Pizza Pizza Royalty Corp.

Ladies and gentlemen, thank you for standing by and welcome to the Pizza Pizza Royalty Corp's earnings call for the first quarter of 2025. During the presentation, all participants will be in a listen-only mode. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. As a reminder, this conference is being recorded on May 7, 2025. I will now turn the call over to Christine DeSilva, CFO.

Thank you, and good afternoon, everyone. Welcome to Pizza Pizza Royalty Corp's earnings call for the first quarter ended March 31, 2025. 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 related 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 or a reconciliation 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 this call. With that, I'd like to turn the call over to Paul Goddard to provide a business update.

Thanks very much, Christine. Good afternoon, everyone, and thank you for joining us on today's call. to assess our Q1 2025 results. We are happy to report a solid start to 2025 with positive sales growth at both Pizza Pizza and Pizza 73. For the quarter, our brands reported a combined change for sales growth of 1.2%, with Pizza Pizza restaurants reporting 0.6% growth and Pizza 73 restaurants reporting growth of 4.3%. I should mention also this is lapping a positive 2.1% for sales growth of 1.7% for 2024. So we are positive on top of positive for this first quarter, and we're pleased to see that we've regained some positive momentum recently. As we discussed on our last call, our plans for 2025 see us continuing to leverage our brand assets and strengths as we implement new promotions backed by our core product propositions and ongoing menu innovation, convenient restaurants, and tech platform, and through all of this, a superb customer experience. Now let's get into the details of our performance this quarter. As I said, we kicked off the year with positive same-store sales, which is great, and at both brands, growth this quarter was driven by increases in both guest traffic and the average customer check. Customer traffic growth was driven by thoughtful calendar initiatives and new product launches, and we were happy to see growth in our organic delivery channel, which helped increase the average check. As we've mentioned in the past, the QSR food service category is highly competitive, and we do see a heightened level of discounting continuing in the quarter. We continue to strive to find the right balance between offering competitive offers and discounts, while also protecting the profitability of our restaurant order operators. Following the success of the Extra Extra Large Pizza, the XXL, at Pizza 73, we introduced the massive 18-inch pizza to Pizza Pizza customers as well. The unique benefit of operating two unique but similar brands in Canada, and that's something that allows us to test and learn at one banner before launching at the other, which we've really, really, I think, gotten better and better at as well. At Pizza Pizza, the FXL was an immediate hit with customers, growing our pizza category overall and providing Canadians with a completely unique value option on our menu. At $20 with two toppings, this big pizza can feed a family for an unbeatable price. Beyond our strong, always-on value propositions, our convenience, Innovative marketing programs and partnerships continue to be on display this quarter, driving visibility and incremental sales. So I wanted to quickly highlight a few points about leveraging our brand strength and innovation as seen this quarter. Our brand likes to be at the forefront of current trending topics. While many brands added proudly Canadian badges on their ads, we took it a step further with the timely and actionable reverse travel promotion providing Canadians with memorable advertising and true financial savings in the form of a 25% discount. Close collaboration with our agency partners and our in-house creative team allowed us to launch the program in time for the Four Nations Hockey Final. Our breakthrough and funny ads ran in the lead-up throughout the game and in the four weeks following, dominating the proudly Canadian conversation while driving up sales via the tactical 25% off reverse tariffs offer. As well, the tag Actually Canadian was something you might have seen while watching one of our many sponsored professional sports teams this quarter. Beyond our score-a-slice and score-a-pie promotions at our partner arenas across the country, this quarter we leveraged our NHL team sponsorships and our longstanding Coca-Cola supplier relationship to create our custom hockey boxes. These boxes provided hockey fans a unique hockey tabletop game complete with hockey nets with their pizza-eating experience. We have regional versions for our Montreal Canadiens, Winnipeg Jets, and Toronto Maple Leafs fans, as well as generic boxes for all other provinces. And coincidentally, obviously, three of those teams actually, our three sponsored teams made it to the playoffs, and they're still in it, obviously, the Jets, the Oilers, and the Leafs. So pretty exciting times. Maybe the hockey box is good luck. Now, Pizza 73, to leverage our relationship with the Edmonton Oilers, we introduced the Skinner Dinner, a product endorsement with the Oilers goalie, Stuart Skinner. This offer has done well, and it was very timely as the Oilers battled on and ran through the playoffs here. While we are always innovating on our messages, I would also be remiss if I didn't speak to our product innovations this quarter. At Pizza Pizza, we introduced a unique product in the GSR space for Canada, the Loaded Caterpots. This program was led with our ownable and craveable creamy garlic tots in the forefront. This offers a great addition to orders and helps lift organic sales during the promotion window. Meanwhile, at Pizza 73, we introduced new signature wraps, including crispy chicken and doner, to highlight our menu variety and drive to lunch and snacking occasions. Following the successful launch of cheese stuffed crust pizza, we also introduced a program at Pizza 73 this quarter, again, proving it in one brand and taking it to the other if it works. The new stuff cost option was an immediate hit with our customers, nearly doubling our sales expectation, providing us an instant net new revenue stream. As we look ahead to the second half of 25, we know that there is significant competition for consumer spending, especially the impact tariffs will have on our customers' wallets. But the overall strengths of our foundation remain the same. Our brand strength and resonant marketing messages, the continually enhanced menu, relentless innovations across all aspects of our business, and unrivaled quality and convenience for our customers. So together, these pillars have been a winning formula for us in the past, and we feel will continue to drive our future growth and success as well. Before I turn the call over to Christine, I just wanted to briefly discuss our restaurant network growth. We remain focused on growing our business across Canada, and we are, by any measure, the leading homegrown national QSR pizza brand. During the quarter, we opened two traditional and two non-traditional pizza pizza locations, Meanwhile, at Pizza 73, we opened one traditional location, and we closed four non-traditional Pizza Pizza sites, and one traditional Pizza Pizza, which actually converted to a Pizza 73 site. So, we continue to see opportunities across Canada, and I would also mention, though, in Ontario, where we have the highest concentration of restaurants, that's where we're originally from, and continue to see close opportunities there in select places. And, in fact, the two traditional restaurant openings this quarter were both in Ontario. As we head into the second half of 2025, we expect to see restaurant network expansion of roughly 2% to 3% traditional restaurant growth. And I will also mention, apart from the network growth side, just on the tech side, we're also continuing to invest heavily in our technology platform with increased restaurant order automation and streamlining, visual order tracking for customers, which we already have, but we're looking to enhance that on our app and web, and getting much more conversion now with what you see on third-party platforms, as well as features like SMS broadcast messaging and order reminders, particularly for app users and our Club 1111 loyalty members. So our ongoing investments here on the tech side help drive customer engagement and loyalty, along with increased order frequency. And just to close off, I just say we are pleased to see the improvement in sales, and especially traffic growth. We always want volume. We always want transactions. So I think that's the most pleasing of all. But we do know that the economic landscape is challenged, and customers are much more deliberate in managing the overall spend. Our job, of course, is to ensure that our customers see us offering the best food at the best price. And I think we're really well known for that. So we will continue to lean into our value offerings, but supported by product innovations and tech innovations and also marketing activations. And we will be wherever our customers are and will be available to them whenever and however they want to order from us. Finally, I'd just like to close by thanking our team, corporate employees, and operators alike for all they do day in and day out for our customers. for our communities and for each other, especially in a difficult economic environment with a lot of uncertainty and potentially worsening our climate, a recessionary climate that could be ahead of us even more than it is now. So I think we have to be prepared for that. I feel great about our team. We've got a very unique special team culture from coast to coast, and the level of passion, commitment, and ambition is second to none. So I feel very confident we'll continue to be a leader in the market, continuing innovating, refreshing, and reinventing ourselves. Well, thank you for listening, and I'll now ask Christine to provide a brief financial update.