Pizza Pizza Royalty ((TSE:PZA)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for Pizza Pizza Royalty Corp. painted a picture of a challenging business environment, marked by both achievements and setbacks. While the company celebrated significant milestones in restaurant expansion and innovative marketing strategies, these were tempered by declines in same-store sales and royalty income. External factors such as reduced consumer spending and operational hurdles, including the Canada Post strike, played a role in these mixed results.
Expansion Success
Pizza Pizza Royalty Corp. achieved a significant milestone by opening a record 48 new restaurants across Canada in 2024. This expansion extended their reach to every Canadian province and brought their total number of locations to over 800, including international outlets in Mexico. This growth underscores the company’s commitment to increasing its market presence and accessibility.
Pizza 73 Sales Growth
Despite the challenging environment, Pizza 73 reported a positive sales growth of 2.3% for the year. This growth was driven by an increase in the average check size, highlighting the brand’s ability to attract and retain customers even amid economic pressures.
Innovative Marketing Campaigns
Pizza Pizza launched several creative marketing campaigns, such as the Bipartisan Wings program and the Raptors Mega Slice promotion. These initiatives successfully boosted brand visibility and customer engagement, showcasing the company’s innovative approach to marketing.
Loyalty Program Enhancement
The Club 11-11 loyalty program saw record usage with over 1.5 million enrolled users. This enhancement in the loyalty program has significantly improved customer engagement and encouraged repeat visits, contributing positively to the company’s customer retention strategy.
Technology and Digital Enhancements
Continued investment in technology, particularly in digital ordering platforms and app development, has improved the customer experience. These enhancements are crucial for driving engagement and adapting to the growing demand for digital solutions in the food service industry.
Same-Store Sales Decline
The company faced a 3.9% decline in same-store sales in Q4 2024, with Pizza Pizza restaurants experiencing a 4.3% decline and Pizza 73 a 0.7% decline. This decrease reflects the broader challenges in the market, including increased competition and economic pressures.
Impact of Canada Post Strike
The Canada Post strike had a noticeable impact on Pizza Pizza’s marketing efforts, particularly affecting the distribution of holiday flyers. This disruption potentially contributed to the negative sales impact during the holiday season.
Reduced Consumer Spending
Ongoing reduced consumer spending, especially in delivery channels, has affected sales. The heightened competition and economic pressures have made it challenging for the company to maintain its previous sales levels.
Decreased Royalty Income
The Royalty Pool System sales decreased by 2.1% in Q4 to $160.5 million, which led to a 1.9% decrease in royalty income, totaling $10.3 million for the quarter. This decline in royalty income reflects the broader sales challenges faced by the company.
Forward-Looking Guidance
Looking ahead, Pizza Pizza Royalty Corp. plans to leverage its brand strength, menu innovation, and digital enhancements to drive growth in 2025. The company aims for a 2% to 3% increase in traditional restaurant growth, focusing on value promotions like the Slice the Price campaign. Despite a 1.2% decrease in Royalty Pool System sales to $620.6 million, the company maintains a working capital reserve of $6.1 million, positioning itself for future growth.
In summary, Pizza Pizza Royalty Corp.’s earnings call highlighted a mix of achievements and challenges. While the company made significant strides in expansion and marketing, it faced headwinds from declining same-store sales and reduced consumer spending. Looking forward, the company is poised to leverage its strengths and innovations to navigate the challenging market landscape and drive growth in the coming year.