Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pizza Pizza Royalty Corp (PZRIF, Financial) has introduced new value offerings, such as the XXL pizza and the 'All for One' special, which have been well-received by customers.
- The company has successfully expanded its restaurant network, opening 33 new locations in 2024, including both traditional and nontraditional formats.
- Pizza Pizza Royalty Corp (PZRIF) has leveraged its strong digital footprint and marketing campaigns, such as the 'Pickup Artists' campaign, to drive growth in pickup orders.
- The company has engaged in strategic collaborations, like the partnership with Tabasco, to enhance menu variety and drive brand visibility.
- Pizza Pizza Royalty Corp (PZRIF) continues to focus on providing value and convenience, which are key differentiators in the competitive QSR landscape.
Negative Points
- Pizza Pizza Royalty Corp (PZRIF) reported a 5.3% decline in same-store sales for the third quarter of 2024, with Pizza Pizza restaurants experiencing a 5.9% decline.
- The company faces ongoing challenges from reduced consumer spending and heightened competition, impacting traffic and sales.
- There has been a shift from delivery to pickup orders, which typically have lower average checks, affecting revenue.
- The company anticipates higher interest rates on its new credit facility, which could impact financial performance.
- Pizza Pizza Royalty Corp (PZRIF) experienced a payout ratio of 109% for the quarter, resulting in a decrease in working capital.
Q & A Highlights
Q: Have you observed any changes in consumer behavior due to recent decreases in interest rates?
A: Paul Goddard, CEO, noted that while the decrease in interest rates is a positive signal, many consumers are still cautious with their discretionary spending. There has been a shift from delivery to pickup orders, which affects revenue due to lower average checks. Consumers are also more selective with their purchases, often opting out of additional items like dips or drinks.
Q: Are customers trading down from higher-priced items like premium pizzas or chicken wings?
A: Yes, Paul Goddard acknowledged a trend of customers trading down from higher-priced items. To address this, Pizza Pizza has introduced value offerings such as a pizza and chicken special at a $19.99 price point to maintain customer interest and drive volume.
Q: How is the competitive environment affecting Pizza Pizza, especially with aggressive promotional pricing from competitors?
A: Paul Goddard mentioned that the company has observed aggressive pricing strategies from competitors, which has necessitated a focus on value offerings to maintain competitiveness. Pizza Pizza aims to balance profitability with attractive pricing through special promotions.
Q: What initiatives are in place to drive walk-in and pickup traffic?
A: Paul Goddard highlighted several initiatives, including value promotions like a large four-topping pizza for $13.99 and snack boxes at sub-$10 price points. These efforts aim to attract value-conscious customers and increase traffic in walk-in and pickup channels.
Q: Why is Pizza 73 performing better than the Pizza Pizza brand in terms of sales?
A: Paul Goddard attributed Pizza 73's relative success to factors such as store renovations, enhanced tech platforms, and unique menu offerings like poutine and donor pizzas. These elements have resonated well with customers in the Western market, despite the competitive environment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
