VANCOUVER, BC, Oct. 17, 2025 /CNW/ - A&W Food Services of Canada Inc. (TSX: AW) ("A&W", "Food Services", "we" or "our") today announced its financial results for the 12 and 36-week periods ended September 7, 2025.
All references to "Q3 2025" are to Food Services' 12-week period ended September 7, 2025, to "YTD 2025" are to Food Services' 36-week period ended September 7, 2025, to "Q3 2024" are to Food Services' 12-week period ended September 8, 2024 and to "YTD 2024" are to Food Services' 36-week period ended September 8, 2024. The fiscal 2025 year is 52 weeks and ends on December 28, 2025 ("Fiscal 2025").
"We are pleased to report our third consecutive quarter of positive Same Store Sales Growth, a significant achievement amidst a challenging macroeconomic environment which continues to create headwinds for sales at A&W restaurants" announced Susan Senecal, Chief Executive Officer. "The Q3 2025 Same Store Sales Growth(i) of 1.4% is a reflection of a positive response to A&W's marketing campaigns and value offerings, which have resonated with guests who are looking for both great taste and value," added Ms. Senecal. "Through the first three quarters of 2025, we've achieved System Sales Growth(i) of 2.9% which is attributed to both the positive Same Store Sales Growth and the opening of new A&W restaurants which is supported by our partnership with Suncor."
(i) System Sales Growth and Same Store Sales Growth are non-IFRS ratios and supplementary financial measures. Please see the "Non-IFRS Measures" section of this news release for further details.
Q3 FINANCIAL HIGHLIGHTS
For Q3 2025, compared to Q3 2024
-- System Sales (i) of $479.6 million increased by $14.5 million (3.1%)
-- Revenue decreased by $4.8 million (6%) to $71.2 million, due to the
timing of new A&W restaurant openings which resulted in seven fewer
openings in Q3 2025 as compared to Q3 2024
-- Income before income taxes increased by $14.6 million (163%) to $23.6
million
-- Adjusted EBITDA (i) increased by $1.1 million (5%) to $25.8 million
-- Operating costs decreased by $14.2 million (31%) to $31.8 million, of
which $7.0M is attributable to decreased marketing-related costs incurred
by the National Advertising Fund
-- General and administrative expenses were consistent at $10.8 million
-- Cash Dividend of $0.480 per share declared on September 2, 2025
-- Opened 3 new A&W restaurants
(i) System Sales and Adjusted EBITDA are non-IFRS financial
measures. Please see the "Non-IFRS Measures" section
of this news release for further details.
SUMMARY OF RESULTS
(in thousands of Canadian $) Q3 2025 Q3 2024 YTD 2025 YTD 2024
Financial Summary
Revenue from franchising 65,301 69,940 184,215 181,986
Revenue from corporate
restaurants 5,904 6,061 16,900 17,117
Total revenue 71,205 76,001 201,115 199,103
Operating costs (31,773) (45,962) (101,740) (108,080)
General and administrative
expenses (10,786) (10,762) (32,796) (33,578)
Royalty expense - (13,742) - (38,260)
Net finance expense (3,615) (233) (11,149) (1,067)
Loss on interest rate swap (1,420) - (2,177) -
Amortization of deferred gain - 880 - 2,641
Share of income from
associates - 2,786 - 8,230
Income before income taxes 23,611 8,968 53,253 28,989
Income tax expense (6,053) (2,482) (13,912) (6,198)
Net income 17,558 6,486 39,341 22,791
Net cash generated from
operating activities 17,200 26,976 22,501 45,074
Other Metrics
System Sales(i) 479,607 465,104 1,328,822 1,291,682
System Sales Growth(i) 3.1 % 0.4 % 2.9 % 1.3 %
Same Store Sales Growth(i) 1.4 % -1.0 % 1.3 % 0.0 %
Net annual restaurant unit
growth(ii) 1.4 % 2.0 % 1.4 % 2.0 %
Adjusted EBITDA(i) 25,793 24,677 70,714 65,542
(i) System Sales, System Sales Growth, Same Store Sales
Growth, and Adjusted EBITDA are non-IFRS financial
measures, non-IFRS ratios and supplementary financial
measures. Please see the "Non-IFRS Measures" section
of this news release for further details.
(ii) Net annual restaurant unit growth reflects the percent
increase in A&W restaurants at the ending of the reporting
period as compared to the end of the prior year comparable
reporting period on a trailing 4 quarter basis.
On October 17, 2024, A&W completed a transaction (the "Transaction") in which Food Services indirectly acquired the trademarks used in the A&W business in Canada through the acquisition of all of the units of A&W Revenue Royalties Income Fund (the "Fund") which it did not already own. Due to the Transaction, the financial results for Q3 2025 are not directly comparable to the financial results for Q3 2024.
For further information regarding the Transaction, please refer to Food Services Q3 2025 Management's Discussion and Analysis ("MD&A") and Food Services' Annual MD&A for the 52-week period ended December 29, 2024, both of which are available on Food Services' SEDAR+ profile at www.sedarplus.ca., as well as the Fund's management information circular dated August 29, 2024 available on the Fund's SEDAR+ profile at www.sedarplus.ca.
Q3 2025 Results Compared to Q3 2024
Total revenue decreased by $4.8 million primarily due to a difference in the timing of restaurant openings. There were seven fewer openings in Q3 2025 compared to Q3 2024, as the timing of restaurant openings is subject to various factors and fluctuates each quarter. New restaurant openings impact the revenue generated from the sale of equipment and the revenue associated with turnkey restaurants and as such the lower number of openings in Q3 2025 led to a reduction in those streams of revenue, when compared to Q3 2024.
System Sales(i) increased 3.1% in Q3 2025 (0.4% in Q3 2024) due to an increase in the number of A&W restaurants and the 1.4% Same Store Sales Growth(i) achieved in Q3 2025. Revenue from service fees, contributions to the National Advertising Fund ("NAF") and revenue generated from the distribution of food and supplies fluctuate with the movement in System Sales and as such, were up quarter over quarter and partially offset the decrease in revenue related to new restaurant openings. The increase in service fee revenue also reflects the continuing migration of A&W restaurants from a 2.5% to a 3.5% service fee rate, leading to a higher weighted average service fee rate and margin expansion in Q3 2025.
Same Store Sales Growth(i) for Q3 2025 was 1.4%, due to an increase in both average cheque size and guest counts. The growth in guest counts demonstrates the ongoing success of our marketing campaigns, which we began to see positive impacts from in Q1 2025 and reflects the attractiveness of our value offerings in the current consumer market, including our Value Deals menu, which was introduced in Q3 2025 and features a variety of menu items priced under $4.00. The increase in average cheque size is partially attributed to industry-wide inflation affecting goods, services, and labour. Same Store Sales Growth is impacted by shifts in guest counts, cheque size (including party size, menu prices, and menu mix), and changes in consumer discretionary spending. On August 21, 2025 we held our 17(th) annual Burgers to Beat MS Day, an annual campaign where $2.00 from every Teen Burger sold is donated to MS Canada. We celebrated another successful campaign and surpassed the number of Teen Burgers sold during the 2024 campaign.
Income before income taxes increased by $14.6 million in Q3 2025 largely as a result of the cessation of the royalty expense following the completion of the Transaction and also due to a decrease in operating costs, partially offset by a decrease in revenue and an increase in net finance expense and loss on interest rate swap as well as the cessation of the income from associates and amortization of deferred gain following completion of the Transaction. In Q3 2025 the NAF's contributions exceeded its expenses by $4.5 million whereas in Q3 2024, the NAF's expenses exceeded its contributions by $3.3 million resulting in a $7.8 million quarter over quarter variance in net income before taxes due to the timing of expenses incurred by the NAF. The remaining decrease in operating costs is correlated with the decrease in revenue discussed above and is due to seven fewer new A&W restaurants opened in the quarter.
Food Services reported net income per share of $0.71 ($0.71 per diluted share) in Q3 2025 versus net income per share of $0.42 ($0.42 per diluted share) in Q3 2024 due to the increase in income attributable to shareholders of Food Services, partially offset by the weighted average number of shares outstanding increasing as a result of the Transaction and the issuance of stock-based compensation.
In order to improve comparability of net income per share, the number of shares used to calculate the net income per share for Q3 2024, has been adjusted to reflect the equivalent number of common shares of Food Services that were outstanding after the reorganization that was undertaken as part of the Transaction.
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