Food In Canada

Pizza Pizza profits take a hit from COVID-19

By Food in Canada   

Food In Canada Business Operations Bake & Snack Food COVID-19 pizza Pizza

May 14, 2020, Toronto, Ont. – Pizza Pizza Royalty Corp., which indirectly owns the Pizza Pizza and Pizza 73 Rights and Marks, reports that the global crisis resulting from the COVID-19 pandemic has had a substantial impact on the restaurant operations at Pizza Pizza Limited for the three months ended March 31, 2020.

The company expects the situation to continue with the timing of a recovery uncertain. System-wide sales growth, royalty pool system sales and same store sales were also negatively impacted for the three-month period.

Pizza Pizza and Pizza 73 system sales have been negatively impacted as its restaurant operators have taken significant measures in their restaurants to protect the health of employees and consumers in compliance with social-distancing recommendations and requirements of applicable health authorities, including the closure of restaurant seating areas, the company states.

Pizza Pizza and Pizza 73 operate traditional and non-traditional restaurants. The royalty pool sales mix includes delivery, pickup, walk-in and non-traditional sales. By brand, Pizza Pizza traditional restaurant sales have historically consisted of approximately 60 per cent delivery and pickup sales and 40 per cent walk-in sales, whereas Pizza 73 traditional restaurant sales have been approximately 90 per cent delivery and pickup sales and 10 per cent walk-in sales.

As a result of government-mandated social distancing policies, the walk-in sales at both brands decreased significantly beginning in mid-March and this trend continued throughout April. However, walk-in sales began modestly improving in May.

During the first quarter, substantially all traditional Pizza Pizza and Pizza 73 restaurants remained open across Canada, with only 15 locations temporarily closing after the quarter due to the pandemic. However, the majority of non-traditional Pizza Pizza and Pizza 73 restaurants have closed, with the exception of a few locations in hospitals and gas bars. Normally, non-traditional locations, offering a limited menu and operating, for example, in sporting arenas, outdoor entertainment venues, universities, hospitals, and cinemas, account for nearly 10 per cent of system sales.

The company states that the medium and long-term impact from COVID-19 will depend on consumer behaviour after the economy fully reopens, the financial solutions achieved with government, lenders, franchisees, and landlords, and the macro impact on the overall economy, in particular household debt and levels of disposable income.

For the three months ended March 31, system sales from the 749 restaurants in the royalty pool decreased 6.1 per cent to $125.8 million from $133.9 million in the same quarter last year when there were 772 restaurants in the royalty pool. By brand, sales from the 645 Pizza Pizza restaurants in the royalty pool decreased 5.3 per cent to $105.2 million and the 104 Pizza 73 restaurants decreased 10.1 per cent to $20.6 million for the quarter.

Paul Goddard, CEO, Pizza Pizza Limited said, “Our delivery and pickup sales remain stable and we are actively taking measures to drive increased delivery business. Guided by the needs of our restaurant employees and the communities we serve, we have implemented rigorous additional health and safety measures, including the introduction of contactless delivery and our innovative, tamper-proof pizza box.

“Also, we are seeing our walk-in sales, which decreased significantly in late March and through April, beginning to gradually increase in May. A special thanks to our restaurant owners, employees and delivery drivers for their operational excellence through these unprecedented market conditions.”

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