now has
41% of its stores— more than in Quebec. He gained a foothold out west, meanwhile, with the 2008 purchase
of Canadian rights to American banner Taco Time. However, he has no plan to expand to the U.S.,: “I
believe the States is a dangerous place for retailers,” says Ma. “It’s a different animal, has different rules,
mentality.” Canada still has lots of room for MTY, he argues. Instead, he wants to reach 2,000 locations before he
considers an American expansion.
7) What are some of MTY’s challenges?
 MTY’s same-store sales have been dwindling by 1% to 2% for several quarters, though the rate of decline has
slowed and the fast-food market is improving.
 Business analysts are also concerned about Ma’s poor job of exploiting public markets —Ma doesn’t really
market his stock and since he went public, he did only one equity raise. “Stanley has to ask himself, What’s the
succession plan? The more control is in the marketplace, the better you’ll do in a takeout.” Ma, however, shows
little interest in selling or being acquired.
 Ma’s current focus lies in building brand equity. While 80% of MTY’s stores were once in food courts, today
only about 30% are, due largely to the acquisition of Country Style, Taco Time and a few other banners that all had
a heavy street presence. For stores located on the street promotion matters for building destination traffic, so MTY
is shifting marketing dollars from menu upgrades to billboard and bus advertising. “I want [my brands] to be like
the big boys [i.e., McDonald’s], recognition-wise,” says Ma.
Analysis / Assignments
1) What do you see as Stanley Ma’s strengths as a business manager? What do you think are his shortcomings as a
business manager? Does Ma fit the definition of an entrepreneur? Why/why not?
2) Define Stanley Ma’s growth strategy for MTY.
3) Explain the source of MTY’s revenue.
4) The article highlights the fact that Stanley Ma refused to convert MTY into an income trust when many
restaurant franchisors went that route a decade ago.
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a) What is an income trust and why did many restaurant franchisors convert to income trusts 10 years ago?
b) Within the business community today, Ma’s decision not to convert to an income trust is deemed as a very smart
move. Why?
2) MTY is a public company. What is Stanley Ma’s approach to exploiting the public markets? Why do business
analysts generally don’t approve of this approach?
3) One of Stanley Ma’s areas of focus is building brand equity. Explain what this means, citing specific examples.
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