Meritage Announced 2025 Preliminary Unaudited Results; 2026 Outlook: Sales and Margin Recovery
MWN-AI** Summary
Meritage Hospitality Group Inc. (OTCQX: MHGU), a leading franchise operator, has released its preliminary financial results for the fourth quarter and fiscal year ending December 28, 2025, ahead of the Sidoti Micro-Cap Conference. The company reported a decline in both sales and earnings, attributing the downturn to significant operational adjustments, including the closure of 21 underperforming restaurants, which led to one-time charges totaling $13.7 million.
For the fiscal year 2025, sales were $617.7 million, down from $668.8 million the previous year. The company's loss from operations was $(22.9) million, contrasting sharply with a profit of $13.3 million in 2024. Net earnings also decreased, resulting in a loss of $(26.3) million, down from a net gain of $8.0 million in the prior year. Consolidated EBITDA for 2025 reflected a loss of $(6.8) million compared to a profit of $42.4 million in 2024. Similarly, the fourth quarter yielded a decline in sales to $145.0 million from $168.7 million the previous year.
Meritage faced unique challenges during 2025, notably margin compression driven by record-high prime costs due to elevated beef prices and aggressive discounting strategies. Looking ahead to 2026, the company anticipates a return to growth and profitability supported by cost-saving initiatives, product innovations, and potential reductions in product costs stemming from lower beef tariffs.
CEO Robert E. Schermer, Jr. highlighted the hard work of restaurant leaders in navigating unprecedented cost pressures. The company aims to leverage operational efficiencies while focusing on its strategic priorities: returning to normalized margins and enhancing the customer experience. The provisional outlook for 2026 projects sales between $610 million to $620 million and earnings from operations of $6.0 million to $7.0 million.
MWN-AI** Analysis
Meritage Hospitality Group Inc. (OTCQX: MHGU) has released its preliminary unaudited results for 2025, highlighting significant challenges yet showcasing optimism for a recovery in 2026. For investors, key takeaways and strategic considerations include the impact of operational adjustments and external market conditions.
The decline in 2025 revenues to $617.7 million from $668.8 million in 2024 can primarily be attributed to margin compression due to high operational costs, particularly related to beef inflation and labor. The company's operating loss of $(22.9) million underscores the operational hurdles faced amid heightened competition and market pressures. While 2025 was a year of drastic loss, the anticipated recovery for 2026 presents an intriguing investment thesis.
Looking ahead, Meritage’s projections of sales of $610 million to $620 million coupled with an expected operational profit of $6.0 to $7.0 million signals potential stabilization. Particularly noteworthy is the focus on cost-saving initiatives and operational efficiencies that may yield substantial improvements to the bottom line. Furthermore, expectations of reducing beef tariffs and the reopening of U.S.-Mexico cattle imports could materially enhance profit margins.
The company's phased approach to innovation, especially regarding menu enhancements and marketing strategies around chicken and breakfast offerings, aligns with consumer trends emphasizing quality and convenience. Importantly, the Morning Belle concept showing +8.7% same-restaurant sales growth speaks to the effectiveness of leveraging niche offerings.
For prospective investors, the key will be to monitor Meritage's execution on cost management and recovery strategies closely. With potential upside in 2026, particularly as operational efficiencies take hold, those looking for a turnaround story in the restaurant sector may find Meritage a compelling prospect, albeit with the inherent risks associated with the industry’s volatility.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
GRAND RAPIDS, Mich., Jan. 19, 2026 (GLOBE NEWSWIRE) -- Meritage Hospitality Group Inc. (OTCQX: MHGU), one of the nation’s premier franchise operators, today reported preliminary financial results for the fourth quarter and fiscal year ended December 28, 2025, ahead of presenting at the Sidoti Micro-Cap Conference.
2025 Full-Year Highlights:
- Sales were $617.7 million compared to $668.8 million last year.
- Earnings (Loss) from Operations were $(22.9) million compared to $13.3 million last year (current year included one-time and non-cash charges of $13.7 associated with pre-opening & costs related to the closure of 21 underperforming restaurants).
- Net Earnings (Loss) was $(26.3) million compared to $8.0 million last year.
- Consolidated EBITDA (Loss), a non-GAAP measure, was $(6.8) million compared to $42.4 million last year.
- Restaurants in Operation 365 compared to 379.
2025 Fourth Quarter Highlights:
- Sales were $145.0 million compared to sales of $168.7 million for the same period last year.
- Loss from Operations were $(15.7) million compared to $(2.3) million for the same period last year (current year included one-time and non-cash charges of $10.6 million associated with pre-opening & costs related to the closure of 21 underperforming restaurants).
- Net Earnings (Loss) was $(13.4) million compared to $5.2 million for the same period last year.
- Consolidated EBITDA (Loss), a non-GAAP measure, was $(12.3) million compared to $13.7 million for the same period last year.
In 2025 the Company experienced margin compression driven by record high prime cost (food, paper and labor) led by beef inflation and elevated discounting. Looking ahead, in 2026 we see substantial EBITDA recovery as significant cost saving initiatives materializing, and new product innovations come to market. Additionally, we see the potential for reduced product costs with lower beef tariffs and the potential opening of the US border to Mexico for cattle imports which could materially alter the beef cost outlook. “I cannot say enough about the work our restaurant leaders have done to combat outside cost pressures and improve productivity. We had a once-in-a-quarter century margin compression last year, driven by unusual protein inflation and operational disruptions that created a timing mismatch between sales, costs and pricing actions. Looking ahead, we believe Wendy’s will deliver wins in 2026 with more innovation around chicken and marketing” stated Meritage CEO, Robert E. Schermer, Jr.
The Company expects to gain leverage from general and administrative cost reductions as well as operational efficiencies including pattern of management, technology and delivery options designed to improve four wall economics and customer experience. The company ended the year with 365 restaurants across 15 states including the Company’s Morning Belle restaurants, its breakfast/brunch/lunch concept that delivered +8.7% of same restaurant sales in 2025.
Initial Fiscal 2026 Outlook: A Margin Recovery Story:
- Sales of $610 million to $620 million
- Earnings from Operations $6.0 to $7.0 million
- EBITDA $18.0 to $20.0 million
- Restaurants in Operation 355
The Company’s strategic priorities are focused on leveraging cost savings and returning to normalized margins in our restaurant operating platform.
About the Company:
Meritage Hospitality Group is one of the nation’s premier restaurant operators, currently with 365 restaurants in operation located in Arkansas, Connecticut, Florida, Georgia, Indiana, Massachusetts, Michigan, Missouri, Mississippi, North Carolina, Ohio, Oklahoma, Tennessee, Texas and Virginia. Meritage is headquartered in Grand Rapids, Michigan, operating with a workforce of over 10,000 employees. At fiscal year-end 2025, the Company had total weighted average fully diluted common shares outstanding of 6,681,000.
The Company’s current and publicly available information pursuant to amended SEC Rule 15c2-11 and FINRA Rule 6432 can be found at www.otcmarkets.com, under the stock symbol MHGU/Disclosures or the Company’s website, www.meritagehospitality.com.
SAFE HARBOR STATEMENT
Certain information in this new release, particularly information regarding future economic performance and finances, and plans, expectations and objectives of management, constitutes forward-looking statements. Factors set forth in our Safe Harbor Statement, in addition to other possible factors not listed, could affect the Company’s actual results and cause such results to differ materially from those expressed in forward-looking statements. Please review the Company’s Safe Harbor Statement at http://www.meritagehospitality.com.
CONTACT:
Robert E. Schermer, Jr., CEO
Meritage Hospitality Group Inc.
(616) 776-2600
FAQ**
What specific strategies is Meritage Hospitality Group Inc. (MHGU) implementing in 2026 to achieve the anticipated margin recovery and improve its restaurant operating platform?
How does Meritage Hospitality Group Inc. (MHGU) plan to address the challenges of margin compression and high prime costs experienced in 2025?
Can you elaborate on the expected impact of reduced beef tariffs and potential cattle imports from Mexico on the financial outlook for Meritage Hospitality Group Inc. (MHGU)?
Given the reduction in restaurants from 379 to 365, what are the criteria Meritage Hospitality Group Inc. (MHGU) is using to evaluate its locations moving forward, and how will this affect overall growth strategies?
**MWN-AI FAQ is based on asking OpenAI questions about Meritage Hospitality Group Inc (OTC: MHGU).
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