Pizza Pizza Royalty Corp. (OTCPK:PZRIF) This fall 2022 Earnings Convention Name March 7, 2023 5:30 PM ET
Alexander Sewrattan – Director of Finance
Paul Goddard – President and CEO
Christine D’Sylva – Chief Monetary Officer
Convention Name Members
Sherif Soliman – TD Securities
Girls and gents, thanks for standing by. And welcome to the Pizza Pizza Royalty Corp.’s Earnings Name for the Fourth Quarter of 2022. Throughout the presentation, all individuals shall be in a listen-only mode. After the audio system’ remarks, there shall be a question-and-answer session. [Operator Instructions]
As a reminder, this convention is being recorded on Tuesday, the seventh of March, 2023. I’ll now flip the convention over to Alexander Sewrattan, Director of Finance.
Thanks and welcome to the decision. As we speak, we’ll be discussing the 2022 fourth quarter outcomes for Pizza Pizza Royalty Corp. For full particulars on the monetary outcomes, please see our fourth quarter supplies filed earlier right now on SEDAR or go to the Investor Relations part of Pizza Pizza’s web site.
The Royalty Corp. is a topline restaurant Royalty Corp. that earns a month-to-month royalty by way of a lease settlement with Pizza Pizza Restricted. In alternate for using the Pizza Pizza and Pizza 73 logos in its restaurant operations, Pizza Pizza pays a month-to-month royalty to the partnership calculated as a share of Royalty Pool gross sales. For an entire description of the fund and its enterprise, please see the annual info kind dated March 7, 2023, which was filed on sedar.com.
Earlier than I flip the decision over to Paul Goddard, President and CEO of Pizza Pizza Restricted, I want to word that sure info within the following dialogue might represent forward-looking info. For a extra full definition of forward-looking info and the related dangers, please confer with the Corp.’s Administration Dialogue and Evaluation issued earlier right now.
Ahead-looking info is supplied as of the date of this name, and besides as required by legislation, we assume no obligation to replace or revise forward-looking info to replicate new occasions or circumstances.
And with that, I’ll now flip the decision over to Paul.
Thanks, Alex. And welcome everybody to the Pizza Pizza Royalty Corp.’s fourth quarter investor convention name. As we speak, I’ll be discussing our This fall initiatives and outcomes and we’ll share a short outlook for what’s forward in 2023. And Christine, our CFO, will then summarize our key monetary highlights, and as normal, we are going to save time for analyst questions on the finish of right now’s name.
We completed the yr on a powerful word and are happy to report double-digit gross sales development for the quarter and yr replicate a file Royalty Pool gross sales and three dividend will increase in 2022. We additionally opened a file 45 new eating places.
We’re most proud that these successes have been achieved throughout a yr that began with the eating places working beneath COVID-19 restrictions and was mired with labor and provide chain challenges, inflationary pressures and common market uncertainty. It goes with out saying our company groups work hand-in-hand with our restaurant operators who’ve all proven excessive resilient, resourcefulness and dedication.
Briefly concerning our gross sales outcomes, for the quarter, our same-store gross sales, the important thing driver of yield development for shareholders elevated 13.0%. By model, Pizza Pizza elevated 15.1%, Pizza 73 elevated 1.3%. General, our development for the quarter was attributable to will increase in each visitor site visitors and the typical buyer verify. This speaks to our model energy and worth propositions resonating nicely with clients.
Our technique to drive larger visitor site visitors contains attracting a spread of shoppers into our eating places by providing quite a lot of merchandise at compelling worth, whereas will increase in common ticket achieved by way of strategic retail value will increase and new product affords.
At each manufacturers, the typical buyer verify elevated as clients accepted retail value will increase, which have been needed in a local weather of unusually excessive commodity and labor will increase. The excellent news is that we basically handle our retail costs and use our personal distribution facilities organically, so we are able to nimbly alter costs as you see prices rising. The rise in retail costs helped to efficiently preserve our eating places gross revenue ranges.
Talking to site visitors, at Pizza Pizza, the rise in same-store gross sales development was pushed by customers considerably growing in-restaurant visits partially as a result of lifting of COVID-19-related public well being restrictions. Gross sales additionally benefited from meals inhibition, worth messages and promotional model actions, plus the reopening of non-traditional places, in addition to college students returning to in-person courses.
At Pizza 73, which relies upon closely on pizza supply versus in-store visits, our same-store gross sales development was adversely affected by clients making ready extra meals at residence, plus sturdy competitors from third-party meals supply apps, leading to a decline in general buyer orders there.
The long-term development and success of Pizza Pizza Royalty Corp. is closely tied to that of Pizza Pizza Restricted. So let’s focus on the initiatives on the personal working firm stage. In This fall, our advertising actions concluded the yr with continued give attention to our strategic pillars, constructing the model, innovating our menu, driving natural orders and sustaining profitability for our franchisees.
Associated to the Pizza Pizza model, we proceed to rollout our new Everybody Deserves Pizza marketing campaign with messaging targeted on our distinctive place to convey Canadians of all walks collectively and to be a part of key social events.
Along with ongoing media executions through out-of-home, programmatic internet banner placements and social media, we built-in our marketing campaign messaging into key sports activities partnerships, constructing extra significant connections with followers.
And through the fall, we proceed to leverage client development knowledge to determine menu growth alternatives that have been a logical match for our eating places and operations capabilities. Foutine [ph] was highlighted as a key alternative and menu hole. We launched a product nationally in October at Pizza Pizza following in depth in-market testing all through the spring and summer time.
Three recipes have been launched, Traditional, Popcorn Hen and Baking Foutine, and we instantly bought a mean quantity models per restaurant per week that was near 30% above our forecasted gross sales for Foutine and that product stays a high vendor and a buyer favourite, so actually pleased with that one. In the meantime, at Pizza 73, we promoted our high-quality contemporary wings all through This fall, bolstered a novel style of our signature Golden Crispy Wings.
Tactical gross sales promotions proceed to be a key traffic-driving exercise for each Pizza Pizza and Pizza 73. Heading into the vacation season, we partnered with Bell Media and secured free one-month free streaming subscriptions for our clients. The subscriptions have been bundled with in style combo choices at every model and promoted over the vacation window. The featured bundle was a high vendor, significantly at Pizza Pizza, anchoring a profitable vacation gross sales window.
And as we transfer into 2023, we are going to proceed to leverage our model belongings as we implement new promotions understanding that one of the simplest ways to enhance the monetary well being of our franchisees is to drive site visitors and topline gross sales, whereas additionally implementing packages to enhance the bottomline and high quality choices.
Turning to restaurant development, we stay laser-focused on rising our enterprise throughout Canada, and it’s secure to say we’re identified and revered as a significant homegrown nationwide model and the main Pizza chain within the nation.
Throughout the quarter, 10 conventional and eight non-traditional Pizza Pizza eating places ingredient, one conventional and two non-traditional Pizza Pizza eating places have been closed. On the Pizza 73 model, we closed one non-traditional restaurant.
As I discussed earlier, for the total yr, we opened a file 45 new eating places throughout Canada. Nonetheless, we additionally reviewed the well being of our restaurant system as an entire and determined to shut 30 underperforming places. Out of 30, 20 have been smaller quantity non-traditional places and 10 have been conventional places.
For many conventional closures, adjoining eating places benefited by absorbing a closed retailer territory, and as with all closures, the Royalty Pool is made complete for any misplaced gross sales, and Christine will contact on the small print of that in a bit.
Pizza Pizza Administration expects to proceed its restaurant community growth by 3% conventional restaurant development in 2023. To-date, we’re proud to say that 85% of our eating places function our scorching and contemporary new look and/or a refresh on the inside and exterior and vital updates proceed to be made with regard to restaurant tools reminiscent of new and extra environment friendly ovens, digital menu boards and in-store expertise.
We’ve additionally renovated many Pizza 73 places, however usually are not but as far together with our renovations there relative to Pizza Pizza. And a lot of the improvements are literally so much smaller scale given the smaller format of Pizza 73s within the entrance foyer space as nicely. So not as far alongside, however we are able to do them rather more simply.
And we proceed to have a big pipeline of franchisee wants which can be keen to hitch our crew and we even have lots of our present franchisees seeking to increase too to all good segments to the wholesome system.
And searching forward, in 2023, you will note us proceed our menu innovation, advertising initiatives, restaurant development, expertise, different digital investments and we are going to work carefully with franchisees and our companions at relaxation, in addition to Pizza 73 to make sure that they’re delivering wonderful and current merchandise in a clear and secure restaurant setting.
I’d like to shut by congratulating our complete crew, our company staff and our proprietor operators alike on a wonderful yr regardless of tough and difficult working setting. I’m additionally very happy with our crew for being acknowledged just lately by Waterstone Human Capital as one in all Canada’s most admired company cultures.
Essentially the most important ingredient to our ongoing success is our individuals and we’ve all labored arduous collectively to create a really revolutionary, formidable, resilient and collaborative tradition proper throughout the nation at each manufacturers.
With that, I’d like to show the decision over to Christine for a short monetary replace.
Thanks, Paul. As we speak, I’ll briefly cowl the monetary outcomes for the quarter, 1 / 4 by which we continued to construct on our momentum after the lifting of restrictions and one the place we completed the yr off sturdy.
As Paul talked about, same-store gross sales, the important thing driver of yield development for shareholders elevated 13% within the quarter. For the yr, same-store gross sales elevated 15.2% with Pizza Pizza growing 17.8% and Pizza 73 growing 1.1%. Royalty Pool System gross sales for the quarter elevated 11.2% to $153.2 million from $137.7 million in the identical quarter final yr.
By model, gross sales from the 624 Pizza Pizza eating places elevated 13.2% to $131.1 million for the quarter and gross sales from the 103 Pizza 73 eating places elevated 0.4% to $21.1 million. For the yr, Royalty Pool gross sales elevated 15.1% to $568.3 million from $493.6 million in 2021. It is a file quantity of gross sales for our Royalty Pool.
The partnership’s Royalty Revenue earned as a share of Royalty Pool gross sales elevated 10.5% to $9.8 million for the quarter and elevated 14.1% to $36.4 million for the yr. The rise within the Royalty Pool gross sales and Royalty Revenue replicate the rise in same-store gross sales, which Paul mentioned earlier.
Moreover, whereas the variety of shops within the Royalty Pool are fewer than they have been in 2019, the monetary impression for shareholders was mitigated by Pizza Pizza Restricted, persevering with to pay royalties as a part of the deficit or Make-Complete Carryover Quantity. This Make-Complete fee will proceed to be added to the Royalty Pool gross sales till Pizza Pizza Restricted has enough gross sales from new retailer openings to offset the gross sales misplaced on the shops completely closed.
Now turning to our partnership bills. Administrative bills, together with itemizing prices, in addition to administrators, authorized and auditor charges have been $233,000 for the quarter and $632,000 for the yr. Along with admin bills, the partnership pays curiosity expense on its $47 million credit score facility.
Curiosity paid within the quarter was $323,000 and $1.3 million for the yr. The partnership is at present making interest-only funds on the non-revolving facility. The rate of interest is locked by way of April 2025 utilizing swap agreements which have mounted the rate of interest at a financial institution acceptance charge of 1.81% plus our credit score unfold.
The credit score unfold adjustments primarily based on the extent of debt-to-EBITDA. In April of 2022 as a result of enhance within the partnership earnings, the credit score unfold decreased by 25 foundation factors for a mixed rate of interest now of two.685%, in comparison with the identical interval final yr when the speed was 2.95.
So after the partnership has obtained its royalty earnings, pays its administrative and curiosity expense, the ensuing web money is offered for distribution to its two companions, Pizza Pizza Restricted and Pizza Pizza Royalty Corp. primarily based on their possession percentages. Pizza Pizza Royalty Corp. then pays taxes on its share of the earnings and any residual money is offered for distribution as dividends to its shareholders.
In 2022, the corporate elevated its dividend 3 occasions for an general enhance of 16.7%. The corporate declared shareholder dividends of $5.1 million within the fourth quarter or $0.2075 per share, in comparison with $4.4 million or $0.18 per share in 2021. For the yr, the corporate declared dividends of $19.6 million or $0.7975 per share, in comparison with $16.9 million or $0.685 per share in 2021. The payout ratio for 2022 was 95%, in comparison with 94% in 2021.
And as Paul introduced earlier, right now, the Board of Administrators elevated the month-to-month dividend 3.6% and bringing the month-to-month dividend to $0.0725 per share or $0.87 annualized, surpassing the pre-COVID dividend charge. This new charge will start with the March 2023 dividend payable in April.
The corporate’s working capital reserve elevated $1 million within the yr and we ended the yr with $7.5 million of money. With the three dividend will increase in 2022 and right now’s enhance, the corporate believes that there’s enough money stream to service the obligations as they fall due. The corporate will proceed to carefully monitor gross sales and royalty earnings to find out when further dividend changes could also be warranted.
That concludes the monetary overview. I’d like to show the decision again to our Operator to ballot for questions.
Thanks. [Operator Instructions] Your first query comes from the road of Derek Lessard from TD Securities. Your line is now open.
Good afternoon. That is Sherif becoming a member of for Derek. Thanks a lot for taking my questions and congratulations on a really sturdy yr contemplating the robust working situation.
Yeah. So when it comes to same-store gross sales, I used to be questioning for those who might assist us break it down when it comes to pricing and quantity, and the way are they trending in Q1 thus far?
Yeah. We will speak just a little bit about that. I imply it’s good to see the site visitors and gross sales quantity, I suppose, you’re saying, each doing nicely. I feel, general, we’ve been fairly pleased with the stability. We actually getting a carry from elevated costs as nicely to reflect inflation, for those who like, in a roughly type of 5% to 10% kind of vary, however we’re nonetheless seeing site visitors maintain up very properly.
So we’re getting numerous our enhance is from that side as nicely and I feel it simply our advertising is resonating very nicely, though we’ve been fairly even handed about our value will increase when we now have to make them to assist insulate our operators and likewise be sure we’re not getting out of step with market expectations and client affordability. I don’t know if Christine has something so as to add to that when it comes to extra specifics?
No. I feel you coated it off nicely. We’ve taken costs throughout all of our choices to the extent of inflation and we now have managed a Pizza Pizza to keep up our site visitors and really develop our site visitors as our non-traditional websites have returned, our catering enterprise has additionally returned, in addition to numerous our walk-in enterprise as restrictions have been lifted.
Good to listen to that. I’m questioning for those who might present a bit extra shade on the difficult working circumstances in Alberta and the impression of third-party distributors, and the way does that examine to the aggressive setting that Pizza Pizza is going through in the remainder of Canada?
Yeah. It’s query. I attempted to type of spotlight that in remarks. I imply 73 has lagged behind our large success of Pizza Pizza for certain. We nonetheless have seen order volumes being adversely impacted considerably. We’ve seen non-traditional come again, as an illustration, although, very properly in Alberta with the return of hockey and issues like that and we’re actually rising that base as nicely.
However we simply outlined in general in Alberta, it’s simply extremely aggressive there and I feel the presence of third-party aggregators is simply extraordinarily aggressive there. It’s additionally a powerful competitors organically within the trade.
However and we predict — those self same individuals as nicely in our extra native markets in Pizza Pizza as nicely in Ontario, as an illustration, however it simply appears that Alberta is especially difficult on the whole. It’s just a bit harder regardless of some excessive commodity costs.
I feel individuals are actually feeling a tense there just a little extra and we seen that the promotional exercise of individuals within the third-party space appears much more aggressive in Alberta when it comes to loyalty or free supply affords or different bogo-type affords and issues like that by way of third-party in Alberta little extra aggressively than someplace like Ontario.
And so we predict that summing all that up, that simply makes it a harder setting and so we notice we have to actually step it up in Pizza 73, however we’re very inspired by a few of the issues that we’re engaged on, we’ve been engaged on and I feel we alluded to this final quarter, an entire new suite of internet and app expertise, which is principally now on par. In actual fact, it’s actually utilizing the identical core engine basically as Pizza Pizza, which we’ve been tremendously profitable with our digital belongings and so that’s simply launched the opposite day.
So it’s public information that aspect available in the market. As of finish of February, we haven’t even began advertising it but, however we do assume that may actually assist out the Pizza 73 and we additionally simply launched this week, Gourmand Thins, which could be very skinny crust connoisseur pizza for a barely totally different demographic and after we launched that in Ontario and throughout Pizza Pizza in Canada nationally, that was a really profitable launch for us. So we’re attempting to imitate a few of that success that we now have with Pizza Pizza 73 and we predict that may win us numerous orders again and numerous new clients as nicely.
That’s nice. Thanks a lot for that. I’m curious if in case you have seen any market positive factors given your advertising efforts and are you seeing the next stage of promotional actions available in the market?
You imply simply in — with efforts to opponents nationally or simply — that’s method I perceive the query.
Yeah. So like simply nationally are you seeing the next stage of promotion on TVs general and are you seeing any market share positive factors out of your advertising efforts?
I feel with Pizza Pizza, our sense is that we’re, as a result of we’re gaining site visitors and verify and we simply assume our — we appear to be very seen. We’ve got an at all times on technique. We additionally do a Pizza 73, however we’re actually altering up much more there. We’ve received numerous extra native sources now, advertising belongings, individuals on the bottom, use of native media purchase in Alberta slightly than nationwide teams earlier than.
However I feel we’re simply being extraordinarily seen and so we positively had lots of people noticing, as an illustration, our mounted value type of tongue-in-cheek marketing campaign type of making entrance of the banks just a little bit with a set value mortgage kind method or the mounted value pizza providing, which is definitely combined extraordinarily nicely and that was the TV spot. We don’t try this a lot TV, it’s costly, however we have been truly very pleased with this one.
After which the broader marketing campaign for Pizza Pizza is Everybody Deserves Pizza has actually resonated and we’ve had very context particular promotional exercise that is smart on to the aspect of a bus, it should have a pie chart speaking about one thing about in your commute to residence, share of individuals would have come beneath the seat versus those that don’t have come on their seat on a pizza pie.
So some actually enjoyable cheeky contact particular advertising and promotional exercise that we’ve performed all around the nation and that appears to have actually resonated very nicely with individuals. So we predict we’re shouting the loudest and are probably the most seen. We do see general extra exercise.
Clearly, the third-party people are, as I stated earlier, actually aggressively attempting to be discounting and offering people to attempt to get individuals to return to them as nicely. However I feel within the conventional pizza aspect, we run beneath the standard suspects, however I feel we’re nonetheless fairly seen when it comes to our social media advertising, our billboards, whether or not it’s at residence, programmatic or digital. I feel we’re shouting the loudest and we’re getting discover extra. So I feel we’re successful some share there within the Pizza Pizza.
73, I feel, it’s a harder battle. We’re nonetheless positively one of many absolute key gamers in that market and we actually intend to emulate what we’ve performed to Pizza Pizza over the approaching months and years.
That’s nice. Thanks. I’m curious how you are feeling about your pricing at present? Are you in search of extra will increase in 2023? And out of your remarks, it feels like clients are nonetheless holding in and the way do you see them reacting in Q1 thus far?
I don’t have an excessive amount of myself on Q1, however I’d say, we’ve been — we’re actually mirroring inflation and so we need to be sure we don’t get two and half of accelerating costs. We actually don’t need to get too off tempo with inflation. And so if — relying on what your view is of the macro local weather, you’re seeing the Fed and the states signaling they’re going to must be extra aggressive enhance charges, however they’re type of being just a little extra cautious and issues.
So I imply my hope is that inflation has possibly peaked, we’ll see, however it’s nonetheless presumably pinching just a little bit up some rates of interest, however won’t translate into the inflation, actually banks maintain the road and so to maintain it at a extra acceptable stage for customers.
So most of that possibly we’re, however we’ll see. We’ll must type of be near the market, however we’re not simply going to type of robotically preserve growing costs, as a result of we all know that may harm our site visitors.
And we now have a really, very value-oriented buyer for each manufacturers that we need to preserve. We need to preserve them coming again, present nice worth, however we additionally need to seize a few of the different varieties of buyer demographics that maybe aren’t as price-sensitive the place we are able to get some value.
So we’re going to be very even handed about that and possibly extra so. My sense of you’d in all probability be — I can’t — I don’t have a crystal ball. I can’t predict precisely, after all. However I feel my sense proper now, not less than could be that you simply in all probability see much less value will increase versus the final two years this yr. However we’ll must see how the market evolves.
Nice. That is smart. And I’m curious how your menu innovation pipeline seems to be like for 2023?
Yeah. I suppose we now have a brand new culiminary shelf on Board, who’s actually received some nice concepts. So I feel Gourmand Thins is one instance at Pizza 73 that I discussed. I feel that’s a extremely attention-grabbing one.
I feel we’re at all times issues that operationally make sense for our operators that hopefully gained’t be a large quantity of incremental labor for them. We would like it to be very possible for them to function, execute and become profitable on what they promote.
So, however issues like Foutine are very, very efficient there and that’s an instance of what we’ve performed, we had success with hen sandwiches. We’ve had success with various kinds of wing sauces and issues like that.
So I feel we’ll attempt to nonetheless be very inventive and keep in contact with client developments and what’s in style and actually provide objects that on both on an LTL foundation or on a everlasting foundation in the event that they’re profitable sufficient and we see sticky demand, we’ll preserve doing them.
So we — I don’t need to get too forward of ourselves when it comes to what we would have for the remainder of the yr on both model. However I feel Gourmand Thins is an efficient instance. We additionally did the Espresso Crisp final yr, which I feel was very nice for us to experiment with the dessert pizza and we need to have type of combined views on that. It’s in in style in some areas and never as in style in different areas and that one turned out to be pretty arduous to execute for our shops.
So we stated we might not preserve that one. That was extra of an LTO, however we’re additionally what else can we exchange that with and since we predict that’s an essential piece of your meal or your dinner deserve plans. So we’ll preserve in search of areas like that.
We’ve additionally been profitable with add-on objects reminiscent of ice cream and issues like that. And we even have many licensed places promoting beer for in-store and for supply as nicely. So I feel there’s numerous totally different arrows in our quiver, some actually meals associated with pizza hen, however some which can be just a little extra on the margin.
Okay. That’s nice. And have you ever now absolutely lap the COVID impression and do you are feeling that gross sales have absolutely recovered to pre-COVID ranges?
I feel for probably the most half, I feel, Christine shall be higher with the numbers than me. However I feel we actually surged remarkably again, I feel, issues like, cadence demand, your faculties being again in-person, hockey being again on, different sports activities, that’s all helped.
And — however I feel our — when it comes to pre-COVID quantity, I’m undecided Christine. I feel it relies upon once you return actually versus 2021, 2020. For those who return to first 2019, I feel, we would nonetheless be shy on orders, Appropriate, Christine, you in all probability right me.
However I feel…
Yeah. That’s right.
Gross sales are positively low. Is that proper? Okay.
Yeah. That’s right. And when it comes to lapping COVID, we’re nonetheless in lockdown throughout January and February of 2022 as a result of Omicron surge. So Q1 of 2023 shall be in comparison with a COVID interval. However as soon as we previous March and April, we shall be like-for-like no COVID impression on our outcomes.
Yeah. So this yr after this quarter, subsequent quarter.
Okay. That sounds nice. And so now COVID has — whereas COVID is essentially behind you. I’m curious for those who might speak about a few of the initiatives that you simply stay up for this yr to drive natural development going ahead?
In order Paul type of talks a couple of piece of 73, we are able to focus on it. We’ve got a brand new web site that was launched on the February twenty eighth. In order that’s purely natural transactions, selling our model and our expertise platforms and as nicely this week launching the Gourmand Skinny providing by way of our natural channels of Pizza 73 is unquestionably a method that we try to convey the model again into give attention to a pure natural platform.
At Pizza Pizza Paul has spoken earlier about our mounted charge pizzas and our Everybody’s Deserves Pizza platform and our messaging that we’re going to be utilizing all through 2023 in numerous [inaudible] methods. So, as Paul talked about, we had a business that got here out in January of this yr, very a lot about making use of for a set charge mortgage, however a set charge pizza.
So we’re going to be utilizing that platform and it’s leveraging our each model belongings on our natural platform. So affords and specials which you can solely get by way of us, not on third-party apps. So we wish individuals to return again to our shops, order from us organically. It’s significantly better for our franchisees. It drives site visitors. And as Paul talked about, one of the simplest ways to assist our franchisee profitability is to get topline gross sales and site visitors again into our shops.
Okay. That’s nice. Do you’ve got any updates in your Mexico grasp franchise, and in that case, what are your expectations for that on this yr?
Proper. That’s level. We’re getting very shut on our first three shops there which can be virtually performed development. So we’ll have extra to say in coming quarters, however we anticipate a gap down there of two, three of these shops — two or three and definitely within the subsequent couple of months is what we count on, and I might say, virtually actually by Might.
So we’re beginning slowly there, however we’ve been actually pleased with the connection thus far and coaching lots of people up right here and are chasing down there so much. And we’re fairly enthusiastic about that market, though we’re beginning small. So Guadalajara goes to be our begin. We like what we’ve performed thus far and we’ll have extra to say in future quarters on that one.
Okay. Sounds nice. Possibly one final one for me, how do you characterize the well being of your franchisees given the aggressive setting as an trade and the market outlook?
I feel, Christine, shall be nearer to the numbers general, however I feel, we’re general very snug, whether or not after we drive topline gross sales and order rely, that’s simply clearly interprets into extra cash stream per retailer for our franchisees. So I feel they’ve weathered this very nicely.
I imply COVID was horrendous for everyone. However I feel that we have been in a position to get some help in some circumstances, see the loans and whatnot. After which as soon as that ended, I imply, I feel, we’ve been in a position to spring again with such a surge of momentum, however they’ve actually bounced again themselves financially as nicely.
So I feel we’re general doing actually fairly nicely. I imply we do really feel like we now have to have a self-discipline, if we now have power underperformers, like I discussed, that we’ll look to shut shops or change franchisee if needed. However we’re additionally very even handed about I feel how we stream individuals, how we display screen actual property and provides individuals the most effective likelihood to verify they’re the correct match for us and likewise be sure they’ve an awesome location that may put them in good market place.
So I feel, general, it’s nonetheless a really aggressive enterprise, however I feel we’re lagging the hole between ourselves, and as an illustration, unbiased gamers and people which can be actually struggling that don’t have an natural supply platform or drivers, as an illustration, whether or not they’re pizza or burgers or different merchandise. I imply individuals are paying enormous sticker costs to those third-party supply corporations and equally they get their meals delivered.
And we use these corporations just a little bit too for marginal acquisitions of recent clients as nicely, as a result of we realized some individuals solely use these channels. We’ve got a technique to win them over to us organically by way of QR codes on our pizza containers and different enticements, loyalty and issues like that to get them to return to us in a less expensive method.
So we predict financially and efficiency-wise, we’ve received great economies of scale and our comfort is phenomenal as nicely. And for smaller gamers and QSR, I feel, it’s a really arduous for them to have a severe supply channel to afford the commissions which can be being charged by these giant third-party aggregators.
And we’ve additionally made our apps extra handy, I ought to point out, too. We’re truly, I feel, virtually throughout the nation now with our monitoring — order monitoring capabilities in order that once you do order with us on our app, you’ll be able to monitor the motive force and see the place they’re on a map, a really very like a third-party platform does.
So we’ve additionally I feel shut the comfort hole that existed there, making it extra handy and extra pleasing to the shopper, understanding the place their pizza is and when it’s going to reach at their doorstep. So there’s a comfort side of recent expertise and conveniences and making it quicker and simpler to order with us, irrespective of the way you need to get your order from us.
Okay. That’s very useful. Really, I’ve one other one, if I could. So I believed that you’ve a really sturdy Hen Pizza [ph] opening and really sturdy content material charge outlook as nicely. So, simply curious for those who might share a few of your ideas behind your 3% to 4% present expectation within the conventional community? Thanks.
Okay. I didn’t fairly hear the very starting what you stated, Sherif. I feel you particularly talking about restaurant development community growth charge of three% or so. Is that right?
Sure. Sure. That’s right.
Yeah. We predict — I imply we’ve been very efficient. Even throughout COVID, we determined to go on offense and I feel it’s actually paid off. And I feel our greatest development areas is actually BC and Quebec. BCs now even rising quicker than Quebec, I might say, however measurement of the Quebec market continues to be larger.
We’ve truly received eating places in Quebec Metropolis now, however a lot of the cluster of our eating places is within the Montreal space, however we’ve been fairly pleased with that development with our sturdy crew on the bottom in that area and so that may proceed to supply alternative for us to develop, in addition to BC, we’ve truly unfold into the inside just a little bit and even Vancouver Island just a little bit, though Decrease Mainland is our essential focus. So we predict we are able to sustain that tempo fairly properly round 3%.
Okay. That’s good. Thanks for reply my questions.
You might be welcome. Thanks, Sherif.
There aren’t any additional questions at the moment. Alexander Sewrattan, please proceed.
Thanks everybody for dialing in right now. If in case you have any additional questions, you’ll find our contact info on our earnings press launch. Thanks.
Girls and gents, this concludes right now’s convention name. Thanks to your participation. You might now disconnect.