Pizza Pizza Royalty Income Fund
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Pizza Pizza Royalty Income Fund ANNUAL AND SPECIAL MEETING - MAY 19, 2009 Elizabeth Wright Chair, Pizza Pizza Royalty Income Fund 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 intend to discuss any undisclosed material information today. Operational Overview Curt Feltner Chief Financial Officer, Pizza Pizza Limited Pizza Pizza Royalty Income Fund Pizza Pizza – Market Dominance • Pizza Pizza - renovated • Seasoned management team • Geographic diversification • Retains 24.8% of the Fund’s fully diluted unit • Leading market share in Ontario and Alberta Growing and Protecting the Brands • Pizza Pizza provides a high level of services including: • Centralized warehouses - Volume purchasing • Pizza Pizza University - Operator training NUMBER OF RESTAURANTS Traditional - Pizza Pizza 640 650 616 Non-Traditional - Pizza Pizza 72 Pizza 73 57 531 520 494 505 471 483 456 192 199 413 176 146 156 165 390 366 130 137 100 317 69 280 36 260 17 355 367 369 326 334 337 338 340 297 313 130 263 281 0 97 98 99 00 01 02 03 04 05 06 07 08 PIZZA PIZZA LIMITED – 10 Years of Strong Sales Growth SYSTEM SALES (dollars in millions) 500 476 86 416 400 Pizza Pizza Restaurants 36 Pizza 73 Restaurants 380 390 361 335 300 316 295 294 276 233 200 188 100 0 99 00 01 02 03 04 05 06 07 08 PIZZA PIZZA LIMITED SAME STORE SALES GROWTH 20% 16.4% 15% 13.0% 10% 5.9% 5.4% 4.5% 4.6% 5% 3.8% 3.7% 1.7% 0% -0.7% -5% 99 00 01 02 03 04 05 06 07 08 Pat Finelli Chief Marketing Officer, Pizza Pizza Limited 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 Marketshare Pizza Hut 13.3% Pizza Nova 8.5% Total Independents 7.3% Domino’s 7.1% 50.6% 241 Pizza 4.2% Toppers Pizza 2.8% 12 months ending November 2008 | Source: NPD Marketshare Panago Pizza 21.8% Pizza Hut 21.6% Total Independents 9.8% 30.2% Domino’s 3.9% Little Caesars 1.9% 12 months ending November 2008 | Source: NPD 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 Promotional Discounting Promotional Discounting Marketing - Promotions b[XRTbU^a b\X[Tb 5 D = 3 Our fundraising event raised over $100,000 for Children’s Miracle Network Brand Awareness Across Canada Sponsorships TM Non-traditional Locations Special Events Industry Innovation Leader • One number ordering system • Networked call centres • Web ordering • Automated re-ordering Industry Innovation Leader • Menu innovations • LED TVs airing commercials • Dual-sided Point-of-sale customer messaging 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 acquisitions 2008 Financial Overview Pizza Pizza Royalty Income Fund 2008 Performance Highlights • System sales of Royalty Pool $470.6 M • Number of restaurants in Royalty Pool: 609 • SSSG = 1.7% • Distributable Cash per Unit $1.003 • Distributions per Fund unit $0.923 • Payout ratio 2008 = 92% 2009 First Quarter • Royalty Pool system sales decreased 3.6% • Restaurants in the Royalty Pool increased to 637 • Same store sales decreased 4.3% • Distributable Cash per Unit $0.221 • Distributions per Fund unit $0.233 • Payout ratio Q1 2009 = 105% UNITHOLDER DISTRIBUTION INCREASES SINCE IPO $0.08 $0.0760 $0.0775 $0.07 $0.0730 $0.0695 $0.0710 $0.0667 $0.0681 $0.06 $0.05 July 05 - Nov 05 - Feb 06 - July 06 - Jan 07 - Sept 07 - $0.04 Oct 05 Jan 06 June 06 Dec 06 Aug 07 Dec 07 $0.03 $0.02 $0.01 $0 v-05 b-06 n-07 p-07 Jul-05 e Jul-06 a un-08 No F J Se J 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 January 1, 2011. Thank You.