Thank you and welcome to the call everyone. Today, we will be discussing the 2021 third quarter results for both Boston Pizza Royalties Income Fund, or The Fund and for Boston Pizza International, or BPI.

For complete details on our financial results, please see our third quarter materials filed earlier today on SEDAR or visit The Fund’s website at bpincomefund.com. Should you require additional information after the call, you can reach us via the Investor Relations phone number listed in our press release.

The Fund is a limited purpose, open-ended trust established under the laws of British Columbia to acquire indirectly certain trademarks and trade names used by BPI in its Boston Pizza Restaurants in Canada. BPI pays royalty and distribution income to The Fund based on franchise revenues of Royalty Pool restaurants.

For a complete description of The Fund and its business, please see the Annual Information Form dated February 9, 2021, which was filed on sedar.com. Before I turn the call over to Jordan Holm, President of BPI, I would like to note that certain information in the following discussion may constitute forward-looking information.

For a more complete definition of forward-looking information and associated risks, please refer to The Fund’s management discussion and analysis issued earlier today. Forward-looking information is provided as of the date of this call and except as required by law, we assume no obligation to update or revise forward-looking information to reflect new events or circumstances.

And with that, I will now turn the call over to Jordan.

Thank you, Michael and welcome everyone to Boston Pizza’s third quarter investor conference call. Today I will be discussing our results for the quarter ended September 30, 2021 and also share a brief outlook.

Michael will summarize our key financial highlights and as usual, we will leave time at the end of today’s call for your questions. The third quarter generated our strongest sales results since the start of the pandemic.

In fact, sales were near pre-pandemic levels for the first time despite COVID-19 continuing to pose significant challenges to our Boston Pizza system. Low COVID case counts during the first part of the quarter allowed government authorities to ease operating restrictions in all provinces.

The easing of restrictions led to an increase in our on-premise business in the quarter. At the start of the third quarter, approximately 380 or 98% of all Boston Pizza restaurants were open for on-premise dining as well as takeout and delivery.

However, by the end of the quarter, most regions of Canada had implemented vaccination passports, which require guests to show proof of vaccination for on-premise dining. To-date, these vaccination passports have resulted in a decrease in customer traffic in our restaurants.

Although vaccine passports may enable on-premise dining to remain available, the full impact of vaccine passports on our future sales remains to be seen. Turning to our financial results, The Fund posted franchise sales from restaurants in the royalty pool of $213 million for the quarter and $476.9 million year-to-date, representing increases of 14.9% and 2.2% respectively versus the same periods 1 year ago.

Same restaurant sales on a franchise sales basis, was positive 15.1% for the quarter and positive 3.1% year-to-date. Positive results for the quarter and year-to-date were principally due to increases in guest traffic from the easing of government restrictions, along with increased takeout and delivery sales.

We are pleased that these sales results have supported an increase in the funds distribution rate, which Michael will elaborate on further later in the call. COVID-19 first began to adversely affect Boston Pizza restaurants in March of 2020.

As a result, The Fund believes it’s useful to report additional sales metrics that compare sales in 2021 to sales in 2019. Comparing to 2019 results allows investors to gauge Boston Pizza’s current sales levels against sales levels on a pre-pandemic basis.

If SRS on a franchise sales basis were calculated by comparing to the same period in 2019, SRS would be negative 1.5% for the quarter and negative 24.7% year-to-date. SRS for October, the month of October 2021, was approximately positive 8% when compared to the same period in 2020 and approximately negative 15% when compared to the same period in 2019.

Total franchise sales and the resulting royalty and distribution income for October 2021 were approximately 109% of the level they were in October of 2020 and approximately 88% of the level they were in October of 2019. While we have been pleased with our ability to mitigate our sales declines throughout the pandemic, we do expect that COVID-19 will continue to have a negative impact on our restaurants.

However, we anticipate that sales levels for the second half of 2021 will be favorable compared to the first half of this year. From a marketing standpoint, Boston Pizza began the third quarter of 2021 with our summer patio promotion, which included our patio retraining campaign and a new summer feature menu.

Both of which were exceptionally well received by our guests. In August, we kicked off our popular BP Kids Cards promotion.

This promotion is always a favorite for families, where a $5 donation to the Boston Pizza Foundation. They receive a card for five free kids meals at Boston Pizza.

We raised over $700,000 and donated that to our national charity partners through the Boston Pizza Foundation. We ended the quarter by introducing our fall feature menu, which featured three new pizzas all created by staff members in our restaurants across the country and some new menu favorites from the past, our BP Classics.

Turning to restaurant development, Boston Pizza opened no new restaurants during the quarter or year-to-date. Boston Pizza closed no restaurants in the third quarter and has closed 2 restaurants year-to-date.

Subsequent to the quarter, Boston Pizza closed 1 restaurant. BPI continues to focus on the safety of our guests and our restaurant staff serving our communities with takeout and delivery and on-premise dining as permitted and helping our franchisees to effectively manage through the next phase of the pandemic.

I will now pass it to Michael for a review of The Fund’s financial performance. Michael?

Thank you, Jordan. The Fund posted royalty income of $8.5 million for the quarter and $19.1 million year-to-date compared to $7.4 million and $18.7million respectively for the same periods 1 year ago.

The Fund posted distribution income of $2.8 million for the quarter and $6.3 million year-to-date compared to $2.5 million and $6.2 million respectively for the same periods 1 year ago. Royalty and distribution income for the quarter were based on 387 Boston Pizza restaurants in the royalty pool that reported franchise sales of $213 million for the quarter and $476.9 million year-to-date.

For the same period in 2020, royalty and distribution income are based on Royalty Pool restaurants of 395 reporting franchise sales of $185.4 and $466.6 million respectively. The Fund’s net and comprehensive income was $5.4 million for the quarter compared to net and comprehensive loss of $0.7 million for the third quarter of 2020.

The $6.1 million increase in The Fund’s net and comprehensive income for the quarter compared to the third quarter of 2020 was primarily due to the $5.5 million decrease in fair value loss, higher royalty and distribution income of $1.5 million partially offset by higher interest expense on Class B units of $0.5 million and higher income tax expense of $0.4 million. The Fund’s net and comprehensive income was $24.8 million year-to-date compared to net and comprehensive loss of $10 million year-to-date in 2020.

The $34.8 million increase in The Fund’s net and comprehensive income year-to-date compared to the same period in 2020 was primarily due to a $35.6 million increase in fair value gain and higher royalty and distribution income of $0.6 million partially offset by higher interest expense on Class B units of $0.8 million and higher interest expense on long-term debt of $0.5 million. While net and comprehensive income or loss is a measurement of The Fund’s earnings under International Financial Reporting Standards, or IFRS.

The Fund is of the view that net income or loss does not provide the most meaningful measurement of The Fund’s ability to pay distributions, because the calculation of net income contains non-cash items that do not affect The Fund’s cash flow. Non-cash items include the fair value adjustment on the investment in Boston Pizza, Canada Limited Partnership, the Class B unit liability interest rate swaps and changes in deferred income taxes.

Consequently, The Fund reports the non-IFRS metrics of distributable cash and payout ratio to provide investors with in The Fund’s opinion more meaningful information regarding The Fund’s ability to pay distributions to unitholders. The Fund generated distributable cash of $6.7 million for the quarter compared to $5.5 million for the third quarter of 2020.

The increase in distributable cash of $1.2 million or 22.5% was primarily due to an increase in cash flow generated from operating activities of $3.4 million partially offset by an adjustment to SIFT tax on units of $1.1 million and a contractually required debt repayment of $1 million for which there is no comparable repayment in the third quarter of 2020. The Fund generated distributable cash of $14.4 million year-to-date compared to $10.9 million year-to-date in 2020.

The increase in distributable cash of $3.5 million or 31.7% was primarily due to an increase in cash flow generated from operating activities of $7 million and an adjustment to SIFT tax on units of $0.4 million partially offset by contractually required debt repayments of $3.1 million for which there are no comparable repayments in 2020 and an increase on interest paid on long-term debt of $0.6 million and increased entitlement for BPI’s Class B units of $0.2 million. The Fund generated distributable cash per unit of $0.31 for the quarter compared to $0.253 per unit for the third quarter of 2020.

The increase in distributable cash per unit of $0.57 or 22.5% is primarily attributable to the increase in distributable cash as just explained. The Fund generated distributable cash per unit of $0.668 year-to-date compared to $0.506 per unit year-to-date in 2020.

The increase in distributable cash per unit of $0.162 or 32% was primarily due to the increase in distributable cash outlined above and fewer units outstanding compared to the same period in 2020 due to the Fund’s normal course issue date that was active from February 19, 2020 to February 18, 2021. Fund’s payout ratio for the quarter was 62.9% compared to 0% in the third quarter of 2020.

The increase in The Fund’s payout ratio for the quarter was due to distributions paid at $4.2 million, with no distributions paid during the third quarter of 2020 and distributable cash increasing by $1.2 million or 22.5%. The Fund’s payout ratio year-to-date was 117.6% compared to 63.5% year-to-date in 2020.

The increase in The Fund’s payout ratio year-to-date was due to distributions paid increasing by $10 million or 144% partially offset by distributable cash increasing by $3.5 million or 31.7%. The payout ratio is calculated by dividing the amount of distributions paid during the applicable period by the distributable cash for that period.

Accordingly, the payout ratio year-to-date factors in the $0.20 special distribution that was paid on January 29, 2021 even though the cash generated to fund the special distribution was generated during fiscal 2020. If the special distribution was excluded in the calculation of the payout ratio on a year-to-date basis, that payout ratio would be 87.6%.

The Fund’s payout ratio typically is higher in the first and fourth quarters compared to the second and third quarters since Boston Pizza restaurants generally experienced higher franchise sales levels during the summer months, when restaurants opened their patios and benefit from increased tourist traffic. On a trailing 12-month basis, The Fund’s payout ratio was 106.8% as of September 30, 2021.

The effects of COVID-19 may materially affect The Fund’s payout ratio in the future. On October 8 2021, Trustees of the Fund announced an increase to the monthly distribution rate and declared a distribution of $0.085 per unit beginning with the September 2021 distribution that was paid in October of 2021.

This represents an increase of $0.02 per unit, or 30.8% from the previous monthly rate of $0.065 per unit. On an annualized basis, the new monthly distribution rate equates to $1.02 per unit compared to $0.78 per unit at the previous monthly distribution rate.

On November 10, 2021, the Trustees of the Fund approved a cash distribution to unitholders of $0.085 per unit with respect to the period from October 1, 2021 to October 31, 2021. This monthly distribution will be payable on November 30, 2021 to unitholders of record at the close of business on November 21, 2021.

The trustees’ objective in setting a monthly distribution amount is that it would be sustainable. The trustees will continue to closely monitor The Fund’s available cash balances given the continued volatility and economic uncertainty caused by COVID-19.

While COVID-19 persists, the trustees expect that franchise sales and same restaurant sales in the resulting royalty and distribution income, along with distributable cash will all continue to be adversely effective. And with that, I will turn the call back over to Jordan for more on the outlook.

Jordan?

Thank you, Michael. We continue to be pleased with the efforts of our team and the franchisees during these challenging times.

Boston Pizza began its fourth quarter with significant national media presence for the 2021 NHL Hockey season, which invites our guests to enjoy Boston Pizza menu items in our restaurants or in their home. We have also launched new fall feature menu and brought back our successful Call the Shot promotion in the fourth quarter of this year.

Under our Call the Shot promotion, customers who order a pizza flight or Molson Canadian product are eligible for a chance to win great prizes by predicting the outcome of NHL Hockey games. With respect to our outlook, BPI’s management continues to monitor the evolving COVID-19 situation and modify the operating procedures of Boston Pizza restaurants to ensure the safety of our guests and our staff.

Our current outlook remains cautious as we anticipate COVID-19 will continue to have a negative impact on the business of Boston Pizza restaurants during the remainder of this year. Our goal is to responsibly and safely operate the dining rooms, sports bars and patios of Boston Pizza restaurants across Canada, and of course, continue to offer takeout and delivery in all regions.

We continue to adapt our plans to responsibly address the challenges and opportunities presented by COVID-19. With that, I’d like to turn it back to the operator to begin the question-and-answer session.

Operator?

Good morning and thanks for taking my questions.

Good morning, Nick.

Can you maybe talk about the trend in system sales that you saw it through October and whether it was flat for the entire month or improving?

Nick, maybe I will start off and then turn it over to Michael on this one. So, as provinces introduced vaccination passports for guests visiting on-premise occasions in restaurants, full-service restaurants across the country, starting September 1 with [indiscernible] closely followed by Manitoba, BC, Ontario.

Now right across the country, we did see an initial I think a significant pullback in guest traffic on-premise. There was some confusion on implementation and rules, but we did see that settled somewhat that people understood the rules and whether it’s the QR codes or the different approaches that provinces have to verify vaccination status on-premise before entering an establishment became understood.

And we saw that recover So, maybe I will then turn it over to Michael to talk specifically to your question about the October trend.

Thanks, Jordan. So, just to refresh the kind of broader listening group here, so, total franchise sales for October compared back to 2019, which is our pre-pandemic and a benchmark.

Total sales were down about 12% in October. And as Jordan said in the first half of the month it was down to a greater degree just as everyone adjusted to the vaccine passports and then the other factors.

But then in the second half of the period, it started to even out.

And then can you maybe expand on whether you are seeing any challenges from labor and supply chain issues?

Yes. Well, it’s certainly in the summer time when you saw the results for the third quarter being driven primarily by July and August results, tailing off a little bit in September, as we experienced, again, those vaccination passport restrictions.

And in July and August when we were doing sales levels in some weeks above the pre-pandemic 2019 levels, absolutely, standing back up, a restaurant industry that has been in lockdown in some provinces longer than anywhere else in the world was a significant challenge on both of the things that you mentioned. Labor would be number one, and number of people who were working in our industry have had their shifts cut back or have been laid off from restaurants that have had to downsize throughout the pandemic.

So, we have had people exit the restaurant sector and finding labor has been a huge challenge. I am sure everyone who follows the economy has heard the stories of labor shortage.

And we are no different. We have certainly put a lot of effort along with our franchisees to address getting proper staff, making sure we can service people properly.

And at times of high sales volumes, that was a challenge through the summer, supply chain as well. And again, that’s been all over the news.

Everybody knows it’s a global disruption as the whole global economy is trying to ramp back up in a lot of ways for things that were restricted during COVID. So, we did have some product pressures and supply chain, nothing widespread or overwhelming.

But there were definitely some scrambles to make sure that regional distribution centers had product available to make sure in those high demand periods of the summer in particular, that we had everything that we needed to operate. So, yes, those are definitely the two hot items when sales are really high.

Obviously, when we pulled back a little bit on sales levels in September and October, there is some easing of that. But labor was a shortage for our industry coming into this.

All of hospitality has a shortage of available workers, whether it’s hotels or travel or restaurants. And that will continue to be an area that we need to focus on as an organization and an industry.

With a tight labor market, did you have to restrict hours or potentially capacity, because even your restaurants might not have had the labor to keep them open for longer or have more seats?

And Nick, it would be very location specific. So, we did have a few locations that had to restrict their hours, or perhaps even close for one day of the week to give their staff a rest.

And that’s very difficult for us to see, because we have worked so hard to be able to open and our guests came back in full force. And so to have to restrict hours or to close certain days of the week is not where we want to be.

But it was driven by labor considerations. And like I said, it’s eased a little bit in the fall, I think we are – people have returned to some of the past practices recreationally and professionally that they were doing pre-pandemic.

And so that has helped bring in more applicants and raise our labored levels. But like I said, it’s been a challenge in this industry for a while and will continue to be.

So, it is still a major focus for us.

Great. And then have you put through any price increases?

We haven’t yet. I mean, we – there are different ways of addressing menu pricing.

So, we have done less discounting, I will say just it’s a less necessary over the last few months because that the consumer demand has been pent-up for quite some time. And so people were maybe more motivated by availability and ability to indulge and socialize and get out there more than a price motivated visit.

So, less discounting. And our feature menus probably had a little bit of price consideration put into them as we rolled out both the summer and the fall feature menus.

And next week we have a new national menu rolling out as well as a new lineup, a refreshed fall feature menu and when we will address menu pricing in both of those pieces as well. So, it’s not all done all at once.

But we do, obviously need to look at the rising costs in our restaurants, whether its supplies or whether its labor, and find a way to balance that with what the guests see from a price perspective. So, we haven’t taken a lot of price at this point.

But it is something that we will continue to look at and then balance between what our costs are and how we can adjust prices accordingly.

And how have takeout and delivery volumes been through the summer, and maybe you can elaborate on the trend you have seen there?

Michael, do you want to take that one?

Yes. So, takeout and delivery volumes have continued to be relatively strong.

And we would judge that in comparison to 2019 levels. And some of that, I think is driven by just a natural shift in consumer spending because of COVID.

And some of that, I think is to the credit of just our own internal team and being able to pivot the business towards more takeout and delivery. So yes, I think it’s that part of the business certainly is a good news story, in the sense of through COVID, we have adapted to the times.

And then once COVID, I think is behind us, there should be some good positive lasting impacts from all the work that’s been happening.

And can you remind me what takeout and delivery was pre-pandemic and where it might be tracking now?

So pre-pandemic, takeout and delivery represented 18% of our total business on a pre-pandemic basis and we are continuing to kind of over perform it.

And the last question for me, how is the pipeline for new franchises, and maybe you can elaborate on the outlook there?

So, I did mention, during the call that we did have no new openings, or have had no new openings year-to-date. We have had some re-sales.

So, some existing locations have changed hands. We continue to see new franchisees coming into the system on a resale opportunity.

We do expect that there will be a return to new locations in the years ahead. And we are planning for that in 2022, just looking for obviously that match between a franchisee and a region and the right location that would support our business model.

So, we have obviously taken a pause here while we get through the COVID period. And I think that’s appropriate.

But we will – we do intend and we have identified franchisees in the pipeline that will be looking to open new locations, whether it’s in 2022 or beyond.

Thanks. That’s all for me.

Thank you, Nick.

Okay, thank you. So, as there no further questions, I would like to thank you for taking the time to listen in.

We look forward to safely welcoming back more of our guests into our restaurants. Please continue to stay safe and healthy.

And we look forward to speaking with you all again at our fourth quarter conference call in February 2022. Thank you everyone.