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Boston Pizza Royalties Income Fund Announces Record Fourth Quarter and Annual Earnings Per Unit Before Non-Cash Items and January Distribution to Unitholders

February 10, 2011

For Immediate Release                                                                           Toronto Stock Exchange: BPF.UN




 System-wide gross sales exceed $853 million from 340 restaurants in Canada

VANCOUVER, BC, (February 10, 2011) - Boston Pizza Royalties Income Fund (the "Fund") and Boston Pizza International Inc. (“BPI”) each reported today financial results for the period from October 1, 2010 to December 31, 2010 (the “Period”) and the period from January 1, 2010 to December 31, 2010 (the “Year”). A copy of management’s discussion and analysis and financial statements of the Fund and BPI for the Period and Year are available and The Fund will host a conference call to discuss the results on February 10, 2011 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 March 17, 2011 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 losses1 (“Earnings before non-cash items”) for the Period and Year were $5.0 million or a record $0.346 per unit and $20.5 million or a record $1.412 per unit, respectively, compared to the same periods in 2009 during which Earnings before non-cash items1 were $4.7 million or $0.329 per unit and $19.5 million or $1.347 per unit, respectively. The Fund’s earnings per unit before income taxes and dilution gains or losses1 increased by 5.2% for the Period and 4.8% for the Year 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 net earnings for the Period and Year were $5.0 million or $0.341 per unit and $20.2 million or a record $1.397 per unit, respectively, compared to the same periods in 2009 during which net earnings were $4.2 million or $0.294 per unit and $19.1 million or $1.325 per unit, respectively. Distributions declared for the Period and the Year were $6.7 million or $0.460 per unit and $20.1 million or $1.380 per unit, respectively, substantially unchanged from the same periods one year ago.  Distributions for the Period and Year were funded entirely by cash flow from operations. No debt was incurred at any point during the Period or Year to fund distributions.

Same store sales growth (“SSSG”) was positive 1.3% for the Period and negative 1.3% for the Year compared to negative 4.4% and negative 4.0% in the same periods one year ago. On a franchise sales basis, SSSG for the Period was positive 2.6% and negative 0.7% for the Year compared to negative 5.8% and negative 5.4% respectively in the same periods in 2009. The SSSG results for the Period and Year 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 $166.2 million for the Period and $663.8 million for the Year, compared to $156.3 million and $644.1 million, respectively, in the same periods in 2009. Sales results for the Period were positively impacted by increased take out and delivery sales, partially offset by weaker sales in British Columbia as a result of the new Harmonized Sales Tax in that province which increased the amount of tax on restaurant meals from 5% to 12% effective July 1, 2010.

“We are pleased to report continued sales momentum in the fourth quarter, with franchise sales rising 2.6% versus a year ago on a same store basis. A key driver was Boston Pizza’s new “Finger Cooking” media campaign, which was positively received by Boston Pizza guests and contributed to higher online orders through the fall” said George Melville, Co-Chairman and Owner of Boston Pizza International Inc. “Based on these improving sales results, BPI surpassed $853 million in system-wide gross sales in 2010 and the Fund posted record earnings per unit before non-cash items1 for both the fourth quarter and full year”.  

The Trustees of the Fund announced a cash distribution to unitholders of 8.4 cents per unit for January 2011. The distribution will be payable to unitholders of record at the close of business on February 21, 2011 and will be paid on February 28, 2011.  The distribution of 8.4 cents per unit is approximately equal to the distribution of 11.5 cents per unit that the Fund declared each month in 2010 less the rate of the specified investment flow-through tax that the Fund is liable to pay from and after January 1, 2011. 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 consolidated financial statements of the Fund.

Oct 1, 2010


Dec 31, 2010

Oct 1, 2009


Dec 31, 2009

Jan 1, 2010


Dec 31, 2010

Jan 1, 2009


Dec 31, 2009

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

System-Wide Gross Sales





Number of restaurants in Royalty Pool 2





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 3[2]





Dilution gain (loss)





Future income tax (expense) recovery





Net earnings





Earnings before undernoted per Fund unit1 3





Basic and diluted Earnings per Fund unit4[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  Number of Royalty Pool stores excludes restaurants that permanently closed during the applicable period.

3 Earnings before dilution gain (loss) and future income tax (expense) recovery.

4 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. For a description of earnings per unit before dilution gain (loss) and future income tax, please refer to the “Distributions” section of the Fund’s management’s discussion and analysis for the three month and twelve month periods ended December 31, 2010.


The Canadian Restaurant and Foodservices Association has forecast sales growth of 2.8% for the Canadian full-service restaurant sector in 2011. Boston Pizza International Inc.’s (“BPI”) management agrees with this outlook for modest growth during 2011 and believes that 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 our guests. SSSG is the combined result of changes in guest traffic and changes in average guest cheque. BPI’s strategies to drive higher guest traffic include a larger marketing budget versus the previous year along with a revised calendar of national and local store promotions. Increased average cheque levels will be achieved through a combination of menu design and annual re-pricing. In addition, BPI’s franchise agreement requires that each Boston Pizza restaurant undergo a complete store renovation every seven years and several renovations are already underway in 2011. Restaurants typically close for two to three weeks to complete the renovation and experience an incremental sales increase in the year following the re-opening.

Boston Pizza remains well positioned for future expansion as evidenced by the three new Boston Pizza restaurants that are currently under construction and scheduled to open in the first half of 2011. BPI’s management believe that Boston Pizza will continue to strengthen its position as the number one casual dining brand in Canada by pursuing further restaurant development opportunities across the country.

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 twelve month periods ended December 31, 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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