Press Release Details

For Immediate Release                                                                           Toronto Stock Exchange: BPF.UN

BOSTON PIZZA ROYALTIES INCOME FUND ANNOUNCES SAME STORE SALES GROWTH OF 3.1% AND FRANCHISE SALES FROM ROYALTY POOL RESTAURANTS OF $201.4 MILLION FOR THE THIRD QUARTER

Distributable Cash per Unit growth of 3.4% in the third quarter of 2014

Highlights

• System-Wide Gross Sales¹ of $258.7 million for the Period and $751.7 million YTD, representing increases of $12.1 million and $18.4 million, respectively, versus the same periods one year ago.
• Franchise Sales² from royalty pool restaurants of $201.4 million for the Period and $584.4 million YTD, representing increases of $9.9 million and $12.7 million, respectively, versus the same periods one year ago.
• Same store sales growth of 3.1% for the Period and 0.5% YTD.
• Distributable Cash³ per Unit of $0.335 for the Period and $0.921 YTD.
• Payout Ratio⁴ of 91.1% for the Period and 100.2% YTD.
• Trustees declared October 2014 distribution to unitholders of 10.2 cents per Unit, marking the Fund’s 148^th consecutive distribution to unitholders since the IPO, totalling $15.02 per Unit.

Same store sales growth (“SSSG”), a key driver of distribution growth for unitholders of the Fund, was 3.1% for the Period and 0.5% YTD compared to 0.8% and 2.5% for the same periods, respectively, in 2013.  Franchise Sales, the basis upon which royalties are paid by BPI to the Fund, exclude revenue from sales of liquor, beer, wine and approved national promotions and discounts.  On a Franchise Sales basis, SSSG was 3.0% for the Period and 0.1% YTD compared to 0.8% and 2.7% for the same periods, respectively, in 2013.  The positive SSSG for the Period was principally due to higher take-out and delivery sales resulting from the continued promotion of Boston Pizza’s online ordering system and menu re-pricing.  Other key marketing campaigns in the Period included Boston Pizza’s 50^th anniversary celebration and the launch of the new “MyBP” guest loyalty app.  The positive SSSG YTD was principally due to higher take-out and delivery sales partially offset by the impact of extreme winter weather experienced in many parts of Canada during the first quarter in 2014 and a higher number of temporary closures due to restaurant renovations compared to the same period one year ago.

Franchise Sales of Boston Pizza restaurants in the royalty pool were $201.4 million for the Period and $584.4 million YTD compared to $191.5 million and $571.7 million in the same periods, respectively, in 2013.  The $9.9 million increase in Franchise Sales for the Period was principally due to additional Franchise Sales from new Boston Pizza restaurants added to the royalty pool on January 1, 2014 and positive SSSG for the Period.  The increase in Franchise Sales YTD was principally due to additional Franchise Sales from new Boston Pizza restaurants added to the royalty pool on January 1, 2014.

“Boston Pizza’s sales in the third quarter of 2014 were driven by popular television and online campaigns to highlight our continued menu innovation, FIFA World Cup game watching events, continued growth in our online ordering platform and new “MyBP” guest loyalty app.  On August 12^th, Boston Pizza celebrated its 50^th anniversary by serving a record 85,000 individual gourmet pizzas to our guests from coast-to-coast,” said Mark Pacinda, President and CEO of BPI. “We opened eight new Boston Pizza locations so far in 2014 and have several more under construction scheduled to open in the fourth quarter.  We are particularly excited about the new Boston Pizza Stadium District location which opened recently in downtown Vancouver, blending an urban design with our traditional family-friendly atmosphere.”

The Fund’s net income and comprehensive income was $5.0 million for the Period and $13.8 million YTD compared to $3.3 million and $6.6 million for the same periods, respectively, in 2013. The changes in net income for the Period and YTD were mainly driven by the change in the fair value adjustments on the class B general partner units of Boston Pizza Royalties Limited Partnership (the “Class B Unit liability”) and higher royalty income. The Fund’s net income under International Financial Reporting Standards (“IFRS”) contains non-cash items, such as the fair value adjustment on the Class B Unit liability, that do not affect the Fund’s business operations or its ability to pay distributions to unitholders. In the Fund’s view, net income is not the only or most meaningful measurement of the Fund’s ability to pay distributions. Consequently, the Fund reports the non-IFRS metrics of Distributable Cash and Payout Ratio to provide investors with more meaningful information regarding the amount of cash that the Fund has generated to pay distributions. Readers are cautioned that Distributable Cash and Payout Ratio are non-IFRS financial measures that do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. For a reconciliation between cash flow from operating activities (the most directly comparable IFRS measure) and Distributable Cash see the “Financial Highlights” section of the Fund’s Management’s Discussion and Analysis for the Period. For a detailed discussion on the Fund’s Distributable Cash and Payout Ratio, please see the “Operating Results – Distributable Cash / Payout Ratio” section in the Fund’s Management’s Discussion and Analysis for the Period.

The Fund generated Distributable Cash of $5.2 million or $0.335 per Unit of the Fund (“Unit”) for the Period compared to $4.9 million or $0.324 per Unit for the third quarter in 2013, representing increases of 6.9% and 3.4% respectively.  The Fund generated Distributable Cash of $14.3 million or $0.921 per Unit YTD compared to $14.0 million or $0.915 per Unit for the same period, respectively, in 2013, representing increases of 1.8% and 0.7% respectively.  The increases in Distributable Cash and Distributable Cash per Unit for the Period and YTD compared to the same periods one year ago are primarily due to the increase in cash flow from operating activities due to an increase in royalty income. Distributions for the Period and YTD were funded entirely by cash flow from operations.  No debt was incurred at any point during the Period or YTD to fund distributions.

The Fund’s Payout Ratio was 91.1% for the Period compared to 94.1% in the third quarter of 2013.  The Fund’s Payout Ratio for the Period decreased compared to the third quarter of 2013 primarily due to the increase in Distributable Cash as discussed above.  The Fund’s Payout Ratio was 100.2% YTD, relatively unchanged from 99.5% in the same period one year ago.  The Fund strives to provide unitholders with regular monthly distributions, and as a result, the Fund will generally experience seasonal fluctuations in its Payout Ratio.  The Fund’s Payout Ratio is likely to be higher in the first and fourth quarters compared to the second and third quarters since Boston Pizza restaurants experience higher Franchise Sales during the summer months when restaurants open their patios and benefit from increased tourist traffic.  Higher Franchise Sales generally results in increases in Distributable Cash.  On a trailing 12-month basis, the Fund’s Payout Ratio was 101.2% as at September 30, 2014.  A key feature of the Fund is that it is a “top line” structure, in which BPI pays the Fund a royalty equal to 4% of Franchise Sales from restaurants in the Fund’s royalty pool.  Accordingly, Fund unitholders are not directly exposed to changes in the operating costs or profitability of BPI or of individual Boston Pizza restaurants.  Given this structure, and that the Fund has no current mandate to retain capital for other purposes, it is expected that the Fund will maintain a Payout Ratio close to 100% over time as the trustees of the Fund continue to distribute all available cash in order to maximize returns to unitholders.

The trustees of the Fund announced a cash distribution to unitholders of 10.2 cents per Unit for October 2014. The distribution will be payable to unitholders of record at the close of business on November 21, 2014 and will be paid on November 28, 2014. The Fund periodically reviews distribution levels based on its policy of stable and sustainable distribution flow to unitholders. Since the Fund’s initial public offering in 2002, unitholders have received 16 distribution increases. Including the October 2014 distribution, which will be paid on November 28, 2014, the Fund will have paid out 148 consecutive monthly distributions totalling $192.1 million or $15.02 per Unit.