Pizza Pizza Royalty Corp.

Good afternoon, ladies and gentlemen, and welcome to the Pizza Pizza Royalty Corp. 3rd Quarting Earnings Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. This call is being recorded on November 4, 2024. I would now like to turn the conference over to Christine De Silva, CFO. Please go ahead.

Thank you. Good afternoon, everyone, and welcome to Pizza Pizza Royalty Corp's earnings call for the third quarter, ended September 30th, 2024. Joining me on the call today is Pizza Pizza Limited's Chief Executive Officer, Paul Goddard. Just a quick note, 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 press release and the risk factors included in our annual information form. Please refer to our earnings press release and the MD&A in the investor relations section of our website for a reconciliation and other disclosures related to our non-IFRS financial measures mentioned today. As a reminder, analysts are welcome to ask questions after the prepared remarks. Portfolio managers, media, and shareholders can contact us after the call. I will now turn the call over to Paul Goddard to provide a business update.

Thanks, Christine, and good afternoon, everyone. Thanks for joining us today. We appreciate it. I'd like to invite you to our call, third quarter investor conference call. Today, I will discuss our results and we'll share a brief outlook for what's ahead as we close out this year. Christine will then summarize our key financial highlights before the Q&A at the end. So in the third quarter, we continue to experience headwinds as we navigate ongoing reduced consumer spending and its impact on food service, particularly delivery channels. And in this environment, we've seen ongoing shifts to pickup orders across Pizza QSR, which continues to be an opportunity for us with our best-in-class restaurant footprint across Canada. In the third quarter of 2024, our brands reported a combined 5.3% same-store sales decline, as pizza restaurants reported a 5.9% decline after two years of very strong growth, and Pizza 73 restaurants reported a sales decline of 1.5%. So both brands saw a decline in traffic as a result of pressures on consumer spending and heightened competition, and relatively flat checks as the brands introduced new value offerings and consumers migrated to picking up instead of delivery orders. Our sales recovery strategy for the remainder of 2024 and into 2025 will leverage our strong everyday value leadership position backed by ongoing enhancements to our menu, convenient restaurants, and customer experience, including the digital experience. On value, while it's obvious, customers are looking for continued value as well as quality. So we have to find the right balance of perceived value for money. We need to keep customers happy and willing to purchase while simultaneously doing all we can to drive not just sales growth, but also profitability for our restaurant owner operators and for our private operating company, Pizza Pizza Limited. And this is not always easy. in the heightened competitive QSR landscape. In the third quarter, we continue to focus and promote value to our customers as we look to gain share of consumers' QSR spend. At the Pizza 73 brand, we successfully launched an XXL pizza at a $19.99 price point, speaking directly to the value customers were looking for and that they're looking for. And this new offering has been well received by our customers. We saw significant sales throughout the quarter as it quickly became our number two deal. So building off the success of this offer, we then introduced the all-for-one special consisting of four small pizzas for $19.99, and a back-to-school discount was added with our unlimited two-topping pizza special at a $10 price point. Meanwhile, over at Pizza Pizza, over the last three years, we have seen a shift in consumer behavior, with customers moving to pickup orders to save on delivery, tip, and other surcharges. We decided to lean into that trend and heavily promoted our pickup specials leading into the summer season, in early Q3 in particular, and our pickup artists campaign was supported with billboard, TV, and digital media advertising, and we continue to see growth in that category. Ensuring we are convenient and accessible to all potential customers has always been a key priority of our business and has proven to be a key differentiator for us, especially with our expansive restaurant network across Canada and our best-in-class digital footprint for customers to order on. In terms of enhancements, Our customers continue to recognize our strong value proposition and convenience, but our marketing and menu innovation continues to be an asset in driving brand visibility and incremental sales. This summer, we tapped into the spicy food trend with a collaboration with legacy brand Tabasco. We developed items across six product categories on our menu to showcase our menu variety while adding something new and exciting. We also used this collaboration to develop new on-the-street social media content, further driving brand awareness. In the past, we've talked about owning key days and occasions, and summer months are no different. We partnered with dozens of festivals and events across Canada, including the Calgary Stampede, Ontario's Honda Indy, the CNE, Montreal and Vancouver's Pride events, and the East Coast Music Festival, to name a few. At these events, tens of thousands of pizza slices were sold, building the brand's equity with Canadians everywhere. As the summer ended, We welcome students back to post-secondary campuses across the country during Frosh Week with a creamy garlic dip mini keg. You know there's a strong affinity for our creamy garlic dip, so we developed some fun social content around that, got lots of attention around that. And while honestly it was not a big sales-driving initiative, it does keep our brand top of mind with that generation of pizza consumers, so we feel like we're seen in refreshed light more and more, which is great. As we look to closing out 2024, we know there is significant competition for consumer spending, But the overall strengths of our foundation remain, to name a few, brand strength, resonant marketing messages, a continually enhanced, ever-changing menu, innovations in our technology, reliable consistency and quality, and probably above all, convenience for customers and value for money. So these leading attributes will be our key to our growth as we go forward, as they have been in the past. Turning to restaurant network growth, five traditional and three non-traditional Pizza Pizza locations, and one traditional Pizza 73 location opened in the third quarter, and three non-traditional locations. For the nine months, we've opened 33 locations, 13 traditional and 20 non-traditional Pizza Pizza locations, and one traditional and one non-traditional Pizza 73 restaurant. Well, we have closed three traditionals and 16 non-traditionals. So we're net 16 year to date. While we continue to focus on openings across Canada, we are pleased to say that half of our traditional store openings have actually been in our biggest and longest standing market, province of Ontario. Meanwhile, our successful expanses to the major newer markets of BC and Quebec continue. And beyond Canada, we continue working with our Mexican partners on the next set of restaurant openings under the direction of their new CEO. We continue to see good momentum in Mexico and expect a few more restaurant openings there in the coming months. Just for some closing remarks, as mentioned, we will continue to drive business by leaning into our value offerings, our innovation, our marketing and brand initiatives, while providing high-quality, delicious, hot and fresh food to our customers wherever and whenever they want us. We know the economic landscape is challenged, but we will ensure that our customers continue to see us offering the best food at the best price. As we always say, always the best food made especially for you. So thank you for listening, and I'll now ask Christine to provide our brief financial update.