Pizza Pizza Royalty Corp. · TSX:PZA
Pizza Pizza Royalty — Pizza Pizza Royalty Income Fund — Shareholder Meeting (May 2010)
29 slides from Pizza Pizza Royalty's shareholder meeting presentation, May 18, 2010
Slide 1: Pizza Pizza Royalty Income Fund Annual General Meeting
Pizza Pizza Royalty Income Fund ANNUAL GENERAL MEETING - MAY 18, 2010 1
Slide 2: Elizabeth Wright, Chair
Elizabeth Wright Chair, Pizza Pizza Royalty Income Fund 2
Slide 3: Forward-Looking Statement
Forward-Looking Statement • This presentation will contain forward-looking statements. • Investors should be aware that any forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those disclosed here today. • Management does not int
Slide 4: Operational Overview
Paul Goddard CEO, Pizza Pizza Limited Operational Overview 4 Good morning. Iʼm the CEO of Pizza Pizza Limited, the operating company which pays a monthly royalty to the Pizza Pizza Royalty Income Fund for use of the Pizza Pizza and Pizza 73 trademarks. With me today from the Pizza Pizza Management T
Slide 5: Michael Overs, Founder
Michael Overs, Founder 5 Before providing an operational overview, let me say that on March 31, 2010, Michael Overs, the founder and 100% shareholder of Pizza Pizza, passed away at the age of 70. Michael, was a great entrepreneur and Canadian success story who worked 42 years building this great Com
Slide 6: Pizza Pizza Limited, the Operating Company
Pizza Pizza Limited, the Operating Company • Began in 1967 • Pizza Pizza - renovated chain • Seasoned management team • Geographic diversification • National expansion plan underway • Retains 26.3% of the Fund’s fully diluted unit 6 Turning to the Operational overview, I would like to highlight the
Slide 7: Growing and Protecting the Brands
Growing and Protecting the Brands • Pizza Pizza provides a high level of services including: • Centralized warehouses - Volume purchasing • Pizza Pizza Training Centre - Operator training • Turn-key operation, plus centralized financing • Real estate site selection and lease renewal • Centralized pa
Slide 8: Brand Dominance
Brand Dominance • Promoting brand awareness • Dominate market share • Geographic diversification • Hot and Fresh diverse menu offerings with new product introductions • Maintain and growing, modern restaurant network • Industry innovation leader • Quick service restaurant industry segment 8 As the F
Slide 9: Economic Challenges
Economic Challenges • Economic recession - more layoffs, less discretionary income • Ontario: auto and manufacturing; West: oil and gas • Family budgets shrinking = cooking at home • Frozen pizza competition increase as more people shop for groceries • QSR competition is utilizing deep discounting 9
Slide 10: Promotional Discounting
Promotional Discounting 10 Our most recent promotion is “Free Delivery” at lunchtime for $11.99. This promotion is geared towards generating traffic, both delivery and pickup. By also selling combos and menu add-ons, we look to increase our average ticket to drive same store sales.
Slide 11: Promotional Discounting
Promotional Discounting 11 At Pizza 73, which is based on a 2-for-1 strategy and a $29 average ticket, we are featuring a single pizza offering for the first time in the brandʼs history- $13.99 for a Large Pizza and 2L Coke. Single pizzas allow us to now attract customers on a tighter budget, who ma
Slide 12: Promotional Discounting
Promotional Discounting 12 While driving delivery-traffic to the call centres, we also have restaurant walk-in deals running concurrently. Successful dine-in options have helped offset the decline in delivery sales. Meanwhile, our web orders have steadily grown, with 20%+ of orders at Pizza Pizza an
Slide 13: Marketing - Promotions
Marketing - Promotions Our fundraising events have raised over $380,000 for our charity partners. 13 Staying active, giving back and being part of our communities is what we enjoy doing almost everyday. In 2007, we launched the Slices for Smiles Foundation at Pizza Pizza, which is committed to impro
Slide 14: Brand Awareness Across Canada
Brand Awareness Across Canada Sponsorships TM Non-traditional Locations Special Events 14 Over ten percent of Pizza Pizza system sales are from our non-traditional locations which cater to consumers attending universities, sporting and recreational events. Our non-traditional locations are located a
Slide 15: World Cup promotional soccer balls
15 To celebrate the World Cup, we have designed promotional soccer balls building brand awareness. We feel these promotional items will help increase our average ticket and build sales.
Slide 16: New menu offerings
16 Introducing new, relevant offerings is key to our success. Our pasta line debuted in 2009 and we are now considering individual sized pastas. We are currently preparing new pizza launches this year, such as the Donair pizza, as well as new sandwiches.
Slide 17: Pizza Pizza Snak Pak
17 Also in production is a concept for a Pizza Pizza Snak Pak. We are responding to the growing trend in snack sized offerings. McDonaldʼs has their McMinis, Wendyʼs has their small $1.69 burger, KFC has their snack sized chicken combos. Our offering features a square slice, 3-4 wings and dip for $3
Slide 18: Industry Innovation Leader
Industry Innovation Leader • One number ordering system • Networked call centres • Internet ordering • Automated re-ordering • Debit-at-the-door and loyalty cards • Menu innovations • LED TVs airing our commercials 18 Additionally, innovation at Pizza Pizza focuses on driving sales. For instance, bo
Slide 19: Strategy of Pizza Pizza Limited
Strategy of Pizza Pizza Limited • Grow and Protect the Pizza Pizza and Pizza 73 Brands • Attract the best Partners by improving restaurant profitability • Grow same store sales • Maintain a modernized restaurant network • Hot & Fresh menu • Organic growth into other provinces • Seek strategic acquis
Slide 20: Financial Overview
Curt Feltner, Chief Financial Officer Pizza Pizza Limited Financial Overview 20
Slide 21: Retail Sales Outlook
Retail Sales Outlook 2009 2010 5 2.5 4.5 3.8 4.5 4.9 0 -0.9 -3 -2.5 -2.5 -8.4 -5 -7.5 -10 CANADA ONTARIO QUEBEC ALBERTA 21 Thank you Paul. In 2009, the overall Canadian economy was certainly affected by the slowdown in the global economy. The following statistics are taken from an RBC economic outlo
Slide 22: Pizza Pizza Limited 10 Years of Strong Sales Growth
PIZZA PIZZA LIMITED 10 YEARS OF STRONG SALES GROWTH 500 SYSTEM SALES (dollars in millions) 476 460 Pizza 73 Restaurants 416 86 79 Pizza Pizza Restaurants 36 375 390 380 381 361 335 316 295 294 250 276 233 125 0 0 0 0 0 0 0 0 00 01 02 03 04 05 06 07 08 09 22 22 Shown are the last ten years of total s
Slide 23: Pizza Pizza Limited Same Store Sales Growth
PIZZA PIZZA LIMITED SAME STORE SALES GROWTH 20% 16.4% 15% 13.0% 10% 5.9% 5.4% 5% 4.5% 4.6% 3.7% 1.7% 0% -0.7% -2.3% -5% -5.9% -10% 00 01 02 03 04 05 06 07 08 09 10 20 1 Q 23 Our next side provides an overview of the annual same store sales growth percentage for the last ten years, which average 4.9%
Slide 24: Number of Restaurants
NUMBER OF RESTAURANTS Pizza 73 Non-Traditional - Pizza Pizza 671 700 640 Traditional - Pizza Pizza 616 81 72 57 560 531 505 494 483 471 456 216 413 192 199 176 420 366 146 156 165 130 137 317 100 280 69 36 280 17 355 367 369 374 313 326 334 337 338 340 140 281 297 263 0 0 0 0 0 0 0 0 0 0 0 97 98 99
Slide 25: Pizza Pizza Royalty Income Fund
Pizza Pizza Royalty Income Fund 25 The “Fund”, owns the Pizza Pizza and Pizza 73 trademarks; and licenses these to PIzza Pizza Limited. The Fund earns royalties on top-line system sales from those restaurants in the Fund's Royalty Pool. The Fund has no employees, no direct exposure to restaurant ope
Slide 26: 2009 Performance Highlights
2009 Performance Highlights • System sales of Royalty Pool $451.4 M • Number of restaurants in Royalty Pool: 637 • Same store sales = -5.9% • Distributable Cash per Unit $0.902 • Distributions per Fund unit $0.93 • Payout ratio 2009 = 103% • $2.4 million reserve 26 PPRIF is the largest RRT measured
Slide 27: 2010 First Quarter
2010 First Quarter • Royalty Pool system sales decreased 1% • Number of restaurants in Royalty Pool: 671 • Same store sales decreased 2.3% • Distributable Cash per Unit $0.213 • Distributions per Fund unit $0.221 • Payout ratio Q1 2010 = 109% 27 this slide summarizes Our first quarter results releas
Slide 28: January 1, 2011 - Tax Legislation
January 1, 2011 - Tax Legislation • In 2007 the Federal government enacted legislation to eliminate the deduction of distributions from taxable income for income trusts and partnerships effective Jan 1, 2011. 28 The questions most asked by investors are “what will the Fundʼs structure be after the t
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