Pizza Pizza Royalty Corp.

Ladies and gentlemen, thank you for standing by and welcome to the Pizza Pizza Royalty Corps' earning call for the second quarter of 2025. During the presentation, all participants will be in a listen-only mode. After the speakers' remarks, there will be a question and answer session. As a reminder, this conference is being recorded on August 7th, 2025. At this time, all lines will be in listen-only mode. Following the presentation, we will conduct a question and answer session. I would now like to turn the conference over to Christine DeSilva, CFO. Please go ahead.

Thank you. Good afternoon, everyone, and welcome to Pizza Pizza Royalty Corp's earnings call for the second quarter ended June 30th, 2025. Joining me on the call today is Pizza Pizza Limited's Chief Executive Officer, Paul Doddett. 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 suggestions discussed today. All forward-looking statements should be considered in conjunction with cautionary language in our earnings release and the risk section included in our annual information form. Please refer to our earnings release and the MDNA in the investor relations section of our website for 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 the call. With that, I'd like to turn the call over to Paul Zahner to provide a business update.

Good afternoon, everyone, and thanks for joining us on today's call, especially on a midsummer night's evening. I'm pleased to report that our brands delivered another strong quarter of growth, underscoring the continued momentum of our business and the strength of our brands in a highly competitive QSR landscape. Our second quarter performance reflects solid execution, strong customer demand, and strategic menu innovation that all translated into sales. For the quarter, our brands reported a combined same-store sales growth of 2.1%, with Pizza Pizza Restaurants reporting 2.1% growth, Pizza 73 restaurants reported a growth of slightly less at 2.0%. At both brands, growth this quarter was driven by increases in both test traffic and the average customer check, which is great to see. Impactful and timely marketing initiatives and new product launches resulted in an increase in traffic, and we're happy to see another quarter of growth in our organic delivery channel as well, which helps increase the average check. This quarter, we continued our focus on building brand engagement through innovative promotions, products, and partnerships, serving great value and celebrating key moments. Speaking a little about our brand-building promotions and partnerships, we continued to build off our Score Slice and Hockey Game Box campaigns as we created custom social content to tap into fan culture during NHL playoffs, leveraging our partnerships with the Leafs, Habs, Jets, Flames, and Oilers. Between digital discount codes and special offers such as the large white-out pizza for $12.99 in Winnipeg at Pizza Pizza and the Skinner Dinner at Pizza 73 in Edmonton, we were actively in the game day conversation exactly when viewership and engagement were at their peaks. Additionally, we identified the opportunity to deepen our connection in Winnipeg. This quarter, we became the official pizza of the Winnipeg Blue Bombers and launched several high-visibility concession stands in the stadium, broadcast assets, and our much envied coveted score slice program to drive app downloads and usage in that market. We also continue to build our brand engagement through exciting menu innovations. With the immediate success of our stuffed crust pizza launch last year, this quarter we introduced two new stuffed crust cheese flavors, dill pickle and spicy habanero, and expanded availability to include XL and XXL sizes for those as well. This evolution reinforces our commitment to innovation elevating flavor options and positioning ourselves as leaders in crust varieties. Meanwhile, at Pizza 73, to launch our new signature wraps, we introduced a secret menu item revealed by 10 influencers, generating hundreds of thousands of organic impressions and engagements while driving demand for the new category. These crispy chicken wraps offered in four flavors add variety to our menu and are a great addition to our expanding lunch day park. And beyond our innovative marketing messages and promotions, We have our core of always on value offerings. Our job is to ensure that our customers constantly see us offering the best food at the best price. We continue to lean into our value offerings as we promoted our XXL pizza and our pizza and chicken combo. And we did a re-hit on our 25% reverse tariff offer as well, lining up perfectly with Canada Day. As mentioned earlier, Pizza has always celebrated special occasions and this quarter was no different. Pizza dominated the QSR share of voice during the 420 cannabis festivities with the return of the pizza pre-rolls exclusively on the menu during the week, and a Catholic collector vinyl album, Pizza Pizza Dope Jams, featuring six psychedelic tracks inspired by the Pizza Pizza jingle. And I will mention, these were specifically targeted at that particular demographic, not our family demographic, so we are careful where we promote that, but we're very happy with the relevant social media demographic there in the response. Meanwhile, at Pizza 73, where we are celebrating that brand's 40th anniversary, we offered a buy one, get one campaign for customers and even celebrated the oil country with free hard pizzas for fans during the Edmonton Oilers playoff run. Select Edmonton and Spruce Grove locations there joined in, showcasing the brand's strong community roots there. Our plans for the second half of 2025 will see us continuing to leverage our brand assets and strengths as we implement new promotions backed by our core product propositions, ongoing menu innovation, conveniently located restaurants, and an award-winning tech platform. All of these fundamental pillars ensure a superb customer experience each and every time. And that's something that we continually iterate upon as well. Customers need to evolve and so do our capabilities as well. So it's a dynamic situation. We never rest on our laurels. And we're continuing to enhance our web and app experiences through iterative data-driven improvements. including not just new menu items, but enhancements to various parts of the functionality and ordering process, and to the speed and simplicity of ordering on our digital channels. We will continue to leverage our competitive tech advantage with more customer-focused capabilities as time goes on. Stay tuned for future updates in future quarters. Before I turn the call over to Christine, I just also wanted to briefly discuss our restaurant network growth. We ended the second quarter with a total of 800 locations in Canada, a really exciting milestone. 696 were Pizza Pizza sites, and 104 were Pizza 73s. The open three traditional and five non-traditional Pizza Pizza locations during the quarter. And I'll just add that we are also adding some more non-traditionals as well this year. We'll likely have a few closures there too, but we'll definitely be a net positive on the non-traditionals as well. So we have a solid site expansion plan, and we have a lot of pipeline, a lot of franchisees, pardon me, in the pipeline as well, so we feel good about that. and we expect the pace to pick up in the remaining quarters. Meanwhile, at Pizza 73, we opened one traditional location, and we closed one traditional and four non-traditional pizza sites, and one traditional Pizza 73 location closed. We continue to see opportunities right across Canada, but also in Ontario, where we have the highest concentration of restaurants. In Mexico, our existing four stores have had good sales growth and continue to generate buzz, traffic, and continuing momentum in Guadalajara. Our Mexican partners have sited several more locations and have commenced the construction process on two new sites in Guadalajara. We continue to believe there's a significant potential to really scale up there in Mexico, especially given the population of 3x Canada in the coming years. And we do think it might take a little longer than I expected to reach our target of approximately 10 new restaurants per year, but we do feel that we've got great initial traction and the sales of existing stores are excellent. So we're pushing hard to get even more momentum there. As we head into the second half of 2025, We expect to see restaurant network expansion of roughly 2% to 3% in traditional restaurant growth. Now some closing remarks. While we're pleased with the positive growth we achieved this quarter at both brands, the Canadian economy in general does appear to be showing signs of continued softening, despite the strong TSX, for instance, since late spring. But perhaps we'll see increased softening in consumer spending continue. It's a little unsure when you look at the macroeconomic environment. But generally, the trend is It's affecting much of the GSR industry, not just in Canada, but also in the United States. So since we can't control the macroeconomic environment, we're staying proactive. We're sharpening our value messaging, optimizing promotions, and continuing to invest in digital and loyalty to drive customer frequency and retention. We're confident these actions will help us maintain our momentum, even as the macroeconomic environment appears poised to become more complex and potentially less favorable to us. Finally, I'd like to close by thanking our entire team, both our corporate employees and restaurant owner-operators alike, for bringing their passion, professionalism, and ambition each and every day for our customers, our communities, and for each other. We're pleased with our performance in this highly competitive market environment and feel we're really just getting started when it comes to realizing the potential of our iconic brands. So thank you for listening in on this warm summer night, and I'll now hand things back over to our CFO, Christine, to wrap up the call.