TORONTO, Jan. 21 /CNW/ - Pizza Pizza Royalty Income Fund (the "Fund") (TSX: PZA.UN) today announced a cash distribution of $0.076 per unit for the month of January, 2008. The distribution will be payable to unitholders of record at the close of business on January 31, 2008, and will be paid on February 15, 2008.
Sales Growth
Same store sales growth ("SSSG") is the key driver of yield growth for Fund unitholders. Pizza Pizza Limited reported SSSG of 4.9% for the fourth quarter and 4.6% for the fiscal year ended December 30, 2007.
"Our western Canada restaurants continue their exceptional sales growth and in spite of the year-over-year decline in tourism and loss of manufacturing jobs, especially in Ontario, Pizza Pizza is very pleased with national sales and restaurant growth", said Pat Finelli, Chief Marketing Officer.
System Sales of the restaurants in the Royalty Pool for the fourth quarter were $118.9 million compared to $93.9 million for the same quarter in 2006. Fourth quarter sales from the 531 Pizza Pizza restaurants were $99.7 million and sales from the 41 Pizza 73 restaurants were $19.2 million. For the year 2007, sales from restaurants in the Royalty Pool were $409.5 million compared to $353.1 million for 2006. Sales from the 531 Pizza Pizza restaurants were $376.4 million for the year and sales from the 41 Pizza 73 restaurants were $33.1 million for the period from July 24 to December 31, 2007. Sales for the year benefited from the addition of 30 net new restaurants to the Royalty Pool on January 1, 2007, positive same store sales growth, and the addition of 41 Pizza 73 restaurants in July 2007.
The 2007 distributions received by unitholders have been determined to be 65% taxable and 35% tax-deferred return of capital.
Restaurants
During the quarter, Pizza Pizza opened 7 traditional and 10 non-traditional locations and closed 1 non-traditional location; year-to-date 12 traditional and 24 non-traditional locations have opened and 8 non-traditional locations have closed. This brings the total number of Pizza Pizza locations to 559 of which 531 are in the Fund's 2007 Royalty Pool. The 559 restaurants are comprised of 367 traditional restaurants and 192 non-traditional restaurants.
Seven traditional Pizza 73 locations were opened during the quarter, bringing the total Pizza 73 restaurants to 57 of which 41 are in the Fund's 2007 Royalty Pool.
Royalties from the additional restaurants opened in 2007 will be vended into the Fund on January 1, 2008, with the exception of the Pizza 73 restaurants opened after September 1, 2007. Those Pizza 73 restaurants opened after September 1 will be vended into the Fund on January 1, 2009.
About the Fund
The Fund is a limited purpose, open-ended trust established under the laws of Ontario to indirectly acquire the trademarks and trade names used by Pizza Pizza Limited ("Pizza Pizza") in its Pizza Pizza and Pizza 73 branded restaurants. Since its initial public offering in 2005, the Fund has increased distributions five times. The last distribution increase was in September 2007 when monthly distributions were increased by 4% from $0.073 per unit to $0.076 per unit.
A key attribute of the Fund is that royalty revenues are based on top-line, system sales of the Royalty Pool restaurants and not on the profitability of either Pizza Pizza or the restaurants in the Royalty Pool. The success of the Fund depends primarily on the ability of Pizza Pizza to maintain and increase system sales of the Royalty Pool and to meet its royalty obligations.
The Fund's trust units are listed on the Toronto Stock Exchange under the symbol PZA.UN.
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