Pizza Pizza Royalty (TSE:PZA) reported fourth-quarter and full-year 2025 results, with management emphasizing brand resilience in a weakening consumer environment and outlining continued investment in digital and restaurant refresh initiatives.
Same-store sales modestly positive as transaction pressure persists
Pizza Pizza Limited President and CEO Paul Goddard said macroeconomic conditions “continued to deteriorate” through 2025, and management saw a more cautious consumer emerge as the year progressed. For the fourth quarter, the company’s two banners delivered a combined same-store sales increase of 0.2%.
Goddard said the company saw growth in Pizza Pizza’s organic delivery channel for a third consecutive quarter, which helped lift the average check. However, both brands experienced fewer transactions amid heightened competition and reduced consumer spending.
Marketing and value promotions aimed at retaining value-conscious customers
Management described the fourth quarter as the most important period of the year, driven by Halloween and New Year’s Eve, as well as major sports partnerships. Goddard highlighted several marketing initiatives designed to drive app engagement and repeat visits, including Pizza 73’s “Score a Slice” and “Score a Pie” programs tied to NHL and NBA partners, along with “free game day delivery,” where customers receive orders with no delivery charge on game days.
During the quarter, Pizza Pizza launched a new partnership with Toronto Blue Jays player Vladimir Guerrero Jr. The campaign featured a double XL 18-inch, three-topping pizza priced at CAD 19.99. Goddard said the promotion reflected the company’s approach to pairing brand partnerships with value positioning.
Management also pointed to ongoing everyday value offers and limited-time promotions across both banners as consumers became more deliberate with spending and as the company lapped the prior year’s December 2024 sales tax holiday. Goddard cited examples including:
- Pizza Pizza’s CAD 19.99 Mix & Match and CAD 15.99 Pizza and Pop deals
- A limited-time “20 wings for CAD 20” offer
- Pizza 73’s continued XXL promotion and the return of its “Holiday Helper” offer
On innovation, Goddard said Pizza 73 launched the “Volcano Pizza,” which generated strong buzz and “millions of impressions” on social media. He said the product’s performance at Pizza 73 led to a rollout to Pizza Pizza in the first quarter of 2026.
Network growth continues, with more disciplined development approach
Goddard said the system opened 37 new restaurants in 2025, bringing the three-year total to 138 new locations across Canada. The company ended the year with 815 locations in Canada, including 712 Pizza Pizza and 103 Pizza 73 restaurants, plus four international locations in Guadalajara, Mexico.
During the year, the company opened 12 traditional and 20 non-traditional Pizza Pizza locations and five traditional Pizza 73 restaurants. It closed three traditional and 11 non-traditional Pizza Pizza locations, along with five Pizza 73 restaurants. Goddard noted that four of the five Pizza 73 closures involved territory transfers to nearby locations, which he described as a territory aggregation intended to minimize any impact on overall sales.
Looking ahead, Goddard said opportunities remain to grow the restaurant network, but the company is taking a more disciplined approach to site and format selection to support long-term profitability amid rising costs.
Digital investments and restaurant refresh efforts highlighted
Management emphasized customer experience as a key pillar, spanning in-store, phone, organic digital, and third-party delivery channels. Goddard said the company plans to relaunch its website, mobile apps, and loyalty platform in 2026.
He also noted that phone ordering remains significant at roughly one-quarter of orders, and said the contact center is fully staffed to minimize wait times. Goddard highlighted Halloween as the busiest day in company history and said systems performed well due to scalable technology infrastructure and staffing execution.
On restaurant modernization, he said 95% of Pizza Pizza locations and 50% of Pizza 73 locations have been refreshed.
Royalty income rises; dividend maintained with payout ratio above 100%
Chief Financial Officer Christine D’Sylva reiterated the company’s structure as a top-line restaurant royalty corporation earning monthly royalties from Pizza Pizza Limited based on royalty pool sales. She said that on January 1, 2025, the royalty pool increased by 20 restaurants. For fiscal 2025, there were 794 restaurants in the pool, comprising 694 Pizza Pizza and 100 Pizza 73 locations.
For the fourth quarter, royalty income increased 2.3% to CAD 10.6 million, which D’Sylva attributed to the addition of 20 restaurants to the pool and the quarter’s same-store sales performance. The partnership also earned CAD 31,000 of interest income on cash and short-term investments, down from the prior year due to lower balances and a lower interest rate.
Administrative expenses totaled CAD 211,000, compared with CAD 221,000 in the prior year. The partnership made interest-only payments on a CAD 47 million credit facility, with interest paid of CAD 443,000 in the quarter. D’Sylva said the company renewed the facility in March 2025 for three years with maturity in April 2028, with the balance unchanged but a slightly higher credit spread.
She also said the partnership entered into new three-year forward swaps in April 2025 as prior swaps expired. The new locked-in rate is 2.51%, up from 1.81% on the maturing swaps, and the all-in rate on the facility for the next three years will be 3.51%, compared with 2.685% previously.
The company declared dividends of CAD 5.7 million for the quarter, or 23.25 cents per share, consistent with the prior year. D’Sylva said the payout ratio was 105%, reducing the working capital reserve by CAD 300,000 to CAD 3.7 million. She said the reserve can be used to stabilize dividends and fund other expenditures amid short- to medium-term sales variability, and noted the company has historically targeted a payout ratio at or near 100% on an annualized basis.
During the Q&A, Goddard said the macro backdrop had become “scarier than ever,” citing geopolitical uncertainty, tariff questions, and the potential for oil-related inflation effects. He said the company is seeing consumers pivot toward pickup and order less overall, while competitive discounting has intensified. Goddard added that the company had data indicating it gained some market share in the fourth quarter, though he described the gains as not major.
On development, he said franchisee interest remains healthy, but the key constraints are real estate economics and construction costs, along with uncertainty around costs for items such as ovens sourced from the U.S. He added that the company is exploring ways to reduce build costs, including smaller stores and materials choices, and said the business will need to remain “extra creative” as customers face ongoing pressure.
About Pizza Pizza Royalty (TSE:PZA)
Pizza Pizza Royalty Corp., through its subsidiary, Pizza Pizza Royalty Limited Partnership, owns and franchises quick-service restaurants under the Pizza Pizza and Pizza73 brands. It offers a flavorful, varied and high-quality menu to pizza-lovers of all ages and tastes and it is composed of more than 600 traditional and non-traditional restaurants coast to coast, employing over 3,000 Canadians. The business activity of the group primarily functions through Canada.
