Pizza Pizza Royalty (TSE:PZA) reported lower third-quarter same-store sales and royalty income as consumer discretionary spending remained pressured and promotional activity intensified across the quick-service restaurant industry.
For the quarter ended Sept. 30, 2026, overall same-store sales declined 2.3%. Pizza Pizza locations recorded a 2.7% decrease, while Pizza 73 same-store sales were flat. Royalty Pool system sales fell 0.9% year over year to C$157.4 million, and partnership royalty income declined 0.7% to C$10.1 million.
Chief Executive Officer and President Paul Goddard said the company faced traffic pressure during the quarter, including a difficult comparison with the prior year, when the Toronto Blue Jays’ World Series run boosted business through Halloween. He also pointed to government immigration-policy changes that have affected non-traditional locations, including college-based restaurants, as well as neighboring traditional stores that serve students.
Traffic trends and promotional environment
Goddard said discretionary spending remained constrained while restaurant operators increased promotional activity, particularly on third-party delivery platforms. He said Pizza Pizza was seeking to direct customers toward its own digital platforms, where the company believes it can generate more profitable sales than on aggregator channels.
The company reported encouraging trends in direct channels, including growth in iOS and Android app orders, as well as gains in walk-in and preorder pickup transactions. During the question-and-answer session, CFO Christine D’Sylva said traffic declines have moderated as 2026 has progressed.
“We’re happy to see a lot of our iOS and digital orders improving as well as we focus on growing those channels,” D’Sylva said. She added that the company has emphasized pickup and walk-in value offers as consumers shift their purchasing preferences.
Goddard said Pizza 73’s flat same-store sales performance reflected stronger average checks, though orders remained down. He said the company remains more focused on rebuilding traffic than on check growth alone.
Geographically, Goddard said the company has been encouraged by trends in the Greater Toronto Area and Ontario core markets, while Quebec has continued to perform well, particularly in more urban areas. Newer markets, including British Columbia and the Maritimes, are still developing their restaurant networks and average unit volumes, he said.
Menu offerings and brand activations
Pizza Pizza introduced several products and promotions during the quarter, including Ancient Grains Crust pizzas, which Goddard described as a premium and lighter-crust option featuring protein-forward recipes. The company also continued to promote its “Buck an Inch” offer, under which two-topping pizzas are priced at C$1 per inch.
Other Pizza Pizza initiatives included a C$5 Mega Slice and drink offer, pizza rolls sold at two for C$5, and a new Chicken Chicken dipping sauce. At Pizza 73, the company highlighted its Double Up deal, offering two medium two-topping pizzas and four drinks for C$22.50, and expanded its Golden Crispy Chicken line with a C$5 chicken sandwich introduced in September.
The company also used event marketing to support the brands. Goddard said Pizza Pizza’s Canadian National Exhibition campaign generated more than 180 million media impressions. Pizza 73 received third place in a Calgary Stampede food innovation award competition for its deep-fried Hot Cheetos cheese slices, he said.
Restaurant development outlook reduced
Pizza Pizza’s restaurant network added two non-traditional Pizza Pizza locations during the quarter, while 10 non-traditional and two traditional restaurants closed. The number of Pizza 73 restaurants was unchanged.
Management reduced its restaurant-development outlook for the year to 1% to 2%, from its typical range of 2% to 3%. Goddard said the adjustment reflected construction delays, challenges sourcing qualified franchisees in certain markets, and a decision to focus on performance at existing locations in newer markets such as British Columbia.
Chief Operating Officer Philip Goudreau said permitting has been the primary cause of construction delays. He said the company remained on track for its revised 1% to 2% growth outlook in the fourth quarter.
As of Jan. 1, 2026, the Royalty Pool included 814 restaurants, consisting of 712 Pizza Pizza restaurants and 102 Pizza 73 locations. That was up from 794 restaurants in the 2025 Royalty Pool, following the addition of 39 new restaurants and the removal of 19 permanently closed locations.
Dividend and franchisee initiatives
Pizza Pizza Royalty declared C$5 million of shareholder dividends for the quarter, or C$0.2025 per share, compared with C$5.7 million, or C$0.2325 per share, a year earlier. D’Sylva said the dividend reduction made in May lowered the quarterly payout ratio to 93% from 111% in the comparable period.
Working capital increased by C$400,000 to C$2.6 million at quarter-end. D’Sylva said the reserve is intended to help stabilize dividends and fund expenditures during periods of short- to medium-term variability in system sales.
The company said it continues to pursue initiatives intended to support franchisee profitability amid rising rent, utility, labor and minimum-wage costs. Goudreau said the ongoing replacement of deck ovens with conveyor ovens has reached nearly 75% completion and can save an estimated 40 to 50 staffing hours per location. Management also cited menu simplification, procurement efforts, equipment improvements and delivery technology as areas of focus.
The partnership’s C$47 million credit facility remained unchanged during the quarter. Interest paid was C$444,000, and D’Sylva said the facility matures in 2028. The company’s locked-in all-in rate for the next three years is 3.51%.
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.
