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Boston Pizza Royalties Income Fund and Boston Pizza International Inc. Announce Second Quarter Results and July Distribution to Unitholders

August 12, 2010

For Immediate Release                                                                           Toronto Stock Exchange: BPF.UN



Earnings before non-cash items per unit rise 3.8% versus prior year


VANCOUVER, BC, (August 12, 2010) - Boston Pizza Royalties Income Fund (the "Fund") and Boston Pizza International Inc. (“BPI”) each reported today financial results for the period from April 1, 2010 to June 30, 2010 (the “Period”) and the period from January 1, 2010 to June 30, 2010 (the “Year-to-date”). A copy of management’s discussion and analysis and financial statements of the Fund and BPI for the Period and Year-to-date are available at and The Fund will host a conference call to discuss the results on August 12, 2010 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 August 19, 2010 by dialling 1-800-319-6413 or 604-638-9010 and entering the pin code: 4452 followed by the # sign.


The Fund’s earnings before income taxes and dilution gains or losses per unit (“Earnings before non-cash items”) increased by 3.8% for the Period and 4.0% for the Year-to-date compared to the same periods in 2009. Earnings before non-cash items on a per unit basis increased for the Period and Year-to-date compared to the same periods in 2009 as a result of the Fund’s acquisition and cancellation of units pursuant to normal course issuer bids. The Fund’s Earnings before non-cash items for the Period and Year-to-date were $5.3 million or $0.355 per unit and $10.0 million or $0.697 per unit, respectively, compared to the same periods in 2009 during which Earnings before non-cash items were $4.9 million or $0.342 per unit and $9.8 million or $0.670 per unit, respectively. Distributions declared for the Period and the Year-to-date were $5.1 million or $0.345 per unit and $8.3 million or $0.575 per unit, respectively, substantially unchanged from the same periods one year ago.  Distributions for the Period and Year-to-date were funded entirely by cash flow from operations. No debt was incurred at any point during the Period or Year-to-date to fund distributions.

Same store sales growth (“SSSG”) was negative 1.1% for the Period and negative 3.3% for the Year-to-date compared to negative 5.0% and negative 1.3% in the same periods one year ago. On a franchise sales basis, SSSG for the Period was negative 1.8% and negative 3.0% compared to negative 5.5% and negative 2.8% respectively in the same periods in 2009. The declines in SSSG for the Period and Year-to-date are similar to the figures reported overall for the Canadian retail industry during the same periods, respectively. Franchise sales of restaurants in the royalty pool were $166.0 million for the Period and $326.4 million for the Year-to-date, compared to $162.7 million and $323.4 million, respectively, in the same periods in 2009. Franchise sales results for the Period and Year-to-date were positively impacted by the addition of 17 net new restaurants to the royalty pool on January 1, 2010.

“We are pleased with the continued growth in earnings per unit before non-cash items, which is vital for our goal of maintaining and growing our monthly distributions to unitholders” said George Melville, Co-Chairman and Owner of Boston Pizza International Inc. “In addition, we have now seen sequential improvement in our same store sales results on a franchise sales basis over the last three quarters and, while we are still not back to our historically strong growth levels, we feel this momentum reflects an improving economy and better times ahead for Boston Pizza.”   

The Trustees of the Fund announced a cash distribution to unitholders of 11.5 cents per unit for July 2010. The distribution will be payable to unitholders of record at the close of business on August 21, 2010 and will be paid on August 31, 2010.  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 beginning in 2002 for which BPI pays the Fund 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 attached consolidated financial statements of the Fund.

Apr 1, 2010


Jun 30, 2010

Apr 1, 2009


Jun 30, 2009

Jan 1, 2010


Jun 30, 2010

Jan 1, 2009


Jun 30, 2009

(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





Administrative and interest expenses





Partnership earnings for the period before undernoted[1]





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 [2]





Dilution gain (loss)





Future income taxes (expense) recovery





Net earnings





Earnings before undernoted per Fund unit1 2





Basic and diluted Earnings per Fund unit[3]





Distributions declared per Fund unit





Same store sales growth (SSSG)





Number of restaurants opened during period





Number of restaurants closed during period





[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 a reconciliation from this non-GAAP financial measure to the most directly comparable GAAP measure.

[2] Earnings before dilution gain (loss) and future income tax (expense) recovery.

[3] Earnings per Fund unit and diluted earnings per Fund unit are shown here on an after-tax basis. These per Fund unit calculations include the impact of future income taxes and dilution gain (loss) which have no impact on cash flow in the Period or Year-to-date. For a description of earnings per unit before dilution gain (loss) and tax, please refer to the “Distributions” section of the Fund’s management’s discussion and analysis for the three month and six month periods ended June 30, 2010.


BPI’s management believes that the prevailing weak economic conditions will persist in 2010 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 offer 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 than the previous year, national and local store promotions and menu re-pricing as part of the new menu launched each year in June. In addition, BPI’s management anticipates that 15 to 25 restaurants will complete renovations in 2010. Renovated restaurants typically experience an incremental sales increase in the year following the re-opening.

BPI’s management anticipates that 5 to 8 new locations will open across Canada in 2010. This is a reduction from the prior new store opening estimate of 10 to 15 as a result of slower than anticipated commercial real estate development at locations where new Boston Pizza restaurants may be located and fewer franchisee deposits received as a result of weak economic conditions. 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 for eligible dividends, thereby reducing the after-tax impact of this legislative change.

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 Boston Pizza Holdings Trust, the Partnership, Boston Pizza Holdings Limited Partnership, Boston Pizza Holdings GP Inc., Boston Pizza GP Inc., 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. When used in this press release, forward looking 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.

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; and

·         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 the Boston Pizza trademarks and tradenames;

·         pace of commercial real estate development;

·         franchisees’ access to financing;

·         franchisees’ duly paying franchise fees and other amounts;

·         there will be no closures of Boston Pizza restaurants that materially affect the amount of royalty paid by BPI to the Fund;

·         speed of permitting;

·         future results being similar to historical results; and

·         expectations related to future general economic conditions.

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;

·         cash distributions are not guaranteed;

·         accounting policies and practices;

·         the impact of new or increased or harmonization of sales taxes upon gross sales; 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 in “Risks & Uncertainties” section of the Fund’s management’s discussion and analysis for the three month and six month periods ended June 30, 2010. 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.

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


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

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