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Boston Pizza Royalties Income Fund and Boston Pizza International Inc. Announce Third Quarter Results and October Distribution to Unitholders

November 06, 2009

For Immediate Release                                                                           Toronto Stock Exchange: BPF.UN


System-Wide Gross Sales rise 2.7% to $635.3 million Year-to-date  

VANCOUVER, BC, (November 6, 2009) - Boston Pizza Royalties Income Fund (the "Fund") and Boston Pizza International Inc. ("BPI") each reported today financial results for the third quarter period of July 1, 2009 to September 30, 2009 (the "Period") and the year-to-date period of January 1, 2009 to September 30, 2009 ("YTD"). A copy of the management's discussion and analysis and financial statements of the Fund and BPI for the Period are available at and The Fund will host a conference call to discuss the results on November 6, 2009 at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time). The call can be accessed by dialling 1-800-319-4610 or 604-638-5340. A replay will be available until November 13, 2009 by dialling 1-800-319-6413 or 604-638-9010 and entering the following pin code: 4452 followed by # sign.

Same store sales growth ("SSSG"), a key driver of distribution growth for individual Unitholders, is the change in gross revenues of Boston Pizza restaurants as compared to the gross revenues for the same period in the previous year, where restaurants were open for the full period in each year.  SSSG was negative 8.5% for the Period and negative 3.9% YTD, compared to positive 0.3% and positive 0.9% respectively in the same periods one year ago. Franchise sales, the basis upon which royalties are paid to the Fund, exclude revenue from the sale of liquor, beer, wine and tobacco and approved national promotions and discounts. On a franchise sales basis, SSSG was negative 9.6% for the Period and negative 5.3% YTD, compared to negative 0.1% and positive 0.5% respectively during the same periods last year. Sales for the Period and YTD were negatively impacted by weaker economic conditions compared to the same periods one year ago.

"The Canadian foodservice industry continues to face a challenging sales environment due to weak economic conditions and our third quarter results demonstrate the impact of higher unemployment and lower consumer spending rates on the restaurant business. However, Boston Pizza is well positioned in the mid-scale casual dining segment to provide excellent value to a broad segment of the Canadian public. We continue to generate innovative marketing, menu and promotional campaigns aimed at driving higher sales and look forward to improved results in the months ahead." said George Melville, Co-Chairman and owner of Boston Pizza International Inc.

The Fund's earnings before non-cash items including future income tax and dilution loss1 were $5.0 million or $0.349 per unit for the Period and $14.8 million or $1.019 per unit YTD compared to earnings before future income tax and dilution loss1 of $5.5 million or $0.352 per unit for the third quarter and $15.2 million or $1.017 per unit for the first nine months of 2008. The Fund's earnings before non-cash items including future income tax and dilution loss1 on a per unit basis were flat for the Period and YTD compared to the same periods in 2008.  This result was largely due to the lower number of Fund units ("Units") outstanding during the Period and YTD versus the same periods one year ago as a result of the Fund's normal course issuer bid (the "2008 NCIB") which was completed on February 23, 2009. Under the 2008 NCIB, the Fund repurchased and cancelled 1,336,154 Units, being the maximum number of Units permitted under the rules of the Toronto Stock Exchange ("TSX"), at an average price of $8.54 per Unit. As a result of this repurchase and cancellation of Units, there is a net savings for the Fund in overall monthly cash distributions to Unitholders of approximately $1.6 million or $0.0876 per Unit per year at the current annualized distribution rate of $1.38 per Unit and current interest rates charged on amounts borrowed by the Fund to repurchase Units under the 2008 NCIB. This accretive benefit, together with the accretive benefit from the 2009 NCIB (see below) will assist the Fund in maintaining the current level of monthly distributions to Unitholders despite the weaker economic conditions and corresponding softer sales experienced during the Period and YTD.

On September 21, 2009, the Fund announced that it received TSX approval of a Notice of Intention to Make a Normal Course Issuer Bid (the "2009 NCIB") through the facilities of the TSX which permits the Fund to repurchase for cancellation up to 1,201,783 Units, being approximately 8.4% of the Fund's issued and outstanding units (as at September 18, 2009) and approximately 10.0% of its public float, then comprised of 12,017,833 Units. 

Purchases under the 2009 NCIB commenced on October 1, 2009 and as of November 5, 2009, the Fund has acquired 131,500 Units at an average price of $10.91 per Unit.  The 2009 NCIB will terminate on September 30, 2010 or such earlier date that the Fund has acquired the maximum number of Units permitted under the 2009 NCIB.  The Fund will pay the market price at the time of acquisition for any Units purchased through the facilities of the TSX and all Units acquired will be cancelled.

Distributions declared for the Period were $5.0 million or $0.345 per Unit compared to distributions declared of $5.4 million or $0.345 per Unit in 2008. Distributions declared YTD were $13.2 million or $0.920 per Unit compared to $14.1 million or $0.920 per Unit in the first nine months of 2008. The decrease in distribution totals during the Period and YTD are a direct result of fewer Units outstanding as a result of the 2008 NCIB. 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 Trustees of the Fund are pleased to announce a monthly cash distribution to Unitholders of 11.5 cents per unit for October 2009. The distribution will be paid to Unitholders of record at the close of business on November 21, 2009 and will be payable on November 30, 2009.  The Fund periodically reviews distribution levels based on its policy of stable and sustainable distribution flow to Unitholders.   

The Fund is a limited purpose, open-ended trust established under the laws of British Columbia to acquire indirectly certain trade-marks and trade names used by BPI in its Boston Pizza restaurants in Canada.  The trade-marks are licensed to BPI for 99 years for which BPI pays a royalty to the Fund equal to 4% of franchise revenues of royalty pooled restaurants.


The following table sets out selected historical information and other data from the financial statements of the Fund and Boston Pizza Royalties Limited Partnership (the "Partnership"), which should be read in conjunction with the consolidated financial statements of the Fund.


Jul 1, 2009
Sep 30, 2009

Jul 1, 2008
Sep 30, 2008

Jan 1, 2009
Sep 30, 2009

Jan 1, 2008
Sep 30, 2008

    (in thousands of dollars - except restaurants, SSSG and per unit items)

System-Wide Gross Sales





Number of restaurants in Royalty Pool





Franchise Sales reported by restaurants in Royalty Pool





Royalty Income - 4% of Franchise Sales of Royalty Pool Restaurants





Partnership administrative and interest expenses





Partnership earnings for the period before undernoted1





BPI's interest in the earnings of the Partnership





Equity income related to BPI royalties earned by the Fund





Net interest income





Earnings before undernoted1





Dilution loss





Future income tax recovery (expense)





Net earnings





Earnings before undernoted per Fund unit1





Basic and Diluted Earnings per Fund unit





Distributions declared per Fund unit





Same store sales growth (SSSG)





Number of restaurants opened during period





Number of restaurants closed during period






BPI's management believes that the prevailing weaker economic conditions will persist during the remainder of 2009 resulting in continued pressure on SSSG and franchise sales at Boston Pizza Restaurants in Canada. However, Boston Pizza is well positioned to attract a wide variety of guests into the restaurant, sports bar and take-out/delivery parts of each location and offers a compelling value proposition to Canadians in these challenging economic times. BPI's strategies to drive guest traffic and higher average cheque levels include a larger marketing budget versus the previous year, national and local store promotions and menu re-pricing as part of the new menu launched in June. In addition, BPI's management anticipates that 15 to 20 restaurants will complete renovations this year. This estimate is lower than the initial forecast of 20 to 30 renovations due to the impact of weaker economic conditions and BPI allowing some locations to delay their renovation in order to take advantage of provincial harmonized sales tax changes that will, if implemented, take effect in 2010. Renovated restaurants typically experience an incremental sales increase in the year following the re-opening.

BPI's management has determined that approximately 15 to 20 new locations will open across Canada in 2009. Boston Pizza remains well positioned for future expansion and will continue to strengthen its position as the number one casual dining brand in Canada by pursuing further restaurant development opportunities across the country.

Under the Specified Investment Flow Through tax legislation, which was substantively enacted into law on June 12, 2007, the Fund will be subject to a tax at the prevailing corporate rate beginning on January 1, 2011. This tax will reduce net earnings and will affect cash distributions to Unitholders by approximately the same amount. Monthly cash distributions to Unitholders will be reclassified for tax purposes as eligible dividends and Canadian residents who hold their Units in a non-tax deferred account may claim the dividend tax credit, thereby reducing the after-tax impact of this legislative change. The Trustees continue to review various strategic alternatives available to the Fund. No determination regarding a change to the current trust structure has been made by the Trustees at this time.

Certain information in this Press Release may constitute "forward-looking information" that involves known and unknown risks, uncertainties, future expectations and other factors which may cause the actual results, performance or achievements of the Fund, the Trust, the Partnership, Holdings LP, BPI, Boston Pizza Restaurants, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information.  Forward-looking information in this Press Release includes, but is not limited to, such things as:  the future expansion of Boston Pizza Restaurants; Boston Pizza will continue to strengthen its position as the number one casual dining brand in Canada; estimates of the number of restaurant openings and estimates related to renovations (number of renovations, timeline of renovations and increased revenues following renovations).  The forward-looking information disclosed herein is based on a number of assumptions including, among other things, the protection of BP Rights, pace of commercial real estate development, franchisees' access to financing, speed of permitting, future results being similar to historical results and expectations related to future general economic conditions.  When used in this Press Release, this information may include words such as "anticipate", "estimate", "may", "will", "expect", "believe", "plan" and other similar terminology.  This information reflects current expectations regarding future events and operating performance and speaks only as of the date of this Press Release.  This forward-looking information involves a number of risks, uncertainties and future expectations including, but not limited to: competition; changes in demographic trends; changes in consumer preferences and discretionary spending patterns; changes in national and local business and economic conditions; legislation and government regulation; accounting policies and practices; and the results of operations and financial conditions of BPI and the Fund.  The foregoing list of factors is not exhaustive and should be considered in conjunction with the risks and uncertainties set out above in "Risks & Uncertainties".  This Press Release discusses some of the factors that could cause actual results to differ materially from those expressed in or underlying such forward-looking information.  Forward-looking information is provided as of the date hereof and, except as required by law, we assume no obligation to update or revise forward-looking information to reflect new events or circumstances.

1 This is a non-GAAP financial measure that does not have a standardized meaning prescribed by GAAP and therefore is unlikely to be comparable to similar measures presented by other issuers. This non-GAAP financial measure provides useful information to investors and management by providing an indication of operating earnings. Investors are cautioned that this should not be construed as an alternative net income measure of profitability. The table above provides reconciliation from this non-GAAP financial measure to the most directly comparable GAAP measure.


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

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