Boston Pizza Royalties Income Fund (TSE:BPF.UN) reported record franchise sales in its royalty pool during the second quarter of 2026, supported by promotional activity, continued takeout and delivery momentum, and increased traffic tied to the FIFA World Cup.
Franchise sales from the Fund’s 372 royalty pool restaurants rose 1.9% year over year to C$256.5 million in the quarter. Year-to-date franchise sales increased 2.5% to C$494.9 million. Same-restaurant sales grew 2.3% in the second quarter and 2.7% through the first half of the year.
Promotions and Pricing Supported Sales
Holm said second-quarter sales benefited from a playoff promotion tied to the hockey and basketball postseason, featuring menu innovations and a national advertising campaign called “Feast Like a Hockey God.” The company also introduced FIFA World Cup-related promotional campaigns in June, aimed at increasing guest engagement and celebrating Team Canada.
Boston Pizza followed those efforts with a summer feature menu and a concert-prize giveaway through its partnership with Live Nation Canada.
During the question-and-answer session, Holm said the company recorded its seventh consecutive quarter of same-restaurant sales growth. While guest traffic has been a significant contributor over that period, he said the second quarter saw a somewhat greater contribution from menu pricing, as Boston Pizza typically implements main-menu price changes in June and November.
“Still positive on both fronts,” Holm said, referring to traffic and pricing. “But a little bit more came from menu pricing.”
Income Declined on Fair-Value Loss
The Fund reported royalty income of C$10.3 million for the second quarter, up from C$10.1 million a year earlier. Distribution income rose to C$3.4 million from C$3.3 million. For the first half, royalty income totaled C$19.8 million and distribution income was C$6.5 million, compared with C$19.3 million and C$6.3 million, respectively, in the prior-year period.
Net and comprehensive income, however, fell to C$5.9 million in the second quarter from C$14.3 million in the second quarter of 2025. Chief Financial Officer Michael Harbinson said the C$8.4 million decline was primarily attributable to an C$11 million increase in fair-value loss and a C$0.3 million rise in net interest expense. Those factors were partly offset by a C$2.6 million reduction in income tax expense and a C$0.3 million increase in royalty and distribution income.
Year-to-date net and comprehensive income declined to C$18.1 million from C$20.7 million. Harbinson said the decrease primarily reflected a C$3.7 million decline in fair-value gain and a C$0.4 million increase in net interest expense.
Cash flow generated from operating activities increased to C$10.4 million in the quarter from C$9.9 million a year earlier. First-half operating cash flow rose to C$20 million from C$19.2 million.
The Fund generated distributable cash of C$8.2 million, or C$0.386 per unit, for the quarter, compared with C$8 million, or C$0.374 per unit, in the prior-year period. For the first half, distributable cash rose to C$15.8 million, or C$0.741 per unit, from C$15.3 million, or C$0.718 per unit.
The quarterly payout ratio was 96.3%, compared with 92.3% a year earlier. The year-to-date payout ratio was 98.8%, versus 96.1% in the first half of 2025. On a trailing 12-month basis, the payout ratio stood at 103.1% as of June 30.
On Aug. 12, the Fund’s trustees approved a monthly cash distribution of C$0.124 per unit for the July 1 through July 31 period. The distribution is scheduled to be paid Aug. 31 to unitholders of record as of Aug. 21.
Development Pipeline and Restaurant Renovations
No new restaurants opened during the second quarter, while two locations permanently closed. Four restaurants have closed year to date. Boston Pizza completed 10 restaurant renovations during the quarter and 21 renovations through the first half.
Holm said three restaurants were under construction in Revelstoke, British Columbia; Dryden, Ontario; and The Pas, Manitoba. Additional potential locations could open during the current construction season or be delayed until early 2027 because of permitting, trade, supply-chain, and other construction-related factors.
The company is targeting approximately 40 renovations in 2026 and may exceed that figure, according to Holm. Boston Pizza completed 40 renovations in 2025 and 26 in 2024.
Addressing the four closures, Holm said each had distinct circumstances, including lease expirations and property redevelopment or expropriation. He said the closures do not represent a sign of brand weakness or a concerning trend.
Third-Quarter Plans and Risk Factors
For the third quarter, Boston Pizza plans to continue its “Live & Local” initiative, which brings live music performances to restaurants and is intended to support local artists while increasing guest engagement. The company also plans a football-season promotion featuring a new menu, as well as its BP Kids Cards fundraising initiative. For a C$5 donation to the Boston Pizza Foundation, families receive a card for five free kids’ meals.
Holm said the company continues to monitor the trade environment and geopolitical developments, including the conflict in the Middle East. While the conflict had not resulted in material increases in restaurant input costs at the time of the call, he said prolonged supply-chain disruptions could raise future costs and affect consumer discretionary spending.
About Boston Pizza Royalties Income Fund (TSE:BPF.UN)
The Fund is a limited purpose open ended trust with an excellent track record for investors since its IPO in 2002. Including the December 2025 distribution which is payable on January 30, 2026, the Fund will have paid out 276 monthly distributions and four special distributions totaling $485.7 million or $28.97 per unit. The Fund earns revenue based on the franchise system sales of the 372 Boston Pizza restaurants in the Fund’s royalty pool. Boston Pizza is the premier casual dining brand in Canada.
