Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Boston Pizza Royalties Income Fund (BPZZF, Financial) reported positive second quarter sales despite high interest rates and inflation challenges.
- Franchise sales from restaurants in the Royalty Pool increased by 1.3% for the quarter and 0.2% year to date compared to the previous year.
- The company launched successful marketing initiatives, including a dynamic playoff promotion and an updated main menu, which received positive feedback.
- Boston Pizza opened two new restaurants and completed renovations on ten others year to date, indicating ongoing expansion and improvement efforts.
- The company celebrated its 60th anniversary with a successful summer patio campaign, enhancing guest experience and engagement.
Negative Points
- The Fund's net and comprehensive income decreased by $5.3 million for the quarter compared to the same period in 2023, primarily due to a decrease in fair value gain.
- Guest traffic faced challenges due to macroeconomic factors, despite menu price increases contributing to sales.
- The Fund's payout ratio increased to 96.2% for the quarter, up from 88% in the same period in 2023, indicating higher distribution relative to distributable cash.
- Cash flows generated from operating activities decreased slightly both for the quarter and year to date compared to 2023.
- The Fund experienced a decrease in distributable cash per unit by 3.6% for the quarter and 0.4% year to date, reflecting financial pressures.
Q & A Highlights
Q: Can you comment on the trend of guest traffic through the quarter and into Q3?
A: Jordan Holm, President of Boston Pizza Royalties Income Fund, noted that guest traffic has been a focus, with menu price increases contributing to top-line sales. The second quarter saw more guests, partly due to a favorable NHL playoff run, which attracted more visitors to the restaurants.
Q: Have you seen a normalization of guest traffic after the NHL playoffs finished?
A: Jordan Holm mentioned that they are still working hard to attract guests, with a focus on patio business, which has grown post-COVID. The company continues to market the patio experience and aims to maintain the positive sales performance into the third quarter.
Q: What was the nature of the new restaurant that opened?
A: Jordan Holm explained that two new restaurants opened this year, one in Markham and another in Sarnia, Ontario. These locations are part of hotel developments, representing a mix of new builds and refurbishments of existing restaurants.
Q: What's the pipeline for new restaurants through the end of the year?
A: Jordan Holm stated that they have a couple of projects underway, with hopes to finish two more by year-end. The focus is on securing the right real estate and franchise agreements for 2025, targeting underserviced Canadian markets.
Q: Were the new restaurant openings conventional footprints or refurbishments?
A: The new openings were a mix of both. One was a brand-new build, and the other was a refurbishment. Both are part of hotel developments, which is considered a nontraditional site for Boston Pizza.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
