TORONTO, May 9, 2024 /CNW/ - Pizza Pizza Royalty Corp. (the "Company") (TSX:PZA), which indirectly owns the Pizza Pizza and Pizza 73 Rights and Marks, released financial results today for the three months ("Quarter") ended March 31, 2024. First Quarter highlights: Same store sales(2) increased 1.7% Royalty Pool sales increased 4.3% Adjusted earnings per share(5) increased 3.1% Restaurant network increased by five net locations Royalty Pool of restaurants for 2024 increased by 31 restaurants on January 1, 2024 "We are pleased to report our 12th consecutive quarter of positive same store sales growth", said Paul Goddard, President and CEO of Pizza Pizza Limited ("PPL"). "We continue to focus on operational excellence and enhancing brand image and exposure by investing heavily in relevant value-oriented menu offerings, food and technology innovation, and owning key sales driving occasions. We feel this strategy will continue to improve the customer experience at our restaurants while driving leadership in the marketplace at a time when customers are feeling pressure on their spending." SALESRoyalty Pool System Sales for the Quarter increased 4.3% to $148.9 million from $142.7 million in the same quarter last year. By brand, sales from the 672 Pizza Pizza restaurants in the Royalty Pool increased 3.7% to $128.3 million for the Quarter compared to $123.7 million in the same quarter last year. Sales from the 102 Pizza 73 restaurants increased 8.2% to $20.6 million for the Quarter compared to $19.1 million in the same quarter last year. For the Quarter, the increase in Royalty Pool System Sales is primarily driven by the new restaurants added to the Royalty Pool on January 1, 2023 and the increase in same store sales. The Royalty Pool System Sales also benefitted from the extra day of sales in February 2024 due to the leap year. Additionally, while the number of restaurants in the Pizza 73 Royalty Pool remains less than 2019 when there were 104 restaurants, the negative impact on Royalty Pool System Sales due to prior year restaurant closures has been mitigated by the Make-Whole Carryover Amount. SAME STORE SALES GROWTH ("SSSG")SSSG, the key driver of yield growth for shareholders of the Company, increased 1.7% (2023 – 13.6%) for the Quarter. SSSG is not affected by the additional day during the year, as SSSG is calculated using a 13-week comparative basis. SSSG First Quarter (%) 2024 2023 Pizza Pizza 0.6 15.5 Pizza 73 8.5 3.0 Combined 1.7 13.6 SSSG is driven by the change in the customer check and customer traffic, both of which are affected by changes in pricing and sales mix. During the Quarter, the average customer check increased as the brands passed along retail price increases. At both brands restaurant traffic also increased due to strong value messaging and promotional brand activities. MONTHLY DIVIDENDS AND WORKING CAPITAL RESERVEThe Company declared shareholder dividends of $5.7 million for the Quarter, or $0.2325 per share, compared to $5.2 million, or $0.2125 per share, for the prior year comparable quarter. The payout ratio is 122% for the Quarter and was 104% in the prior year, comparable quarter. The Company's policy is to distribute all available cash in order to maximize returns to shareholders over time, after allowing for reasonable reserves.  Despite seasonal variations inherent to the restaurant industry, the Company's policy is to make equal dividend payments to shareholders on a monthly basis in order to smooth out income to shareholders. The Company's working capital reserve is $7.2 million at March 31, 2024, which is a decrease of $1.0 million in the Quarter due to the 122% payout ratio. System sales for the quarter ended March 31 have generally been the softest and historically results in a payout ratio over 100%. The reserve is available to stabilize dividends and fund other expenditures in the event of short- to medium-term variability in System Sales and, thus, the Company's royalty income. The Company has historically targeted a payout ratio at or near 100% on an annualized basis. EARNINGS PER SHARE ("EPS")Fully-diluted basic EPS increased 6.8% to $0.235 for the Quarter compared to the prior year comparable quarter. As compared to basic EPS, the Company considers adjusted EPS(5) to be a more meaningful indicator of the Company's operating performance and, therefore, presents fully diluted, adjusted EPS. Adjusted EPS for the Quarter increased 3.1% to $0.23 when compared to the same period in 2023. RESTAURANT DEVELOPMENTAs announced earlier this year, the number of restaurants in the Company's Royalty Pool increased by 31 locations to 774 on the January 1, 2024 Adjustment Date, and consists of 672 Pizza Pizza restaurants and 102 Pizza 73 restaurants. The number of restaurants in the Royalty Pool will remain unchanged through 2024. During the Quarter, PPL opened two traditional and nine non-traditional Pizza Pizza restaurants, and closed two traditional and five non-traditional Pizza Pizza restaurants. The Company also opened one non-traditional Pizza 73 restaurant. New restaurant construction continues across Canada as government mandated restrictions on commercial construction have been lifted in all provinces. PPL management expects to grow its traditional restaurant network by 3-4% and continue its renovation program through 2024. Readers should note that the number of restaurants added to the Royalty Pool each year may differ from the number of restaurant openings and closings reported by PPL on an annual basis as the periods for which they are reported differ slightly. SELECTED FINANCIAL HIGHLIGHTSThe following tables set out selected financial information and other data of Pizza Pizza Royalty Corp. ("PPRC" or the "Company") and should be read in conjunction with the March 31, 2024 unaudited interim condensed consolidated financial statements of the Company ("Financial Statements"). Readers should note that the 2024 results are not directly comparable to the 2023 results due to there being 776 restaurants in the 2024 Royalty Pool compared to 743 restaurants in the 2023 Royalty Pool. (in thousands of dollars, except number of restaurants, days in the year, per share amounts, and noted otherwise) March 31, 2024 March 31, 2023 Restaurants in Royalty Pool(1) 774 743 Same store sales growth(2) 1.7 % 13.6 % Days in the Period 91 90 System Sales reported by Pizza Pizza restaurants in the Royalty Pool(6) $           128,284 $        123,685 System Sales reported by Pizza 73 restaurants in the Royalty Pool(6) 20,611 19,050 Total System Sales $           148,895 $        142,735 Royalty – 6% on Pizza Pizza System Sales $               7,697 $            7,421 Royalty – 9% on Pizza 73 System Sales 1,855 1,714 Royalty income $               9,552 $            9,135 Interest paid on borrowings(3) (5)