TORONTO, March 25, 2026 /CNW/ - Pizza Pizza Royalty Corp. (the "Company") (TSX: PZA), which indirectly owns the Pizza Pizza and Pizza 73 Rights and Marks, released financial results today for the three months ("Quarter") and twelve months ("Year") ended December, 31, 2025.
Fourth Quarter highlights:
-- Same store sales(2) increased 0.2% -- Royalty Pool sales increased 2.2% -- Adjusted earnings per share(5) was flat -- Restaurant network increased by 4 net locations
Year to Date highlights:
-- Same store sales(2) increased 0.9%
-- Royalty Pool sales increased 2.4%
-- Adjusted earnings per share(5) decreased 0.2%
-- Restaurant network increased by 18 net locations
-- Royalty Pool of restaurants for 2025 increased by 20 net restaurants on
January 1, 2025
"While we delivered positive sales in a very tough environment, it is clear that momentum has softened as customers become more deliberate in how they spend. That said, we will leverage our strong everyday value leadership position, backed by ongoing enhancements to our menu, restaurants and digital customer experience to continue to grow successfully," said Paul Goddard, President and CEO of Pizza Pizza Limited.
SALES
Royalty Pool System Sales for the Quarter increased 2.2% to $164.0 million from $160.5 million in the same quarter last year. By brand, sales from the 694 Pizza Pizza restaurants in the Royalty Pool increased 2.0% to $140.4 million for the Quarter compared to $137.7 million in the same quarter last year. Sales from the 100 Pizza 73 restaurants increased 3.3% to $23.6 million for the Quarter compared to $22.8 million in the same quarter last year.
Royalty Pool System Sales for the Year increased 2.4% to $635.5 million from $620.6 million in the same Year last year. By brand, sales from the 694 Pizza Pizza restaurants in the Royalty Pool increased 2.4% to $547.6 million for the Year compared to $534.8 million in the same Year last year. Sales from the 100 Pizza 73 restaurants increased 2.5% to $87.9 million for the Year compared to $85.8 million in 2024.
For the Quarter and Period, the increase in Royalty Pool System Sales is driven by the same store sales and new restaurants added to the Royalty Pool on January 1, 2025. Additionally, while the number of restaurants in the Pizza 73 Royalty Pool remains less than 2019 when there were 104 restaurants, the negative impact on Royalty Pool System Sales due to prior year restaurant closures has been mitigated by the Make-Whole Carryover Amount. See "Same Store Sales Growth".
The Pizza Pizza and Pizza 73 restaurants are subject to seasonal variations in their business. System Sales for the quarter ended March 31 have generally been the lowest. System Sales for the quarter ended December 31 have generally been the highest relative to other quarters.
SAME STORE SALES GROWTH ("SSSG")
SSSG, the key driver of yield growth for shareholders of the Company, increased 0.2% (2024 -- decreased 3.8%) for the Quarter, and increased 0.9% for the Year (2024 -- decreased 3.0%). SSSG is not affected by the additional day during 2024, the leap year, as SSSG is calculated using a 13 and 52-week comparative basis.
SSSG Fourth Quarter(%) Year-to-Date(%)
2025 2024 2025 2024
Pizza Pizza -0.1 -4.3 0.7 -3.8
Pizza 73 1.8 -0.7 1.9 2.3
Combined 0.2 -3.8 0.9 -3.0
SSSG is driven by the change in the customer check and customer traffic, both of which are affected by changes in pricing and sales mix. During the Quarter, at both brands, restaurant traffic decreased due to the current economic situation and its impact on consumer discretionary spending, as well as heightened competition for those consumer spending dollars. The average customer check increased, as the brands saw an increase in higher ticket delivery orders. For the Year, both brands saw a slight increase in orders and average customer check.
MONTHLY DIVIDENDS AND WORKING CAPITAL RESERVE
The Company's dividends remained unchanged in the Quarter and Year. The Company declared shareholder dividends of $5.7 million, or $0.2325 per share, for the Quarter and the prior year comparable quarter, and $22.9 million, or $0.93 per share, for the Year and the prior year comparable period. The payout ratio is 105% for the Quarter and was 110% for the Year.
The Company's policy is to distribute all available cash in order to maximize returns to shareholders over time, after allowing for reasonable reserves. Despite seasonal variations inherent to the restaurant industry, the Company's policy is to make equal dividend payments to shareholders on a monthly basis in order to smooth out income to shareholders. After the reduction in the monthly dividend in April 2020, and the eight subsequent increases, including the most recent increase in November 2023, any further change will be implemented with a view to maintaining the continuity of consistent monthly distributions. It is expected that future dividends will continue to be funded entirely by cash flow from operations and the cash reserve.
The Company's working capital reserve is $3.7 million at December 31, 2025, which is a decrease of $2.4 million in the Year (omitting fiscal 2024's debt reclassification). System sales for the quarter ended March 31 have generally been the softest and historically results in a payout ratio over 100%. The reserve is available to stabilize dividends and fund other expenditures in the event of short-to-medium-term variability in System Sales and, thus, the Company's royalty income. The Company has historically targeted a payout ratio at or near 100% on an annualized basis.
EARNINGS PER SHARE ("EPS")
Fully-diluted basic EPS for the Quarter was flat at $0.240 when compared to the prior year comparable quarter.
As compared to basic EPS, the Company considers adjusted EPS(5) to be a more meaningful indicator of the Company's operating performance and, therefore, presents fully diluted, adjusted EPS. The adjusted EPS for the Quarter was also flat at $0.245 when compared to the same period of 2024, and decreased 0.2% to $0.951 for the Year.
RESTAURANT DEVELOPMENT
As previously announced, the number of restaurants in the Company's Royalty Pool increased by 20 net locations to 794 on the January 1, 2025 Adjustment Date, and consists of 694 Pizza Pizza restaurants and 100 Pizza 73 restaurants. The number of restaurants in the Royalty Pool remained unchanged through 2025.
During the Quarter, Pizza Pizza Limited ("PPL") opened three traditional and three non-traditional Pizza Pizza restaurants. Additionally, at the Pizza 73 brand, PPL opened one traditional restaurants and closed three traditional restaurants.
During the Year, PPL opened 12 traditional and 20 non-traditional Pizza Pizza restaurants, and closed three traditional and 11 non-traditional Pizza Pizza restaurants. PPL also opened five traditional Pizza 73 restaurants, and closed five Pizza 73 traditional restaurants. Four of the five traditional Pizza 73 closures, had their delivery territory fully assigned to their neighbouring restaurant, to minimize the impact on sales.
PPL management expects to grow its traditional restaurant network by 2% to 3% and continue its renovation program through 2026.
Readers should note that the number of restaurants added to the Royalty Pool each year may differ from the number of restaurant openings and closings reported by PPL on an annual basis as the years for which they are reported differ slightly.
CREDIT FACILITY
On March 20, 2025, the Company's existing credit facility was extended for three years with a new maturity date of April 24, 2028. Mandatory repayment remains interest-only until the loan matures. The new facility bears interest at Canadian Overnight Repo Rate Average ("CORRA") rate plus a credit spread of 1.00% to 1.50%, depending on the level of certain financial ratios. Additionally, on April 8, 2025, the Partnership entered into two three-year forward swap arrangements commencing April 24, 2025. With the new swaps and credit spread, the interest rate increased to 3.51%, comprised of a fixed rate of 2.51% plus a credit spread currently set at 1.0%.
The credit facility includes affirmative and negative covenants customary for agreements of this nature, and as at June 30, 2025 all covenants have been met. The Partnership is required to maintain a funded debt-to-EBITDA ratio not to exceed 2.5:1.0 on a four quarter rolling average and an interest coverage ratio of minimum 3:1. The debt-to-EBITDA ratio for the last four-quarter rolling average is 1.18:1 and the interest coverage ratio is 26.04:1. The Partnership is presently making interest-only payments on the non-revolving credit facility. As the debt-to-EBITDA level changes, the credit spread will change as follows.
Debt:EBITDA Credit Spread < 1.5:1 1.00 % 1.5 - 2.0:1 1.25 % > 2.0:1 1.50 %
SELECTED FINANCIAL HIGHLIGHTS
The following tables set out selected financial information and other data of the Company and should be read in conjunction with the December 31, 2025 audited consolidated financial statements of the Company ("Financial Statements"). Readers should note that the 2025 results are not directly comparable to the 2024 results due to there being 794 restaurants in the 2025 Royalty Pool compared to 774 restaurants in the 2024 Royalty Pool.
(in thousands of Three Three Twelve Twelve
dollars, except monthsendedDecember monthsendedDecember monthsended monthsended
number of 31,2025 31,2024 December December
restaurants, 31,2025 31,2024
daysin the year,
per share
amounts, and
noted otherwise)
Restaurants in
Royalty Pool(1) 794 774 794 774
Same store sales
growth(2) 0.2 % -3.8 % 0.9 % -3.0 %
Days in the
Period 92 92 365 366
System Sales
reported by
Pizza Pizza
restaurants in
theRoyalty
Pool(6) $ 140,420 $ 137,721 $ 547,584 $ 534,768
System Sales
reported by
Pizza 73
restaurants in
theRoyalty
Pool(6) 23,580 22,820 87,930 85,783
Total System
Sales $ 164,000 $ 160,541 $ 635,514 $ 620,551
Royalty -- 6% on
Pizza Pizza
System Sales 8,425 8,264 $ 32,855 $ 32,086
Royalty -- 9% on
Pizza 73 System
Sales 2,122 2,053 7,914 7,721
Royalty --
International
operations 6 - 20 -
Royalty income $ 10,553 $ 10,317 $ 40,789 $ 39,807
Interest paid on
borrowings(3)
(5) (443) (326) (1,596) (1,286)
Administrative
expenses (211) (221) (827) (717)
Interest income 31 70 197 386
Adjusted
earnings
available for
distribution to
the
Companyand
Pizza Pizza
Limited(5) $ 9,930 $ 9,840 $ 38,563 $ 38,190
Distribution on
Class B and
Class D
Exchangeable
Shares(4) (2,725) (2,584) (10,937) (10,624)
Current income
tax expense (1,775) (1,767) (6,844) (6,839)
Adjusted
earnings
available for
shareholder
dividends(5) $ 5,430 $ 5,489 $ 20,782 20,727
Add back:
Distribution on
Class B and
Class D
Exchangeable
Shares(4) 2,725 2,584 10,937 10,624
Adjusted
earnings from
operations(5) $ 8,155 $ 8,073 $ 31,719 31,351
Adjusted
earnings per
share(5) $ 0.245 $ 0.245 $ 0.951 $ 0.953
Basic earnings
per share $ 0.240 $ 0.240 $ 0.940 $ 0.941
Dividends
declared by the
Company $ 5,724 $ 5,724 $ 22,895 $ 22,895
Dividend per
share $ 0.2325 $ 0.2325 $ 0.930 $ 0.930
Payout ratio(5) 105 % 104 % 110 % 110 %
December December
31,2025 31,2024
Working
capital(5) (7) $ 3,727 $ (40,908)
Total assets $ 377,103 $ 373,745
Total
liabilities $ 75,614 $ 75,527
(1) The number of restaurants for which the Pizza Pizza
Royalty Limited Partnership (the "Partnership") earns
a royalty ("Royalty Pool"), as defined in the amended
and restated Pizza Pizza license and royalty agreement
(the "Pizza Pizza License and Royalty Agreement")
and the amended and restated Pizza 73 license and
royalty agreement (the "Pizza 73 License and Royalty
Agreement") (together, the "License and Royalty Agreements").
For the 2025 fiscal year, the Royalty Pool includes
694 Pizza Pizza restaurants and 100 Pizza 73 restaurants.
The number of restaurants added to the Royalty Pool
each year may differ from the number of restaurant
openings and closings reported by Pizza Pizza Limited
("PPL") on an annual basis as the periods for which
they are reported differ slightly (see "Royalty Pool
Adjustments").
(2) Same store sales growth ("SSSG") is a supplementary
financial measure under NI 52-112 and therefore may
not be comparable to similar measures presented by
other issuers. SSSG means the change in Period's gross
sales of a particular Pizza Pizza or Pizza 73 restaurant
as compared to sales in the previous comparative Period,
where the restaurant has been open at least 13 months.
Additionally, for a Pizza 73 restaurant whose restaurant
territory was adjusted due to an additional restaurant,
the sales used to derive the Step-Out Payment (calculated
as the difference between the average monthly Pizza
73 Royalty payment attributable to that Adjusted Restaurant
in the 12 months immediately preceding the month in
which the territory reduction occurs, less the Pizza
73 Royalty payment attributable to the restaurant
in the current month) may be added to sales to arrive
at SSSG. SSSG does not have any standardized meaning
under IFRS Accounting Standards ("IFRS") as issued
by the International Accounting Standards Board ("IASB").
See "Reconciliation of Non-IFRS Measures".
(3) The Company, indirectly through the Partnership, incurs
interest expense on the $47 million outstanding bank
loan. Interest expense also includes amortization
of loan fees. See "Interest Expense".
(4) Represents the distribution to PPL from the Partnership
on Class B and Class D Units of the Partnership held
by PPL. The Class B and D Units are exchangeable into
common shares of the Company ("Shares") based on the
value of the Class B Exchange Multiplier and the Class
D Exchange Multiplier at the time of exchange as defined
in the License and Royalty Agreements, respectively,
and represent 26.2% of the fully diluted Shares at
June 30, 2025 (December 31, 2024 -- 25.2%). During
the quarter ended March 31, 2025, as a result of the
final calculation of the Exchangeable Class B and
Class D Share entitlements related to the January
1, 2024 Adjustment to the Royalty Pool, PPL was paid
a distribution on additional Exchangeable Shares as
if such Shares were outstanding as of January 1, 2024.
Included in the three months ended March 31, 2025,
is the payment of $34 in distributions to PPL pursuant
to the true-up calculation (March 31, 2024 - PPL received
$288).
(5) "Adjusted earnings available for distribution to the
Company and Pizza Pizza Limited", "Adjusted earnings
from operations", "Adjusted earnings available for
shareholder dividends", "Adjusted earnings per Share",
"Interest paid on borrowings", "Payout Ratio", and
"Working Capital" are non-GAAP financial measures
under NI 52-112. They do not have any standardized
meaning under IFRS and therefore may not be comparable
to similar measures presented by other issuers. See
"Reconciliation of Non-IFRS Measures" and "Interest
Expense".
(6) System Sales (as defined in the License and Royalty
Agreements) reported by Pizza Pizza and Pizza 73 restaurants
include the gross sales of Pizza Pizza company-owned,
jointly-controlled and franchised restaurants, and
the monthly Make-Whole Payment, excluding sales and
goods and service tax or similar amounts levied by
any governmental or administrative authority. System
Sales do not represent the consolidated operating
results of the Company but are used to calculate the
royalties payable to the Partnership as presented
above.
(7) Working capital for 2024 includes the reclassification
of the $47 million credit facility to current liabilities,
see "Working Capital". Excluding the reclassification,
working capital would be $6.1 million.
A copy of the Company's interim consolidated financial statements and related Management's Discussion and Analysis ("MD&A") will be available at www.sedarplus.ca and www.pizzapizza.ca after the market closes on March 25, 2026.
As previously announced, the Company will host a conference call to discuss the results. The details of the conference call are as follows:
Date: March 25, 2026
Time: 5:30 p.m. ET
Call-in number: 416-945-7677 / 888-699-1199
Recording call in number: 289-819-1450 / 888-660-6345
Available until midnight, April 8, 2026
Conference ID: 20669#
A recording of the call will also be available on the Company's website at www.pizzapizza.ca.
FORWARD-LOOKING STATEMENTS
Certain statements in this report, including information regarding the Company's dividend policy, its ability to meet covenants and other financial obligations, and their ability to achieve their business objectives, constitute "forward-looking" statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this report, such statements include such words as "may", "will", "expect", "believe", "plan", and other similar terminology in conjunction with a discussion of future events or operating or financial performance. These statements reflect management's current expectations regarding future events and operating and financial performance and speak only as of the date of this MD&A. The Company does not assume any obligation to update any such forward looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. These forward-looking statements involve a number of risks and uncertainties. The following are some factors that could cause actual results to differ materially from those expressed in or underlying such forward-looking statements: changes in national and local business and economic conditions, impacts of legislation and governmental regulation, accounting policies and practices, competition, changes in demographic trends and changing consumer preferences, and the results of operations and financial condition of PPL. The foregoing list of factors is not exhaustive and should be read in conjunction with the other information included in the foregoing MD&A, the PPL financial statements for the period ended December 28, 2025 and the related MD&A and the Company's Annual Information Form.
Exhibit One: Reconciliation of Non-IFRS Measures
The Company's earnings, as presented under IFRS includes non-cash items, such as deferred tax, that do not affect the Company's business operations or its ability to pay dividends to shareholders. The Company believes its earnings are not the only, or most meaningful, measurement of the Company's ability to pay dividends or measure the rate at which the Company is paying out its earnings. Therefore, the Company reports the following non-IFRS measures:
-- Adjusted earnings available for distribution to the Company and PPL;
-- Adjusted earnings from operations;
-- Adjusted earnings available for shareholder dividends;
-- Adjusted earnings per share ("EPS");
-- Payout Ratio; and
-- Working Capital.
The Company believes that the above noted measures provide investors with more meaningful information regarding the amount of cash that the Company has generated to pay dividends, and, together with Interest Paid on Borrowings and SSSG, help illustrate the Company's operating performance and highlight trends in the Company's business. These measures are also frequently used by analysts, investors, and other interested parties in the evaluation of issuers in the Company's sector, particularly those with a royalty-based model. The adjustments to net earnings as recorded under IFRS relate to non-cash items included in earnings and cash payments accounted for on the statement of financial position. Investors are cautioned, however, that this should not be construed as an alternative to net earnings as a measure of profitability. The method of calculating the Company's NI 52-112 non-IFRS financial measures: Adjusted earnings available for distribution to the Company and Pizza Pizza Limited, Adjusted earnings from operations, Adjusted earnings available for shareholder dividends, Adjusted EPS, Payout Ratio, Working Capital and SSSG for the purposes of this MD&A may differ from that used by other issuers and, accordingly, these measures may not be comparable to similar measures used by other issuers.
The table below reconciles the following to "Earnings for the period before income taxes" which is the most directly comparable measure calculated in accordance with IFRS:
-- Adjusted earnings available for distribution to the Company and Pizza
Pizza Limited;
-- Adjusted earnings from operations; and
-- Adjusted earnings available for shareholder dividends.
(in thousands of 2025 Q4 2025 Q3 2025 Q2 2025 Q1 2025
dollars, except
number of shares)
Earnings for the
period before income
taxes 38,563 9,930 9,571 9,734 9,328
Adjusted earnings
available for
distribution tothe
Company and Pizza
Pizza Limited 38,563 9,930 9,571 9,734 9,328
Current income tax
expense (6,844) (1,775) (1,706) (1,707) (1,656)
Adjusted earnings
from operations 31,719 8,155 7,865 8,027 7,672
Less: Distribution on
Class B and Class
DExchangeable Shares (10,937) (2,725) (2,726) (2,726) (2,760)
Adjusted earnings
available for
shareholderdividends 20,782 5,430 5,139 5,301 4,912
Weighted average
Shares -- diluted 33,353,588 33,353,588 33,353,588 33,353,588 33,353,588
(in thousands of 2024 Q4 2024 Q3 2024 Q2 2024 Q1 2024
dollars, except
number of shares)
Earnings for the
period before income
taxes 38,190 9,840 9,566 9,557 9,227
Adjusted earnings
available for
distribution tothe
Company and Pizza
Pizza Limited 38,190 9,840 9,566 9,557 9,227
Current income tax
expense (6,839) (1,767) (1,714) (1,712) (1,646)
Adjusted earnings
from operations 31,351 8,073 7,852 7,845 7,581
Less: Distribution on
Class B and Class
DExchangeable Shares (10,624) (2,584) (2,584) (2,584) (2,872)
Adjusted earnings
available for
shareholderdividends 20,727 5,489 5,268 5,261 4,709
Weighted average
Shares -- diluted 32,908,631 32,908,631 32,908,631 32,908,631 32,908,631
The Basic EPS and the Adjusted EPS calculations are based on fully diluted weighted average shares, and both include PPL's Class B and Class D Exchangeable Shares since they are exchangeable into and economically equivalent to the Shares. See "Adjusted EPS".
Adjusted EPS is calculated by dividing Adjusted earnings from operations, as explained above, by the fully diluted weighted average shares. Adjusted EPS for the Quarter was flat at $0.245 when compared to the same period of 2024, and decreased 0.2% to $0.951 for the Year.
Basic EPS is Three months ended Year ended
adjusted as
follows:
December December December December
31,2025 31,2024 31,2025 31,2024
Basic EPS $ 0.240 $ 0.240 $ 0.940 $ 0.941
Adjustments:
Deferred tax
expense 0.005 0.005 0.011 0.012
Adjusted EPS $ 0.245 $ 0.245 $ 0.951 $ 0.953
Payout Ratio is a non-IFRS financial measure that does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company presents the Payout Ratio to illustrate the earnings being returned to shareholders. The Company's Payout Ratio is calculated by dividing the dividends declared to shareholders by the adjusted earnings from operations, after paying the distribution on Class B and Class D Exchangeable Shares, in that same period.
Three months ended Year ended
(in thousands December December December December
of dollars, 31,2025 31,2024 31,2025 31,2024
except as
noted
otherwise)
Dividends
declared to
shareholders 5,724 5,724 22,895 22,895
Adjusted
earnings
available for
shareholder
dividends 5,430 5,489 20,782 20,727
Payout Ratio 105 % 104 % 110 % 110 %
Working Capital is defined as total current assets less total current liabilities. The Company views working capital as a measure for assessing overall liquidity and its ability to stabilize dividends and fund unusual expenditures in the event of short- to medium-term variability in Royalty Pool System Sales. In 2024, the borrowings of $47.0 million were reclassified to current liabilities as the facility was scheduled to come due in April 2025. On March 20, 2025, the Company renewed its facility for a three-year term and maturity is now April 2028. Excluding the impact of the borrowings in 2024, the working capital reserve would have been $6.1 million as at December 31, 2024. The use of the working capital during the Period relates to the payout ratio of 110%.
(in thousands of dollars) December 31, 2025 December 31, 2024 Total current assets 7,258 9,621 Less: Total current liabilities 3,531 50,529 Working Capital 3,727 (40,908)
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