Pizza Pizza Royalty Corp.

Thank you. Good afternoon, everyone and welcome to Pizza Pizza Royalty Corp.’

s earnings call for the first quarter ended March 31, 2020. Joining me on the call today are Pizza Pizza Limited’s Chief Executive Officer, Paul Goddard and Chief Financial Officer, Curt Feltner.

Our discussion today will contain forward-looking statements that may involve risks relating to future events. Actual events may differ materially from the projections discussed today.

All forward-looking statements should be considered in conjunction with the cautionary language in our earnings press release and the risk factors included in our annual information form and in our MD&A. Please refer to our earnings press release and the MD&A in the Investor Relations section of our website for reconciliation and other disclosures relating to non-IFRS financial measures mentioned on this call.

As a reminder, analysts are welcome to ask questions after the prepared remarks. Portfolio managers and media can contact us after the call.

With that, I would like to turn the call over to Paul Goddard for a business update.

Thanks, Christine. Good afternoon and thanks everyone for joining our call today.

Earlier today, we released our first quarter financial statements and issued a press release summarizing the results. Our press release highlights our financial results, the May dividend and a thorough update on the COVID-19 impact on Pizza Pizza Royalty Corp.

and Pizza Pizza Limited operations. So how have sales been impacted by the pandemic?

Well, same-store sales growth, the key driver of yield growth for shareholders of the company decreased 6.6% for the quarter. System sales from the 749 restaurants in Royalty Pool decreased 6.1% to $125.8 million from $133.9 million in the same quarter last year when there were 772 restaurants in the Royalty Pool.

The Royalty Pool sales mix includes delivery, pickup, walk-in and non-traditional sales. Pizza Pizza and Pizza 73 system sales have been negatively impacted as restaurant operators took significant and necessary measures in their restaurants to protect the health of employees and customers.

Our teams were very proactive in complying with social distancing recommendations and requirements of applicable health authorities, including the closure of restaurant sitting areas. Fortunately, our traditional restaurants were allowed to remain open for delivery and takeout sales.

We believe the recent decrease in sales is largely, if not entirely due to the negative impact of the pandemic at Pizza Pizza, though Pizza 73 did a weak start to Q1 even before the pandemic effect and yet, we do see some good progress starting in April at Pizza 73. I just want to mention.

In quantifying the impact on same-store sales growth, we look back to Q4 when both brands reported a positive 2%. During Q4 and into Q1 at both brands, we continued executing on our long-term strategy of promoting our value-based menu offerings supported by product innovation, food quality, on-trend product introductions and operational excellence in our restaurants.

Plus, we re-launched Pizza Pizza’s website and apps in Q4 and continued to experience positive results throughout most of Q1, 2020 until the dramatic and sudden impact of COVID-19. Specifically, the Pizza Pizza brand reported positive Q1 same-store sales growth right up to mid-March, though the Pizza 73 brand operating largely in Alberta was already experiencing weakness in same-store sales leading up to mid-March as indicated related to the broader challenges in the Western Canadian economy.

As you can see from our results by period, sales began being adversely affected by the pandemic in mid-March. And right away, sales at the Pizza Pizza brand decreased significantly.

However, despite that weak start in Q1, Pizza 73 has actually been less affected since the pandemic than has Pizza Pizza as a result of the brand’s sales mix. Remember, there are those of you that may not be as familiar, roughly out there, it’s about 90% of sales are from delivery and pickup, whereas at Pizza Pizza, only about 60% of traditional restaurant sales are from delivery transactions and pickups.

So, the remaining sales are from walk-in sales transactions and those decreased significantly once governments mandated social distancing and also nearly 10% of our system sales are from those non-traditional capital market businesses of course, which decreased effectively, almost entirely to zero due to the mandated closure of schools, sporting arenas, the MLSEs of the world, the different teams, entertainment venues and so on and so forth. So, it’s obviously a major impact given our more varied sales mix of the Pizza Pizza side.

So with the decrease in system sales, the company’s royalty income has also decreased and as a result, company previously announced that its monthly dividend will be reduced by 30% from just over $0.07 a share, down to $0.05 a share beginning with the April 2020 dividends. So, what actions have our brands taken to drive sales and begin to roll back to positive sales growth?

Well, first, we are fortunate to operate in the quick-service retail pizza industry and have a large portion of sales derived from deliveries. Most non-pizza QSR competitors have not been as fortunate.

At Pizza Pizza and Pizza 73, our delivery business remains stable and in fact growing and we continue to take nimble and targeted actions via our marketing operations and technology change to further drive our delivery business. Our team was able to offer contactless delivery very quickly literally within days.

We are actually first in Alberta to do it and one of the first certainly in the Central Canada market as well to offer contactless delivery. And then shortly thereafter, we introduced our innovative tamper-proof pizza box, which is another industry first as we like to be a pioneer and that’s been extremely well received by our customers.

And guided by the needs of our restaurant employees and the communities we serve, we have implemented rigorous additional health and safety measures, including face shields and masks, heightened sanitation on all work and touch services, including delivery bags, and we also provide our customers contactless transactions for in-store pickup as well, didn’t want to forget to mention that. And customers also now have the option to order, pay and even tip or pre-tip, if you like to think of it that way, tip or pre-tip their driver online through our website and various apps.

And this offers customers the added piece of mind that our pizzas leave our 500-degree ovens and are placed immediately via pizza paddles into a secure box, which will be delivered as per the customer’s instructions without any direct human contact. And what has happened more recently?

Well, the sales impact felt from the pandemic in the last 2 weeks of March continued through month of April, but I am glad to say that sales have improved week-over-week during this time, especially at Pizza 73, but the non-traditional sales portion of the mix is not expected to return in the near future, obviously very uncertain as to when consumers will come back given what’s going on with COVID. So, the significant decline in walk-in sales and non-traditional sales encountered in March and April were partially offset by increased delivery and pickup sales, but not entirely, as evidenced by our same-store sales number.

But of particular note, again we are encouraging to see modest improvements in walk-in sales in the first few weeks of May. I’d like to talk briefly the Pizza Pizza Limited, the private operating company.

The success of Pizza Pizza Royalty Corp. depends primarily on the ability of Pizza Pizza Limited to maintain and increase system sales of the Royalty Pool and to meet its royalty obligations.

Therefore, the health of the underlying operational company is critical. At Pizza Pizza Limited, the following actions have been taken to maintain the financial health of the operating company.

We have had temporary reduction of executive salaries, temporary layoffs and some permanent staff reductions in areas not able to currently operate at normal capacity. We have had extensions of supplier payment terms wherever possible and needed.

We had substantial reduction in corporate operating expenses and also minimization, delay or elimination of significant capital expenditures. And lastly, Pizza Pizza Limited is also working closely with its franchisees, our JV partners at Pizza 73 through these unprecedented market conditions to come up with financial solutions which maybe required such as obtaining sufficient financial support from governments, obviously, lots of programs coming out there.

We are taking advantage of everything we can and our operators are, getting additional support from lenders and obtaining rent relief from landlords wherever needed, wherever feasible. So, our teams are working very holistically, very hard, collaboratively to maximize any and all opportunities to bolster our network financially from all angles.

And I am very proud of the collaboration and commitment level everyone has shown. Now, turning to restaurant development for a moment, during the first quarter, during the first quarter, PPL opens two traditional Pizza Pizza restaurants, meanwhile four traditional and four non-traditional Pizza Pizza restaurants were closed as well as one traditional Pizza 73 restaurant.

As mentioned earlier, during the first quarter, substantially all traditional Pizza Pizza and Pizza 73 restaurants remained open across Canada. 15 locations have temporarily closed after the quarter due to pandemic however almost all of our nontraditional Pizza Pizza and Pizza 73 restaurants were required to close with exception of just a few locations and number hospitals and gas stations, but not a massive number as well a new restaurant construction is permitted during the COVID-19 pandemic in some provinces such as British Columbia, Alberta.

However, Pizza Pizza Limited will be temporarily pausing restaurant construction and renovations in Ontario, Quebec until government dated restrictions on commercial construction are listed these two provinces. Alright.

So, what’s ahead? We are cautiously optimistic however the medium and long-term impacts to the company from COVID-19 will depend on consumer behavior after the economy fully reopens financial solutions achieve government wonders franchisees landlords and of course the macro impact on the overall economy in particular household debt that levels up disposable income.

And I will say that the resilience of the Pizza delivery business should not be underestimated and should help us grow and thrive relative to other QSR and even FSR players and what with no doubt continue to be a challenging post-COVID environment as well for quite some time. My personal view is that because so much of our core business and core competency has always been around delivery the high level of professional service itself that we have been doing since 67 the design of our food packaging our call center systems, our IT systems, the business processes it’s really what we do for a living we all always done is we’ve always been experts at it and I think we’ve always showed that continued innovation across our business and we have we’ve done so again with very little notice with this pandemic hitting us.

So I think that all of that molded together, we are all – it keeps us well-positioned to continue growing and this should help our restaurant operators operating company and pizza investors alike prosper well to the future. And going forward, we will continue to place the needs and health of our restaurant operators and our employees in the communities we serve first as we build same-store sales back to consistent positive growth territory.

While I personally thank our employees, restaurant owners and their team members, our incredible delivery drivers as well as especially all healthcare workers and other frontline workers, including emergency responders who are putting others first daily, they have shown tremendous courage and leadership despite this pandemic. Our team has been performing extremely well under extremely unprecedented circumstances and it’s truly inspiring to see people helping each other this way donating through to the frontlines across the country working hard keeping us safe.

So, thanks again to everybody and thanks again for joining our call this afternoon. And I will now ask Curtis Feltner, our CFO to provide a brief financial update.

Great. Thank you, Paul and good afternoon everyone.

Pizza Pizza Royalty Corp and directly owns the Pizza Pizza and Pizza 73 brands and trademarks to its subsidiaries Pizza Pizza Royalty Limited partnership. Partnership has two partners which is Pizza Pizza Royalty Corp which own 76.5% of the partnership.

And the Pizza Pizza Limited private operating company owns the remaining 23.5 percent Royalty Corp is the topline restaurant Royalty Corp and it earns a monthly Royalty through a lease agreement with Pizza Pizza Limited and Pizza Pizza Limited uses Pizza Pizza and Pizza 73 brands trademarks and its restaurant operations. The partnership’s monthly royalty is calculated as a percentage of system sales reported by the restaurants and what’s called the Royalty Pool of restaurants.

Increases in restaurant sales are derived both from the same-store sales and from opening new restaurants. So, this success of the Royalty Corp depends primarily on the ability of Pizza Pizza Limited to maintain and increase restaurant system sales and to meet its royalty obligations.

So, just some housework, as previously announced in our February 14 press release, on January 1 of each year, the Royalty Pool of restaurants is adjusted by the prior year’s net change in the number of restaurants at Pizza Pizza Limited. So as of January 1, the Royalty Pool of restaurants have decreased by a net 23 restaurants and this was the result of adding 20 new restaurants opened in the previous year less 43 restaurants that were permanently closed by Pizza Pizza in 2019.

So of the 43 closures, 30 were non-traditional locations which have the limited operating hours and a limited menu and are operated under license agreements. So, these license agreements can be short-term when compared to our traditional franchise restaurant agreements.

So therefore, we tend to see a greater volatility with non-traditional restaurants. Any royalty income loss to permanent closure of restaurants is replaced with royalties from new restaurants at the time of the next Royalty Pool adjustment.

So until then, Pizza Pizza Limited continues to pay royalties as if the restaurants that we closed had not closed. So for 2020, there will be 749 restaurants in that Royalty Pool for the year made up of 645 Pizza Pizza locations and 104 Pizza 73s.

So, now, let’s turn to the first quarter results. First, financial highlights for the quarter were negatively impacted by the global pandemic.

Paul mentioned same-store sales for the quarter decreased 6.6%. And as a result, our Royalty Pool sales decreased 6.1%, which affected our adjusted earnings, which decreased 7.4%.

So, Paul also discussed about how our company typically reports comparative quarterly same-store sales we typically don’t disclose month-to-month details, but due to the COVID-19 impact on our sales, we did earlier release January, February and March and now we are adding April to those. Paul also talked about the Royalty Pool sales mix, which includes delivery sales pickup, walk-in and non-traditional.

It’s very important to understand that Pizza Pizza has this wide variety of sales mix. And so the significant decline in walk-in sales encountered in March and April due to social distancing was partially offset by our increased delivery on pickup sales, but the non-traditional portion of our mix is not expected to return anytime in the near future.

So, the Royalty Pool of system sales for the quarter decreased 6.1% to a $125.8 million from $133.9 million in the same quarter last year. And so the sales decrease primarily attributable to the pandemic effect, which began in March.

Though this varies by brand as Paul mentioned earlier as to the exact search, but by month, we reported a January positive same-store sale growth of 2.3%, then February decreased 1.2% followed by the March decrease of 17.6%, which had the two weeks of the COVID effect. So, the sales impact fell in those two weeks continuing through most of April resulting in the 26.4% same-store sales for April.

Again, the April decrease is primarily a loss in walk-in sales and a loss in non-traditional sales. But having said that, as Paul mentioned sales have increased week over week from mid-March to present so we are seeing positive momentum come back in our sales.

As a result of the decrease in Royalty Pool sales, the company’s royalty income of course was affected a decrease 6.4%. So, the partnership’s royalty income was $8.2 million for the quarter.

Administrative expenses were fairly consistent at $115,000 for the quarter versus $104,000 in Q1, 2019. In addition to administrative expenses, the partnership pays interest expense on its $47 million credit facility.

Interest paid for Q1 was relatively unchanged at $300,000 when compared to Q1 of 2019. So, the credit facility interest rate for Q1 was 2.75% and this is unchanged from 2019.

However, this rate did change just recently in April of 2020 and this is due to the partnership entering into a new 5-year forward interest rate swap in 2019 with chartered banks. So the credit facility bears interest at our negotiated fixed rate plus a credit spread 8.75%, up 0.875% and to 1.375%.

So this – the credit spread depends on the level of debt to EBITDA, which at March 31, our debt to EBITDA was 1.35 to 1. So, the credit facility rate decreased in April to 2.685 from the 2.75 and it’s comprised of 1.81% plus a credit spread 0.875%.

So, we are in the low end of the credit spread, the credit schedule at this point. If in the future for example the debt to EBITDA ratio increases about 1.5 to 1, the credit spread will increase 25 basis points.

So please reference the company’s MD&A for a full credit spread schedule. Also the interest expense on the statement of earnings differs from interest actually paid due to hedge accounting and we reconcile interest expense in the MD&A as well.

So after the partnership receives royalty income and pays admin and interest expense, the resulting net cash is available for distribution to its two partners. Based upon their ownership percentage, Pizza Pizza Limited ownership is held through its Class B and Class C exchangeable shares.

So the ownership increased by 0.5% to 23.5% after the January 1, 2020 adjustment to the Royalty Pool and also after the true-up of the January 1, 2019 Royalty Pool. So now just touching on dividends and working capital, the company declared shareholder dividend of $5.3 million, which is $0.2139 per share, which is unchanged from the prior year comparable quarter.

Payout ratio was 123% for the quarter compared to 107% in Q1 2019. With the decrease in system sales as a result of the pandemic, on April 15, the company announced that its monthly dividend would be reduced by 30% from $0.713 per share to $0.05 per share beginning with the April 2020 dividend, which is payable this week on May 15.

At the same time, the partnership also reduced the monthly distribution to Pizza Pizza Limited on it Class B and Class C exchangeable shares and that distribution was also decreased by 30%. For the next month’s dividend, in today’s release, the company also announced a monthly cash dividend of $0.05 per share for May 2020 payable June 15, 2020.

So now the company’s working capital reserve, which is $2.6 million at March 31, which is a decrease of $986,000 from the year end December 31. The decrease in the reserve is attributable to the increased payout ratio of 123% as well as $164,000 payment made to Pizza Pizza Limited based upon the 2019 true-up payment that was made from the January 1, 2019 adjustment date.

It is expected that future dividends will continue to be funded entirely by cash flow from operations and the cash reserve. The company will however continued to monitor system sales and royalty income and will consider future changes to the monthly dividend taking into account that duration and the impact of the COVID-19 pandemic on restaurant operations and the timing and the pace of the economic recovery and the markets at Pizza Pizza and Pizza 73 serve.

So with that, that’s the end of our financial overview today. I will now turn the call back to David to take questions from our analyst.

David?

Good afternoon, everybody and hope you are staying safe. I guess my first question is – yes I guess I think I am not surprised by the April number given that the backdrop, I just wonder what kept you guys from performing maybe similarly to you bigger U.S.

peers that have reported positive same-store sales in March and April? I guess there is something structurally different in your business and/or in the Canadian industry?

Yes, I think I can answer that, Derek. We try to kind of give that any comments a little bit, but one of the key things is our sales mix is so different.

And there maybe little bit of a timing aspect as well in terms of actions taken in the different geographies, but kind of putting timing of COVID aside assuming it was relatively equal impact. We have obviously a lot of other business as we try to explain that are very big channels for us.

Walk-in, for instance, is people that are walking, un-premeditated sales grabbing a slice on the street corner, big, big part of our business, I have Pizza Pizza, right and our non-traditional business is also very significant with all the hockey teams, sports teams, basketball etcetera. So even then right in sort of March, April to suddenly go down is a major hit for us.

So, we are just not as nearly solely delivery focused as some of the big U.S. competitors are and those ones look a lot more like a Pizza 73 and we did sort of try to paint the picture there, we did see a bit of weakness even pre-COVID with 73 at the very beginning of Q1.

But we have seen delivery really actually encouragingly. Despite the trouble in the Alberta economy which is still obviously quick terrible out there.

We have seen these week-over-week gains there, where delivery is really picking up, delivery and pickup, and that’s it both brands week-over-week were seeing delivery and pickup trend positively. So that’s – just say our sales mix is very different than some of those big U.S.

competitors or much more leverage to just delivery as a sales channel. And so I would say we actually have – there is actually a good story underneath this, because we have got delivery and pickup trending here for quite some time.

It’s just that it’s so disguised by this massive hit to our walk-in and non-traditional, if that makes sense on the Pizza Pizza side, particularly.

No, absolutely. And Paul, yes, don’t get me wrong, I think you guys did a good job at laying that out.

I was just – I was definitely just wondering if that was the main difference between you guys?

Yes. I think it is.

Okay. Maybe just drilling down a bit further in that number.

I am sorry, Derek. You cut out me there, the numbers included in what?

In your – in the walk-in same-store sales like – if you walk-in numbers like the decline in your walk-in numbers – sorry if the decline in your non-traditional business included in walk-in same-store sales?

No, we do look at this channel separately. I mean, they are both hit by the – in simple terms, walk-in is not neural like we still do have some walk-in happening uncommitted to the sales.

And pickup, what we call pickup in our parlance is premeditated orders, where you have ordered in advance remotely and say you might want to save delivery charge or something. And so that’s more pickup.

Walk-in is you are walking on the street, you just had to go in, you might have a mask on these days, but you can still do that and actually get some product. So, walk-in there is still some walk-in, but it’s substantially down whereas our non-traditional is essentially is almost zero.

Okay, so even more dramatically down than what we would consider what we call walk-ins, because non-traditional is those captive markets, the universities, colleges, cineplexes. We had a cineplex promotion on, which is going okay and then suddenly guess what, no cineplexes out there right at the close.

So that non-traditional piece just suddenly went to zero and the Pizza Pizza brand is it kind of much more leveraged to that. We have more locations that are that non-traditional nature as you know, so that is sort of an even bigger impact there and the walk-in is also much bigger on the Pizza Pizza side, whereas Pizza 73 is more like 90% delivery, 10% kind of pickup or walk-in.

Okay. That’s clear.

And this is just to maybe to help me out of it on my math, in April you are saying that consolidated sales were down same-store sales were down 26%. So, before assuming that walk-in and I guess some non-traditional went to zero.

Does that mean delivery and pickup was up 30% plus that how we should look at it?

I don’t think, it’s up that much. Curt and Christine could chip in about the actual quantum, but I think walk-in is not zero.

So non-traditional has affectively or largely. Walk-in is still it’s not zero.

So I would say that it’s – I don’t know what exact figure would be there. I think Curt now if he wants to say anything, but it’s down but not completely down like non-traditional is.

So we have seen certainly double-digit I would say gains on delivery pick up at both brands now for sometime, but it’s probably not 30, it’s just something less than that.

Okay.

Yes, maybe I will just weigh in on the walk-in question and Derek it is a little complicated for sure, because we are completely different than the U.S. large competitors.

Our walk-in business we basically what has happened now for the last 6 weeks is we have lost actually about 50% of the walk-in business. So, I see where your math is.

So it’s a roughly somewhere around 50% on average we are we are seeing walk in business actually pick up a bit now. People are a little more comfortable but the nontraditional business which is traditionally 10% is down so roughly we are seeing delivery and pickup business at Pizza Pizza increase.

I mean mathematically it’s somewhere in between 12% and 14% to make up for the decrease in walk in and the lack of 0 nontraditional business which is getting you back to the 29%.

Got it. got it.

Thanks, Curt. Are you seeing I guess it is still early on but I know you guys have put a big push on the contact with delivery I’m hearing a lot more marketing around the delivery options that at Pizza Pizza has any of that increased promo spend or increased marketing have you seen any of that start to translate into an increase in delivery sales?

I think so. We have said look what we control right now what we drive and we realized what differentiates us and I think the contact was being moved very quickly some other leading competitors also pivoted quite quickly as well when that would happen but I think we’ve got a really nice solution there we do a lot of pick up as well that’s contactless not everyone is able to do that and then the tamper proof box is also really good in addition to that was very timely we work we’re working on it actually before this but we’re able to accelerate that very quickly as well so if you think about it we have to deal with a lot of service supply chain issues marketing issues and IT development and things like that we are pretty quickly got there and got that done and make sure that we pivoted to highlight the benefits of our trusted delivery system so there’s a lot of her trust and reliability themes coming through in all of our marketing whether it’s digital or if it’s on a you know CP24 type of thing in Toronto where we realize that you are at home watching news on television etcetera and then trying to hit the relevant channel so we shifted where we’re putting our marketing next say focusing as well on both brands probably even a little more for sure right now on value but I will say that think like keto have done really well for us to Pizza Pizza at the beginning of the year was a really well time launch and that’s certainly up an innovative product that we’re still going to keep pushing but we do see people in the mode that we are in obviously right now focusing on values so I do think so that is resonating and we are continuing to spend marketing dollars we think it’s important and we think that it is an opportunity for us to actually take share now in this type of tough environment.

Okay. And maybe just adding on to that Paul, anecdotally, are you seeing any now particularly now as we move past that initial pantry stocking that you might have gotten in mid-March to April the weather is improving and you can kind of feel that people are getting anxious after being nearing two months in social isolation are you guys starting to feel that even in your walk-in sales?

I think we are. It is still early days.

There is so much uncertainty but I think that with the spring effect I mean there is lots of different data out there but I would say there’s a fair amount of a sense that out there that there is that grocery fatigue cooking fatigue at home or I think people are starting to look to deliveries more and what is people are really trying to promote delivery Everybody, even those that really don’t have capability to – unless they do it through a third-party and that’s, of course very expensive so I think we’re sort of trying to hit with the right messages there I think it is starting to resonate I do think it is starting to loosen up a bit people are tired of just being cooked up for so long and yet we’re all worried still very much about the health issues. So who knows how much, we will lift at a more normal state or we are going to be wearing masks 6 months from now, I am not sure, but we are prepared do that.

So, I mean, that’s sort of kind of way of operating. So, we think a lot as long as we need to, if we have to with that, but we certain would love to see walk-in come back more dramatically as weather improves.

So, I guess we will see – I noticed anecdotally that if you drop by a Best Buy or a Wal-Mart, a lot of these places are open even with distancing. There are Qs outside some of these stores.

So I think there is a sign that people are not only going to grocery stores, but certainly get out a little more. So, I think when things like the coffee shops open up, we are open, I think there will be a little more just food traffic out there as well.

So hopefully that will come back and we will certainly take measures to drive walk-in as well. The non-traditional started for us to control directly, because we are just not in control of that.

It’s really – it’s our foodservice partners, it’s the sport venues and whatnot in the colleges, but we will still try to amplify everything we can to delivery and walk-in.

Okay. I know there is – like no one’s business model is built to withstand a 30% drop in revenue let alone 100% for a long period of the time.

So I am just wondering how you think about the health of your franchisees and potential royalty relief and then secondly have you gotten any word on being able to tap into the government assisted programs or perhaps any rent relief from the landlords?

Yes. I mean, first of all, we certainly are in a lot of direct contact with the franchisees and certainly some they are doing fine, stores that are doing wonderfully and there is others that of course aren’t doing that great, because there is stores that really rely on walk-in slices for instance more than others is one example of Pizza Pizza.

So, those folks are really struggling and I think we are taking full advantage with our real estate group, our franchising teams, our operating teams with that operations folks that are helping coaching our franchisees to apply for anything that might me eligible for the $40,000 loans, for instance. We had great tick up on that.

And obviously if they paid back that by I guess instead of 2021, they can get a $10,000 free essentially on an interest free loan. So, that’s very attractive.

The wage subsidy is also helping a lot of our restaurants, not everybody, but certainly some. And so there is every level we can possibly get them help on we are taking advantage of, but things like rent reliefs have been frankly more challenging.

It’s really been kind of patchy and the fact is if the landlord doesn’t have a CMHC mortgage, even if they have public debt if it’s a read or something, they don’t even have a process to even apply for that landlord relief loan themselves. So it’s – even if they have the will.

So, there is a lot of confusion there, lack of clarity and that is still a concern for some franchisees for sure if they have a sustainable level of sales. So I guess we are trying on many levels to keep their expenses down, royalty relief, we have not talked to them about.

I mean there is certainly lots of different cries for help from certain franchisees, but I think people are encouraged to see our trend up in delivery and pickup and I think if walk-in starts coming back here as well, that’s going to be good and the 73 partners meanwhile, they have very little, if any, debt on their restaurants. So those folks even though it’s a horrible economy out there in Alberta, they are getting a lot smaller dividend checks than they used to, but they are still hanging in there quite well.

And with this recent trend up, that’s encouraging to see with again a little more pivot to value with something like our 973 single pizza deal seems to have really kind of hit the mark here and help us gain some more traction back out there.

That’s great color. Everybody again, thanks for taking my questions and stay safe.

Okay. Thanks.

You too.

Thank you, David and thank you everyone for being on the call with us this afternoon. If you have any questions after this call, please contact us.

Our information is on the earnings release. Thank and have a good evening.