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Boston Pizza Has a Record Year for New Store Openings in 2005, Boston Pizza Royalties Income Fund Adds 31 Restaurants to Royalty Pool

January 03, 2006

For Immediate Release                                                                           Toronto Stock Exchange: BPF.UN

BOSTON PIZZA HAS A RECORD YEAR FOR NEW STORE OPENINGS IN 2005
BOSTON PIZZA ROYALTIES INCOME FUND ADDS 31 RESTAURANTS TO ROYALTY POOL

VANCOUVER, BC, JANUARY 3, 2006 - Boston Pizza Royalties Income Fund (the “Fund”) (TSX: BPF.UN) and Boston Pizza International Inc. (“BPI”) announced today that effective January 1, 2006, the number of Boston Pizza restaurants included in the Fund’s royalty pool (the “Royalty Pool”) has been increased to include the royalties from 30 new full-service restaurants and one new Quick Express location opened across Canada between November 2, 2004 and December 31, 2005 (the “Period”).  With the addition of these 31 restaurants, royalties are now payable to the Fund from 226 Boston Pizza restaurants.

The Fund indirectly owns the Boston Pizza trade marks and trade names used by BPI in its Boston Pizza restaurants in Canada. in 2002 the Fund licensed these trade marks to BPI for 99 years and in return BPI pays the Fund a top line royalty of 4% of franchise revenues of Royalty Pool restaurants. Annually, the Rolyalty Pool of Boston Pizza restaurants is increased to include the new Boston Pizza restaurants that have opened in the prior year. The increase is adjusted to reflect any locations that may have permanently closed during the year. During the year no Boston Pizza restaurants were closed.

“In 2005 our team set a Boston Pizza record for new store openings.  Opening 31 new locations and not closing a single location is a great achievement that speaks to the strength of our business model.  Our employees and franchisees should be commended” said Mike Cordoba, Chief Executive Officer for BPI and the Fund. 

On January 1 of each year (the "Adjustment Date"), an adjustment is made to add to the Royalty Pool new Boston Pizza restaurants that opened prior to that Adjustment Date. In return for adding this additional royalty revenue, BPI receives the right to indirectly acquire additional Fund units (the “Additional Entitlements”). The adjustment for new Franchise Sales added to the Royalty Pool is designed to be accretive for Unitholders.  The Additional Entitlements are calculated at 92.5% of the estimated royalty revenue added to the Royalty Pool, divided by the yield of the Fund, divided by the Weighted Average Unit Price.  BPI receives 80% of the Additional Entitlements initially, with the balance received when the actual full year performance of the new restaurants is known with certainty.  BPI receives 100% of distributions from the Additional Entitlements throughout the year.  Once these new restaurants have been part of the Royalty Pool for a full year, an audit of the royalty revenues of these restaurants received from BPI will be performed.  At such time an adjustment will be made to reconcile distributions paid to BPI and the Additional Entitlements received by BPI.   

In return for adding the royalty revenue from the 31 new restaurants to the Royalty Pool, BPI has received 1,523,846 Additional Entitlements.  The 1,523,846 represents 80% (1,904,808 represents 100%) of the Additional Entitlements with the balance received when the actual full year performance of the new restaurants is known with certainty.  The 1,523,846 Additional Entitlements represents 11.2% of the Fund units on a fully diluted basis. The full 1,904,808 Additional Entitlements would represent 13.3% of the Fund on a fully diluted basis.  The estimated franchise revenues for the 31 new restaurants in 2006 is estimated to be $61,098,000. The estimated 4% royalty revenue the Fund will receive in 2006 from these additional 31 restaurants is $2,443,920.  The royalty revenue for the purposes of calculating the Additional Entitlements, therefore, is $2,260,626 or 92.5%.   Once the actual performance of these 31 restaurants for 2006 is known, the number of Additional Entitlements will be adjusted in 2007 to reflect the actual royalty revenue received by the Fund in 2006.  As of January 1, 2006, there are 226 restaurants in the Royalty Pool.

Including the 1,523,846 Additional Entitlements described above, BPI has the right to exchange its securities for 3,945,056 Fund Units, representing 28.9% of the Fund Units on a fully diluted basis. BPI has agreed to maintain at least a 20% ownership interest, direct or indirect, in the Fund until such time as there are 275 restaurants in the Royalty Pool.  Please see below Table 1.

Table 1 - Summary of Boston Pizza Royalties Income Fund Units

  
  Issued & Outstanding Units, & Additional Entitlements
 Issued & Outstanding Units, Additional Entitlements, & Holdback of Additional Entitlements
  
Public Float as of December 31, 2005
 9,684,841
 9,684,841
  
BPI Additional Entitlements - Outstanding as of December 31, 2005
 2,421,210
 2,421,210
  
BPI Additional Entitlements - Holdback as of December 31, 2005
 N/A
 258,437
 (1)
Number of Fully Diluted Units as of December 31, 2005
 12,106,051
 12,364,488
  
       
Public Float as of December 31, 2005 & January 1, 2006
 9,684,841
 9,684,841
  
BPI Additional Entitlements - Outstanding as of December 31, 2005
 2,421,210
 2,421,210
  
BPI Additional Entitlements - Holdback as of December 31, 2005
 N/A
 258,437
 (1)
BPI Additional Entitlements - Issued & Outstanding as of January 1, 2006                       (31 Restaurants added to Royalty Pool)
 1,523,846
 1,523,846
 (2)
BPI Additional Entitlements - Holdback as of January 1, 2006                       (31 Restaurants added to Royalty Pool)
 N/A
 380,962
 (3)
Number of Fully Diluted Units as of January 1, 2006
 13,629,897
 14,269,296
  
       
BPI Total Ownership as of January 1, 2006
 28.9%
 32.1%
  
BPI Ownership based on 31 Restaurants added to Royalty Pool only      as of January 1, 2006
 11.2%
 13.3%
  
       
(1) Holdback of Additional Entitlements from 18 restaurants added to Royalty Pool on January 1, 2005.  Actual number of Additional Entitlements will be determined in early 2006, effective January 1, 2005, once audited results of 18 restaurants is known.
  
(2) Issued effective January 1, 2006
      
(3) Holdback of Additional Entitlements from 31 restaurants added to Royalty Pool on January 1, 2006.  Actual number of Additional Entitlements will be determined in early 2007, effective January 1, 2006, once audited results of 31 restaurants is known.
 

The trustees of the Fund have approved the contents of this news release.

FOR FURTHER INFORMATION PLEASE CONTACT:

Boston Pizza Royalties Income Fund
Jordan Holm - Vice President of Investor Relations
Tel: 604-303-6083

www.bpincomefund.com

® Boston Pizza Royalties Limited Partnership. All Boston Pizza registered Canadian trade-marks and unregistered Canadian trade-marks containing the words "Boston", "BP", and/or "Pizza" are trade-marks owned by the Boston Pizza Royalties Limited Partnership and licensed by the Boston Pizza Royalties Limited Partnership to Boston Pizza International Inc.

© Boston Pizza International Inc. 2006
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