TORONTO, May 1, 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”) ended March, 31, 2026.
First Quarter highlights:
- Same store sales(2) decreased 4.1%
- Royalty Pool sales decreased 3.6%
- Adjusted earnings per share(5) decreased 6.1%
- Restaurant network increased by seven net locations
- Royalty Pool of restaurants for 2026 increased by 20 net restaurants on January 1, 2026
“Our sales decline was driven by continued pressure on discretionary spending, softer demand, and an increasingly competitive promotional retail landscape. At the same time, we recognize opportunities to drive further value and innovation. We are focused on controlling what we can – strengthening our product offering, building out our footprint across Canada, and driving operational discipline,” said Paul Goddard, President and CEO of Pizza Pizza Limited.
SALES
Royalty Pool System Sales for the Quarter decreased 3.6% to $145.8 million from $151.3 million in the same quarter last year. By brand, sales from the 712 Pizza Pizza restaurants in the Royalty Pool decreased 4.1% to $124.5 million for the Quarter compared to $129.8 million in the same quarter last year. Sales from the 102 Pizza 73 restaurants decreased 0.9% to $21.3 million for the Quarter compared to $21.5 million in the same quarter last year.
For the Quarter, the decrease in Royalty Pool System Sales is largely driven by the same store sales, offset by new restaurants added to the Royalty Pool on January 1, 2026. 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, decreased 4.1% (2025 – increased 1.2%) for the Quarter. SSSG is calculated using a 13-week comparative basis.
|
SSSG |
First Quarter (%) |
|
|
2026 |
2025 |
|
|
Pizza Pizza |
-4.3 |
0.6 |
|
Pizza 73 |
-2.7 |
4.9 |
|
Combined |
-4.1 |
1.2 |
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 slightly, as the brands adjusted retail prices on select offers.
MONTHLY DIVIDENDS AND WORKING CAPITAL RESERVE
The Company’s dividends remained unchanged in the Quarter. The Company declared shareholder dividends of $5.7 million, or $0.2325 per share, for the Quarter and the prior year comparable quarter. The payout ratio is 134% for the Quarter and was 117% in the prior year comparable period.
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 $2.3 million at March 31, 2026, which is a decrease of $1.4 million in the Quarter. 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 decreased to $0.22 when compared to the prior year comparable quarter at $0.233.
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 decreased 6.1% to $0.216 when compared to the same period of 2025.
RESTAURANT DEVELOPMENT
As previously announced, the number of restaurants in the Company’s Royalty Pool increased by 20 net locations to 814 on the January 1, 2026 Adjustment Date, and consists of 712 Pizza Pizza restaurants and 102 Pizza 73 restaurants. The number of restaurants in the Royalty Pool will remain unchanged through 2026.
During the Quarter, Pizza Pizza Limited (“PPL”) opened six traditional and three non-traditional Pizza Pizza restaurants, and closed one traditional and one non-traditional Pizza 73 restaurant. The six traditional restaurant openings were across Canada in British Columbia, Manitoba, Ontario, Quebec and two in Newfoundland.
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.
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 March 31, 2026 unaudited interim condensed consolidated financial statements of the Company (“Financial Statements”). Readers should note that the 2026 results are not directly comparable to the 2025 results due to there being 814 restaurants in the 2026 Royalty Pool compared to 794 restaurants in the 2025 Royalty Pool.
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(in thousands of dollars, except number of restaurants, days in the year, per share amounts, and noted otherwise) |
Three months ended March 31, 2026 |
Three months ended March 31, 2025 |
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|
Restaurants in Royalty Pool(1) |
814 |
794 |
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|
Same store sales growth(2) |
-4.1 % |
1.2 % |
||||
|
Days in the Quarter |
90 |
90 |
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|
System Sales reported by Pizza Pizza restaurants in the Royalty Pool(6) |
$ 124,526 |
$ 129,820 |
||||
|
System Sales reported by Pizza 73 restaurants in the Royalty Pool(6) |
21,308 |
21,503 |
||||
|
Total System Sales |
$ 145,834 |
$ 151,323 |
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|
Royalty – 6% on Pizza Pizza System Sales |
$ 7,471 |
$ 7,789 |
||||
|
Royalty – 9% on Pizza 73 System Sales |
1,918 |
1,936 |
||||
|
Royalty – International operations |
4 |
4 |
||||
|
Royalty income |
$ 9,393 |
$ 9,729 |
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|
Interest expense on borrowings(3) |
(435) |
(317) |
||||
|
Administrative expenses |
(132) |
(152) |
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|
Interest income |
25 |
68 |
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Adjusted earnings available for distribution to the Company and Pizza Pizza Limited(5) |
$ … |
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