Pizza Pizza Royalty Corp.

Standing by and welcome to the Pizza Pizza Royalty Corp earnings call for the fourth quarter of 2020. During the presentation, all participants will be in a listen-only mode. After the speaker's remarks, we will conduct a question and answer session. At that time, if you have a question, you will need to press star and the number one on your touchtone phone. As a reminder, this conference is being recorded on Tuesday, March 2, 2021. I will now turn the call over to Christine DaSilva, CFO. Please go ahead.

Thank you. Good afternoon, everyone, and welcome to Pizza Pizza Royalty Corp's earnings call for the fourth quarter ended December 31, 2020. Joining me on the call today are Pizza Pizza Limited's Chief Executive Officer, Paul Goddard, and Senior Vice President of Strategic Analysis and Implementation, Kurt Feltner. Our discussion today will contain forward-looking statements that may involve risks relating to future events. Actual events may differ materially from the projections discussed today. All forward-looking statements should be considered in conjunction with the cautionary language in our earnings release and the risk factors included in our annual information form. Please refer to our earnings press release and MDNA in the Investor Relations section of our website for a reconciliation and and other disclosures related to non-IFRS measures mentioned on this call. As a reminder, analysts are welcome to ask questions after the prepared remarks. Portfolio managers, media, and shareholders can contact us after the call. Before turning the call over to Paul for the business update, I wanted to spend a few moments reviewing the structure of the Corp for our new investors. Pizza Pizza Royalty Corp. indirectly owns the Pizza Pizza and Pizza 73 brands and trademarks through its subsidiary, Pizza Pizza Royalty Limited Partnership. This partnership has two partners, Pizza Pizza Royalty Corp., the public company, which owns 76.5%, and the other partner, Pizza Pizza Limited, the private operating company, who owns the remaining 23.5%. The Royalty Corp is a top-line restaurant royalty corp that earns monthly royalties through a lease agreement with Pizza Pizza Limited. In exchange for the use of the Pizza Pizza and Pizza 73 trademarks in its restaurant operations, Pizza Pizza pays the partnership a monthly royalty calculated as a percentage of royalty pool sales. Royalties lost due to the permanent closure of restaurants are replaced with royalties from new restaurants opened on the next royalty pool adjustment date. Until that date, Pizza Pizza continues to pay the royalties as if the restaurants had not closed. Growth in the corp is derived from increasing same-store sales of the restaurants in the royalty pool and by adding new restaurants to the pool each year. The royalty pool is adjusted at the beginning of each year by adding new restaurants opened, less any restaurants that have been permanently closed. For the fiscal year 2020, the royalty pool was adjusted on January 1st of 2020 to include 645 Pizza Pizza restaurants and 104 Pizza 73 restaurants. So with that brief review, I will turn the call over to Paul Goddard to provide the business update.

Thanks, Christine, for that structural overview. And good afternoon, everybody. Thank you, all of you, for taking the time to attend our call today. And before we get started here, I just would like to take this opportunity to personally thank all of our employees, our restaurant owners and their team members, our incredible delivery drivers on the front lines, and our suppliers, of course, as well. They've shown tremendous resilience, courage, and leadership over this past year. And despite this pandemic, our team is continue to really perform well under extreme circumstances. And it's truly inspiring for me to see everyone helping each other out, particularly during these really trying times. And to our customers and to you, our investors, thank you for your continued trust and loyalty. Moving on to the business side of our call, I would like to first congratulate Christine on her appointment earlier this year, as of Jan 1, to the Chief Financial Officer position of Pizza Pizza and Pizza Pizza Realty Corp. Christine has worked alongside Kurt and myself for 14 years now and is previously our VP Finance and Investor Relations. And really excited to have her in this role. And I'd also like to extend my appreciation and thanks to Kurt Feltner on his transition from CFO into the new cross-functional role of Senior Vice President of Strategic Analysis and Implementation. We've got a lot of exciting initiatives and strategies that we're embarking on here in 2021, and I'm proud of the exceptional senior management team that we have at the company. And both Christine and Kurt are here on the call today with me. Obviously, the main purpose of our call this afternoon is to highlight the results of our fourth quarter and year-end for December 31, 2020. Now, as a reminder, our business is comprised of two key revenue streams. First, our traditional restaurant network, which generates 90% of our royalty pool sales. And second, our non-traditional and special event locations, which generate the remaining 10%. So... Within our traditional restaurant network, our customers are able to enjoy our food by ordering in advance for delivery or for pickup or by simply walking into one of our restaurants on a premeditated basis for takeout or for dine-in. And about 60% of all of our orders, by the way, are done through our websites or numerous apps as well. And that's increasing over time, which is great. Fortunately, our traditional restaurants have remained open for delivery and takeout business since the pandemic began. Our customer dine-in options have generally been closed since the onset of the pandemic, following public health guidelines, with the exception of a brief period during the summer months in 2020, where we did see some good momentum. While our traditional business has been deemed essential and therefore allowed to remain open, Pizza Pizza and Pizza 73 system sales have still been impacted in material ways, as restaurant operators took significant and necessary measures in their restaurants to protect the health of their employees and our customers. Our teams have also been proactive and agile in complying with all social distancing recommendations and requirements of the applicable health authorities, including the closure of all restaurant seating areas. So the lack of normally robust dine-in business combined with work-from-home mandates, virtual schooling, and reduction in broader social and business activities have all combined and led to a significant decrease in our walk-in sales, especially for those in our urban locations, which typically represent all that group there of walk-in, about 40% of our total store sales, so Definitely very significant. But again, fortunately, for delivering pickup channels, which represent about 60% of our sales, we continue to see that offset a large portion of those lost walk-in sales. During the early stages of the pandemic, we quickly introduced innovative customer-centric safety measures such as contactless pickup and delivery transactions, literally in about four days. So hats off to the IT operations and marketing folks for making that happen. It was laser fast. And also an industry-first award-winning tamper-free pizza box, which provides customers additional assurances when ordering from us. And all of these innovations have been very well received by our customers and appreciated. The other aspect of our business, our non-traditional locations and special events have had to remain almost entirely closed due to government mandates during the pandemic. Our non-traditional business, including sporting arenas, colleges and universities, and major outdoor entertainment venues such as Canada's Wonderland and many others, are largely responsible for the reported decrease in our fourth quarter sales. As I noted at the beginning, this component generally accounts for 10% of our sales, that non-traditional bucket. And the fourth quarter typically signals the start of the new sports season, holiday gatherings, and our strongest sales quarter. However, during this last fourth quarter, as government restrictions and stay-at-home orders resumed, the start of sports was delayed. For example, the beginning of the new NHL season was delayed until mid-January, whereas back in 2019, it began in early October. And of course, this past year, no spectators have been allowed in the sporting venues either. Halloween parties, seasonal holiday gatherings, they just were not permitted to happen this past December either. We also normally see substantial group ordering, catering orders, you know, high volume orders at businesses, school orders, doing Q4 as well, right from September through to especially the holiday season. But this was another area where we were, you know, where we were not permitted to operate, basically. We, you know, we... were open for business, but there just was no demand there because of what was going on with the pandemic restrictions. And in addition, I would also say that we saw increased pressure from third-party aggregators through a substantial amount of discounting on their part and heavy advertising in the marketplace. So our sales momentum from the summer months that we had was really materially pressured lower during the fourth quarter with the resumption of all these restrictions and the difference of behaviors going on associated with that. So for the quarter, our starting store sales, the key driver of yield growth for shareholders decreased 17.6%, and the total royalty pool sales decreased 15.8% to $123.7 million from $146.9 million. While system sales and royalty income were meaningfully lower in the fourth quarter than prior years, our ability to pay our monthly dividends remained strong. As a reminder to everyone, our Board of Trustees made the prudent decision to reduce our monthly dividend in April 2020 by 30% ahead of potential uncertainties in our business. However, I'm proud to say that our business outperformed those expectations, and we were able to announce a 10% dividend increase last year. During the quarter, we generated $745,000 in excess cash, which added to our working capital reserve, which is now at a very robust $5.4 million. As a result, our payout ratio is 84% for Q4 2020, and 90% for the year. We'll continue to monitor that payout ratio carefully, as we always do, and while our target payout ratio remains at 100%, we also need to remain vigilant given the ongoing effects of the pandemic across Canada and the possibility of a resurgence in COVID-19 cases and variants, which does appear to be happening right now in parts of Ontario, for instance. And until we see a broader vaccination rollout, hopefully by the end of September, as the federal government has promised us, We expect consumer confidence and therefore domestic economic fundamentals to remain quite weak. Nevertheless, our goal remains to be providing stability in our dividends to shareholders and increase them over time as we move past this pandemic. Turning to the operations of PPL, the private operating company, at both Pizza Pizza and Pizza 73, our marketing strategies are structured to support restaurant profitability while also increasing customer orders and order frequency, whether it is via traditional phone call-in, digital app engagement, or walk-in traffic. This year, we're focused on going on the offense. Our innovation pipeline is strong, and we see excellent growth potential, particularly in key new markets. Consumers have moved online faster than ever before during 2020 and are purchasing in large numbers, in large part due to the pandemic and increasing consumer comfort with e-commerce and contactless experiences in general. And we feel they aren't going to move back offline after the pandemic recedes either. With this trend in mind, Pizza Pizza also launched a new e-gift card program focusing on driving digital sales and quick contactless redemptions as well, versus using the more tedious plastic gift cards still so common in the industry. And for many, many years, Pizza Pizza Limited has invested heavily in our digital platforms. And we've said this before, and I'll say it again here, no other pizza player in Canada has more digital channels for customers to choose from. Our customer delivery and pickup orders transacted through our array of digital ordering platforms accounts for over 60% of all orders, And like I said, this percentage will continue to increase, benefiting our customers, our company, and our franchisees. Innovation is key to our growth, and it's one of the most important brand attributes we're known for, not only in tech, but also in our menu offerings and really in everything we do. In 2020, we continued our core menu promotional activity, featuring our very popular unlimited two-topping $7.99 medium pizza special at Pizza Pizza and our $9.73 solo special at Pizza 73. And we also promoted our alternative crusts, particularly the keto and cauliflower crust, now paired with a side order of cauliflower bites. And for the holidays, Pizza Pizza promoted a dessert option with funnel cake sticks featuring two holiday-inspired dips. Our diverse high-quality menu, together with our award-winning websites and apps, and our top-notch customer service have positioned us well to weather this pandemic and come out stronger at the other end. Now, turning to restaurant development for a moment, during the quarter, we opened one traditional restaurant and one non-traditional Pizza Pizza location. However, we permanently closed three Pizza Pizza restaurants. Additionally, we opened one traditional Pizza 73 restaurant. For the year, we opened six traditional restaurants and three non-traditional Pizza Pizza locations, while closing 17 traditional and 15 non-traditional Pizza Pizza restaurants. Additionally, two traditional Pizza 73 restaurants opened, while one traditional and one non-traditional restaurant were closed. And as previously mentioned during the quarter, substantially all traditional Pizza Pizza and Pizza 73 restaurants remain open across Canada. However, the majority of the non-traditional Pizza Pizza and Pizza 73 restaurants have remained closed with the exception of a few small locations and several hospitals and gas stations and the like. So while we have not opened as many new restaurants as originally envisioned in 2020 during the pandemic, we have accelerated our renovation and refresh program now. And in fact, 70% of our traditional stores now showcase our new look. And also we've put through new uniforms and a bunch of other changes too. So if you have been to one of our stores lately, I think you'll see a very new and refreshed look right through and through, which is great to see. And that really demonstrates to the market that we will always reinvent ourselves and keep refreshing our brands. We're not waiting around for various restrictions to be lifted. That's something we're not in direct control over, so we're going to focus on what we can control. And we believe our current store network is strong, it's ubiquitous, and our franchisees are as ambitious as we are to grow faster. So we've ramped up the restaurant construction and renovations for 2021, and barring any resurgence or adverse long-term effects of the pandemic or unexpected further delays in vaccine rollout later this year, we currently expect to see traditional restaurant growth to be approximately 5% in 2021. And as I said at the beginning, this year has been, of course, very challenging for everyone, and I want to personally thank our entire team for their hard work, their sheer perseverance, and the unrelenting efforts this past year. The health and safety of our customers and our restaurant teams continues to remain our top priority, and we've implemented strict protocols in our restaurants and in our deliveries to keep our customers safe, and our track record's been really good in that regard. So we're committed to, as always, delivering great food, providing the best customer experience, and we know that will translate into loyal customers and improve performance over the long term for our investors as well. So thanks again for joining the call this afternoon. I'll now turn things over briefly to Kurt to say a few words. followed by Christine as our newly-minted CFO, who will provide the full financial update. But first, over to you, Kurt.

Thank you, Paul. I would just like to take a moment to say that it's been a pleasure working with our shareholders, our investment bankers, and our financial institutions and our analysts over the years since our initial public offering in 2005. I'm Personally, very proud of what we've accomplished with our market-hitting brands. And I'm particularly pleased to have Christine now lead the company in the chief financial officer role. She and I have worked closely over the years, and I'm fully confident she'll serve the company extremely well. She has excellent technical skills and has gained a solid reputation industry knowledge, and she's been at the table for, um, all of our major company decisions, uh, in at least in the past decade. So, uh, yeah, she's well-versed on, on, on our company. So, uh, with regards to my, uh, new role, um, I'm well into, um, our strategic and analytical role and initially focusing on business intelligence and specifically, uh, currently on customer data analysis. So it's good stuff for the company. And we're making good progress. But just thank you for the time. And with that, I'll now pass the call to Christine for our Q4 financial update. Christine?

Thanks, Kurt, for that glowing introduction. I'd just like to briefly cover the financial results for the quarter. And our financial results, as Paul has mentioned, continue to be impacted by COVID-19. Same-store sales growth, the key driver of yield growth for shareholders, as Paul mentioned, decreased 17.6% for the quarter and decreased 12.5% for the year. The lost walk-in sales and non-traditional sales, as previously discussed, are responsible for the reduction in system sales. However, delivery and pickup at both brands are working hard to offset this reduction. though same-store sales is expected to be negative in the near future as the pandemic continues. Growth sales reported by the restaurants in the royalty pool for the fourth quarter were $123.7 million. This is a 15.8% decrease as compared to $146.9 million in the fourth quarter of 2019. By grant, sales from the 645 pizza restaurants in the pool decreased significantly 15.6% to 103.4 million, and sales from the 104 Pizza 73 restaurants decreased 16.6% to 20.3 million for the quarter. For the year, royalty pool system sales decreased 11.8% to 488.3 million. Royalty income for the quarter was 8 million as compared to 9.5 million, and was $31.8 million for the year compared to $35.9 in 2019. The decrease in royalty pool system sales and royalty income for the quarter and year is largely a result of the negative impact COVID-19 has had on our business and the change in the number of restaurants on January 1, 2020. Turning to the partnership expenses, administrative expenses include director, legal, auditor fees, listing costs, and annual shareholder meeting costs. Administrative expenses for the quarter were $183,000 and $636,000 for the year. In addition to administrative expenses, the partnership pays interest expense on its $47 million credit facility. Interest paid for the quarter decreased to $319,000 from $329,000 last year. The partnership is currently making interest-only payments on the non-revolving credit facility. the partnership's new interest rate swap agreement came into effect in April of 2020. The new interest rate swap agreements fixed the facility's interest rate at the banker's acceptance rate of 1.81% plus the credit spread, which is currently 0.875, for a combined rate of 2.685. The previous interest rate agreements expired in April of 2020 at a combined rate of 2.75. The facilities include affirmative and negative covenants, customary for agreements of this nature, and as of December 31, 2020, all covenants have been met. The partnership is required to maintain a funded debt-to-EBITDA ratio not to exceed 2.5 to 1. The debt-to-EBITDA ratio for the last rolling four-quarter period was 1.51 to 1. And the credit spread ranges based on this level of debt to EBITDA. Due to the impact of COVID-19 on the partnership, it is likely that the credit spread will increase to the next tier. And you can refer to the MD&A for the full credit spread schedule. So after the partnership receives royalty income and pays administrative and interest expenses, the resulting net cash position is available to distribute to its two partners based on their ownership. Now speaking to shareholder dividends, the company declared shareholder dividends of $3.9 million for the quarter or $0.16 per share compared to $5.3 million or $0.21.39 per share in the prior year's comparable quarter. The payout ratio was 84% for the quarter compared to 95% in the prior year. For the year, the company declared shareholder dividends of $16.6 million or $67.6 $0.39 per share compared to $21.1 million or $0.8556 per share in 2019. The payout ratio for the year was 90% and was 103% in 2019. When COVID-19 first impacted system sales in March, the company reduced its dividend from $0.713 per share to $0.05 per share beginning in April 2020. Since April, system sales have partially recovered, and after careful consideration, the Board of Directors announced a 10% increase to the monthly dividend beginning in November 2020. This has resulted in the 90% payout ratio for the year and the Working Capital Reserve ending the year at $5.4 million. The Working Capital Reserve increased over $700,000 in the quarter from and $1.8 million in the year, and it's largely attributable to the April dividend reduction, offsetting the first quarter's payout ratio of 123%. It is expected that future dividends will continue to be funded entirely by cash flow from operations and the cash reserve. The company will continue to monitor system sales and royalty income and will consider future changes to the monthly dividend taking into account the duration and impact of the pandemic on our restaurant operations, as well as the timing and pace of economic recovery in the markets in which we operate. So that concludes my financial overview. I'd like to turn the call back now to the operator to poll for questions.

Certainly. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound or hash key. Please stand by while we compile the Q&A roster. Your first question comes from the line of Derek Lessard with TD Securities. Your line is open.

Yeah, good afternoon, everybody, and I hope everybody and their loved ones are safe. Thanks, Derek. Same to you. And just congratulations to both you and Christine and Kurt. Good luck in your new roles. Just a question, Paul. I think it looks like the second lockdown hurt you guys more in terms of sales than it did the first time. You did add some color, but just maybe on the surface, it looks like it was a much weaker in Pizza 73, which up to this point has held in pretty well. Is that the gist of it?

Yeah, that's pretty much it. I mean, I would say that the unique thing about Q4 as well, right, is that the catering orders and that whole sort of seasonal aspect, which probably, as I said, is such a big thing for us, it was just so anemic this year because of what's going on, right? And so I think that's what I would highlight as the main difference. It's not just the fact that, you know, you can't sit down in our restaurants because that's what also happened before the summer, but just the, you know, the back-to-school catering service that we see, all the seasonal parties, you know, we did okay on Halloween and Christmas Eve and New Year's and things, but not as robust as we normally would be, right? People are just not physically gathering. And so that's one part I really would highlight is just that effect. And also, as I tried to allude to, we just saw more activity in that back part of the year from third-party aggregators in particular. And you may notice just the sheer level of advertising spend going on there from those folks. And I think people are using those apps quite a bit. There's a lot of choice out there. even though it's very financially tough on those independent restaurants that use them heavily. But I think those are two key things I would highlight is why we saw more pain in that fourth quarter. And the non-traditionals still being shut. Yeah, the non-traditionals as well are impacted by that too. All the college kids are not back, right? Or if they are back, they're maybe on campus or they're in their town where the university is in some cases if they're not home and Toronto or Calgary or Montreal or whatever, but they're not on campus as well. So that there's all those compounding effects, I guess. And that's, I contrast that also with something like the United States where, you know, you saw, you know, it's definitely different state by state, but a lot more of a return to somewhat more normal behavior with restaurants, especially QSR in general down there. Whereas, you know, we have, if you look at our restaurants and we're saying roughly 725 locations, I mean, basically about 300 locations of all our non-traditionals are pretty much not able to operate right now. So that's a quite unique factor for us.

Okay, that makes sense. Have you noticed as well from maybe some of your competitors or other QSRs, I guess in the second wave that they were more prepared for it, offering curbside pickup and different offerings than they were the first time around?

Um, I think so. Yeah, I think that we, uh, you know, perhaps, you know, we were one of the quickest ones along with maybe a few other brands that were, had the capability to shift really quickly, um, to, to contact us, especially for our own organic delivery, um, and pickup. And I think a lot of other, you know, independents, restaurants and non-pizza players, you know, they're pretty much at the mercy of the third parties. And so it's, it helps them get in that game. And I think there was also more of a surge of those people to get on those platforms, um, which just makes sense because it was their only option, right? If, if you're, uh, know a place like a sports bar or somewhere that's more fast casual your only option in most cases is to use those third-party aggregators and you know albeit at very high commission levels so i do wonder about the sustainability of that but in the short term it does get those folks sales more and i think there was a catch-up that some of those different competitors of different types may have been able to do more as of the year we're on versus you know in the sort of late spring early summer i think we were you know one of the few

Okay, and how is the competitive environment playing out, I guess, as we exit or kind of get into the end of the first quarter here?

Yeah, I mean, we'll see. I mean, we certainly still have many of those, you know, but there's restrictions in place, for instance, in Ontario. You know, it's definitely an impact for us still. Our non-traditional business is still very essentially non-existent largely right now. We do think that will come back. You know, we'll rebound. This question is, when will it rebound? And right now, which is truly to say, I'm pretty conservative on when it will return. In my own view, just I think it'll be more towards the end of this year. That's just my thought. But, you know, it'll take a while. And I think if people are vaccinated or we get some combination of broad vaccination nationwide, pretty much, and also, you know, and or herd immunity as well, people are still not going to be confident enough. Or even if they are confident, there's government restrictions are still going to keep people in some of these most populated regions like Ontario and Quebec from actually enjoying restaurants in a closed environment until we see those numbers staying down for a long time. So we're really trying to focus on, look, pickups has actually been quite strong for us, deliveries, those things we know we're good at, and the sort of delivery done better mantra that we have in the company that lets prove that we can do it better than anyone else, including third-party delivery people. It's a trusted driver in a uniform. It's going to be hot. Our time guarantee is is, you know, something that is a key part of our brand as well that people expect and differentiate us from these folks who just can't really do that, right? And, you know, you're typically going to get even a driver you recognize many times with us. So trying to highlight that service aspect of food quality and innovation as well. We've got the pipeline there, some exciting things I think that will help play out this year. So, you know, I feel sort of optimistic, but it's going to take a while for that non-traditional to come back and that group ordering, catering behavior, schools, all that stuff. It's a very significant volume for us, and it's just still a big question mark as to when does that return. I think we'll be in a good position when it does, but until then, it's hard for us to really replace that volume, if you know what I mean.

Yeah, no, that makes perfect sense, and maybe you're still touching on the subject, as you alluded to, more from a high level. How are you thinking about the business and how your position coming out of the pandemic?

Well, I guess what I tried to give people a sense of was that we are really seeing it as an opportunity to take share. There's so many things that we are not happy about, obviously, with our non-traditional and group order business being so non-existent. But we do see, because of the weakness, I mean, there's real estate opportunities. We are starting to see signs of prices coming down there. We've been able to successfully negotiate lease extensions and things at quite an attractive level. And I think people also see that we're a really solid financial player and brand in the market as well. So that all does give us leverage. And so we're quite ambitious about our build this year and accelerating our renovations. And we're trying to make sure we keep our costs down for the franchisees and time it for them so that we're not hurting the cash flow of the units at a unit level. for the stores, but I do see a lot of opportunity because if we can really push and do the things well that we can control the drive volume, obviously value is continuing to be a very key part, but we've really also, I think, emphasized quality and food innovation, so we're getting new customers we didn't used to get, whether it's the alternative crusts and things, gourmet thins, and our digital channel focus. We're leveraging the data. I mean, the whole purpose of Kurt's role is to just provide more strategic oversight right across the enterprise as well and really leverage all that, um, investment that we've spent, you know, for years to build up our, our data platform and our, our data warehouse to really just get more insights into a true household view like never before in terms of what, um, our customers are doing. You know, we've, we've tracked the transaction data very well for a long time now, um, with our loyalty program and whatnot, but we haven't necessarily been able to until recently been able to really get a full household view of everything that, that, uh, a household might be doing. And that's actually quite complex. Easy to say, but complex to actually do. So we think that the level of insights we have is something that very few people have, maybe only the top few players in QSR. So we think that we should be able to leverage that more, especially with a real focus and a senior level focus with Curtin's team.

Looking forward to that. I guess there's just one more for me because you touched on it. Just maybe if you can speak to your franchisee pipeline and the franchisee health. I mean, it seems it's pretty healthy given the 5% growth that you're looking for this year, but maybe just some comments on that.

Sure. I mean, I don't want to paint a picture that things are rosy all over the place, but I think that I've got a good sense this past year. I did a lot of advocacy with the industry as well. with Chamber of Commerce and Restaurants Canada and things, you know, everyone is sort of arm in arm trying to get, you know, hopefully better policy from governments on the wage subsidy and things like that. And certainly government to listen, they tend to not necessarily do a great job in execution, but I think that there's at least the intention. And certainly, you know, what I learned is that so many restaurants, I mean, almost every restaurant I can think of out there in the industry is suffering, right? I mean, some more than others and, you know, sports bars and fast casual and those that, don't really have a deliverable product. It's really terrible for them. And I think when subsidies run out, it's going to be a really tough picture. But I think for us, we see our financial health overall quite good. We went through a lot of pain last year by really closing locations that probably should have been closed even sooner. So I think the worst performers that are at the bottom of our pile really you know, we make some decisions to not extend leases and renew, which, you know, in a given case, even I can think of some cases even in downtown Toronto where we decided not to renew a lease in actually a really good location, but it wasn't really doing that great. And now those two adjacent territories are doing so much better and we're still very close to the customers. So we're able to maintain the service level and help two franchisees with a financial performance much better. So I think, you know, the sort of, you know, EBITDA for store type of metric is actually pretty good overall. And I think stores seem to be Now that we've kind of achieved that critical mass of that fresh new look and the uniforms and even if they're light front lobby refreshes in some cases versus a brand new store, it really does rejuvenate people, I think. And people say, you know, I want that. So I think that there's a pretty good sort of overall group psychology going on. And I think despite the fact that we're not physically in the office, most of us, we're almost all remote. Our operations team and our overall broader team no matter what part of the company you're working in, they're very connected to the franchisees. And I think the franchisees are ironically probably more in touch with everybody inside the company too. So, you know, I think we're working through it with them and they know that we're very ambitious along with them to try and come out of this more strongly. So, you know, there's frustrations there too, but I think overall we've weathered it quite well relative to others. I mean, I think at least we're in pizza delivery business, right? I mean, versus some other sectors or even other parts of QSR that, still really um have a really uphill battle i mean our uh we want to get back to obviously increasing dividends eventually but we just we've got work to do to get that to that level but i do like our financial position obviously right our dividends very safe we've uh we're in a good place i think to go on offense here while others are in a timid uh retreating mode yeah thanks for for the color paul and yeah understandably a tough market uh all around and i think you guys are operating uh

quite well given the circumstances. That's all the questions for me. Thanks, guys. Okay. Thanks very much, Jack.

There are no further questions at this time. I will turn the call back over to Christine DeSilva.

Thank you. And thank you, everyone, for being on the call with us this afternoon. If you do have any questions after the call, please contact us. Our information is on the earnings release. Have a great evening. Stay safe and healthy.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.