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Boston Pizza Royalties Income Fund Temporarily Suspends Monthly Distributions Due to Effects of COVID-19

March 23, 2020

Toronto Stock Exchange: BPF.UN

VANCOUVER, March 23, 2020 /CNW/ - Boston Pizza Royalties Income Fund (the "Fund")1 (TSX: BPF.UN) announced today that it will temporarily suspend monthly distributions on units of the Fund ("Units") until further notice, commencing with the March 2020 distribution that ordinarily would have been payable on April 30, 2020 to unitholders of record on April 21, 2020.  The distribution of $0.102 per Unit announced on March 10, 2020 that is payable on March 31, 2020 to unitholders of record on March 21, 2020 is not affected.

Boston Pizza International Inc. ("BPI") announced on March 18, 2020 that Boston Pizza proactively closed all of its dining rooms and sports bars across Canada, including Boston Pizza restaurants located in municipalities and regions where such closures had not yet been mandated, at the close of business on March 17, 2020 in an effort to help "flatten the curve" during the rapidly evolving COVID-19 situation.  Since March 18, 2020, many jurisdictions across Canada have mandated the closure of all bars and dine-in restaurant experiences.  Most Boston Pizza restaurants continue to offer take-out and delivery services to support Canadians by providing dine-at-home options.  The closure of all Boston Pizza dining rooms and sports bars across Canada in response to COVID-19 has resulted and will continue to result in material declines to Franchise Sales2 and Same Restaurant Sales3 at Boston Pizza restaurants across Canada.  The declines in Franchise Sales and Same Restaurant Sales will result in significant declines to Royalty4 and Distribution Income4 payable by BPI and Boston Pizza Canada Limited Partnership ("BP Canada LP") to the Fund, and significant declines in the amount of cash available to distribute to unitholders of the Fund.

"In response to the unprecedented effects COVID-19 is having on the business of Boston Pizza restaurants across Canada and the corresponding decline in Royalty and Distribution Income payable to the Fund, the Trustees of the Fund decided to temporarily suspend the monthly distribution on Units until further notice," said Marc Guay, Chairman of the Fund.  "We believe that this is a prudent decision to help preserve the Fund's existing cash until the full economic consequences of COVID-19 on the Fund are better understood.  The Trustees will continue to monitor the effects of COVID-19 on the Fund and adjust our distribution policy in a prudent manner as circumstances warrant with a view to preserving unitholder value."

COVID-19 has had dramatic impacts on the Canadian economy and specifically on restaurants.  Governmental policy and responsible social distancing measures have resulted in the closure of all Boston Pizza dining rooms and sports bars across Canada.  While the COVID-19 situation persists, the Trustees of the Fund expect that Franchise Sales and Same Restaurant Sales at Boston Pizza restaurants across Canada will continue to be adversely affected, and that preservation of cash by the Fund is prudent and appropriate until economic conditions improve.

1)

The Fund includes, where applicable, its subsidiaries, including Boston Pizza Holdings Limited Partnership and Boston Pizza Royalties Limited Partnership.

2)

"Franchise Sales" is the basis upon which Royalty and Distribution Income are payable, and means the gross revenue: (i) of the corporate Boston Pizza restaurants in Canada owned by BPI that are in the Fund's royalty Pool; and (ii) reported to BP Canada LP by franchised Boston Pizza restaurants in Canada that are in the Fund's royalty pool, without audit or other form of independent assurance, and in the case of both (i) and (ii), after deducting revenue from the sale of liquor, beer, wine and revenue from BP Canada LP approved national promotions and discounts and excluding applicable sales and similar taxes. Nevertheless, BP Canada LP periodically conducts audits of the Franchise Sales reported to it by its franchisees, and the Franchise Sales reported herein include results from sales audits of earlier periods.

3)

"Same Restaurant Sales" is the change in gross revenue of Boston Pizza restaurants as compared to the gross revenue for the same period in the previous year for Boston Pizza restaurants that have been open for a minimum 24 months.  Same Restaurant Sales is a non-IFRS financial measure that does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers.  Management believes Same Restaurant Sales provides investors useful information regarding the change in gross sales of Boston Pizza restaurants.

4)

The Fund indirectly owns the Boston Pizza trademarks and trade names used by Boston Pizza restaurants in Canada.  In 2002, the Fund licensed these trademarks to BPI for 99 years and in return BPI pays the Fund a top line royalty of 4% of franchise revenues of Boston Pizza restaurants in the Royalty Pool ("Royalty").  On May 6, 2015, the Fund completed an indirect investment in BP Canada LP (a limited partnership controlled and operated by BPI) that entitles the Fund to receive distribution income from BP Canada LP ("Distribution Income") equal to 1.5% of franchise revenues of Boston Pizza restaurants in the Royalty Pool less the pro rata portion payable to BPI in respect of its retained interest in the Fund.

 

ABOUT US

The Fund is a limited purpose open ended trust with an excellent track record for investors since its IPO in 2002.  Including the February 2020 distribution which is payable on March 31, 2020, the Fund will have paid 212 consecutive monthly distributions totaling $341.3 million or $22.22 per Unit. The Fund earns revenue based on the franchise system sales of the 395 Boston Pizza restaurants in the Fund's royalty pool.

BPI is Canada's number one casual dining brand with annual gross sales in 2019 of over $1.1 billion serving more than 50 million guests through over 390 mainly franchisee operated restaurants.  The Boston Pizza brand has successfully existed for over 55 years since opening its first restaurant in Edmonton, Alberta in 1964.  BPI has been recognized as a Platinum Member of Canada's 50 Best Managed Companies and has been a Franchisees' Choice Designation winner for eight consecutive years.

Certain information in this press release constitutes "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, Boston Pizza Holdings Trust, Boston Pizza Royalties Limited Partnership, Boston Pizza Holdings Limited Partnership, Boston Pizza Holdings GP Inc., Boston Pizza GP Inc., BPI, BP Canada LP, Boston Pizza Canada Holdings Inc., Boston Pizza Canada Holdings Partnership, 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.  All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Fund or its Trustees expect or anticipate will or may occur in the future, including such things as, distributions on Units being suspended until further notice, the closure of Boston Pizza dining rooms and sports bars across Canada continuing to result in material declines to Franchise Sales and Same Restaurant Sales, declines in Franchise Sales and Same Restaurant Sales resulting in significant declines to Royalty and Distribution Income payable to the Fund and significant declines in the amount of cash available to distribute to unitholders of the Fund, the Trustees of the Fund continuing to monitor the effects of COVID-19 on the Fund and adjusting distribution policy in a prudent manner as circumstances warrant with a view to preserving unitholder value, that preservation of cash by the Fund is prudent and appropriate until economic conditions improve and other such matters are forward-looking information.  When used in this press release, forward-looking information may include words such as "anticipate", "estimate", "may", "will", "expect", "believe", "plan", "should", "continue" and other similar terminology.  The material factors and assumptions used to develop the forward-looking information contained in this press release include the following: the COVID-19 outbreak will continue to negatively impact the restaurant industry and necessitate the closure of all Boston Pizza dining rooms and sports bars across Canada, and that the closure of all Boston Pizza dining rooms and sports bars across Canada will result in significant declines in Franchise Sales and Same Restaurant Sales.  Risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievement expressed or implied by the forward-looking information contained herein, relate to (among others) competition, demographic trends, consumer preferences and discretionary spending patterns, business and economic conditions, legislation and regulation, reliance on operating revenues, accounting policies and practices, the results of operations and financial condition of BPI, BP Canada LP and the Fund, as well as those factors discussed under the heading "Risks and Uncertainties" in the most recent Annual Information Form of the Fund. This information reflects current expectations regarding future events and operating performance and speaks only as of the date of this press release.  Except as required by law, the Fund assumes no obligation to update previously disclosed forward-looking information. For a complete list of the risks associated with forward-looking information and the Fund's business, please refer to the "Risks and Uncertainties" and "Note Regarding Forward-Looking Information" sections included in the most recent Annual Information Form of the Fund available at www.sedar.com and www.bpincomefund.com.

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

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

SOURCE Boston Pizza Royalties Income Fund

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