MONTREAL - MTY Food Group Inc. shares dropped to their lowest level in months after the restaurant franchisor reported quarterly revenue and profit that came in below analyst estimates.

The Montreal-based company's stock fell nearly 10 per cent in the first minutes of trading, trading at $57.21, down $6.04 shares from the previous close.

MTY reported earlier that profit attributable to its shareholders in the third quarter was $22.9 million or 91 cents per share for the quarter ended Aug. 31.

That was up from $22.1 million or 88 cents per share in its 2018 fiscal third quarter, but short of estimates.

Analysts had estimated $1.02 per share of profit and $167.9 million of revenue, according to financial markets data firm Refinitiv.

MTY's revenue rose to $163.6 million from $113.0 million while system sales generated by its restaurants were a record $1.08 billion, up 36 per cent from $789.9 million a year earlier.

Most of the growth in revenue and system sales was from MTY's acquisition of Papa Murphy's for about $253.2 million.

MTY operates a wide range of restaurant brands in Canada and the United States, including ManchuWok, Mucho Burrito and Baton Rouge.

At the end of the period, MTY's network had 7,441 locations in operation, of which 163 were corporate and 7,278 were franchised. About 55 per cent of the locations were in the United States and 38 per cent in Canada.

This report by The Canadian Press was first published Oct. 11, 2019.

Companies in this story: (TSX:MTY)

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