A&W FOOD SERVICES OF CANADA INC. ANNOUNCES THIRD QUARTER RESULTS FOR FISCAL 2025
VANCOUVER, BC, Oct. 17, 2025 /CNW/ - A&W Food Services of Canada Inc. (TSX: AW) ("A&W", "Food Services", "we" or "our") today announced its financial results for the 12 and 36-week periods ended September 7, 2025.
All references to "Q3 2025" are to Food Services' 12-week period ended September 7, 2025, to "YTD 2025" are to Food Services' 36-week period ended September 7, 2025, to "Q3 2024" are to Food Services' 12-week period ended September 8, 2024 and to "YTD 2024" are to Food Services' 36-week period ended September 8, 2024. The fiscal 2025 year is 52 weeks and ends on December 28, 2025 ("Fiscal 2025").
"We are pleased to report our third consecutive quarter of positive Same Store Sales Growth, a significant achievement amidst a challenging macroeconomic environment which continues to create headwinds for sales at A&W restaurants" announced Susan Senecal, Chief Executive Officer. "The Q3 2025 Same Store Sales Growth(i) of 1.4% is a reflection of a positive response to A&W's marketing campaigns and value offerings, which have resonated with guests who are looking for both great taste and value," added Ms. Senecal. "Through the first three quarters of 2025, we've achieved System Sales Growth(i) of 2.9% which is attributed to both the positive Same Store Sales Growth and the opening of new A&W restaurants which is supported by our partnership with Suncor."
| (i) System Sales Growth and Same Store Sales Growth are non-IFRS ratios and supplementary financial measures. Please see the "Non-IFRS Measures" section of this news release for further details. |
Q3 FINANCIAL HIGHLIGHTS
For Q3 2025, compared to Q3 2024
- System Sales (i) of $479.6 million increased by $14.5 million (3.1%)
- Revenue decreased by $4.8 million (6%) to $71.2 million, due to the timing of new A&W restaurant openings which resulted in seven fewer openings in Q3 2025 as compared to Q3 2024
- Income before income taxes increased by $14.6 million (163%) to $23.6 million
- Adjusted EBITDA (i) increased by $1.1 million (5%) to $25.8 million
- Operating costs decreased by $14.2 million (31%) to $31.8 million, of which $7.0M is attributable to decreased marketing-related costs incurred by the National Advertising Fund
- General and administrative expenses were consistent at $10.8 million
- Cash Dividend of $0.480 per share declared on September 2, 2025
- Opened 3 new A&W restaurants
| (i) |
System Sales and Adjusted EBITDA are non-IFRS financial measures. Please see the "Non-IFRS Measures" section of this news release for further details. |
SUMMARY OF RESULTS
| (in thousands of Canadian $) |
Q3 2025 |
|
Q3 2024 |
|
YTD 2025 |
|
YTD 2024 |
| Financial Summary |
|
|
|
|
|
|
|
| Revenue from franchising |
65,301 |
|
69,940 |
|
184,215 |
|
181,986 |
| Revenue from corporate restaurants |
5,904 |
|
6,061 |
|
16,900 |
|
17,117 |
| Total revenue |
71,205 |
|
76,001 |
|
201,115 |
|
199,103 |
| Operating costs |
(31,773) |
|
(45,962) |
|
(101,740) |
|
(108,080) |
| General and administrative expenses |
(10,786) |
|
(10,762) |
|
(32,796) |
|
(33,578) |
| Royalty expense |
- |
|
(13,742) |
|
- |
|
(38,260) |
| Net finance expense |
(3,615) |
|
(233) |
|
(11,149) |
|
(1,067) |
| Loss on interest rate swap |
(1,420) |
|
- |
|
(2,177) |
|
- |
| Amortization of deferred gain |
- |
|
880 |
|
- |
|
2,641 |
| Share of income from associates |
- |
|
2,786 |
|
- |
|
8,230 |
| Income before income taxes |
23,611 |
|
8,968 |
|
53,253 |
|
28,989 |
| Income tax expense |
(6,053) |
|
(2,482) |
|
(13,912) |
|
(6,198) |
| Net income |
17,558 |
|
6,486 |
|
39,341 |
|
22,791 |
| Net cash generated from operating activities |
17,200 |
|
26,976 |
|
22,501 |
|
45,074 |
| Other Metrics |
|
|
|
|
|
|
|
| System Sales(i) |
479,607 |
|
465,104 |
|
1,328,822 |
|
1,291,682 |
| System Sales Growth(i) |
3.1 % |
|
0.4 % |
|
2.9 % |
|
1.3 % |
| Same Store Sales Growth(i) |
1.4 % |
|
-1.0 % |
|
1.3 % |
|
0.0 % |
| Net annual restaurant unit growth(ii) |
1.4 % |
|
2.0 % |
|
1.4 % |
|
2.0 % |
| Adjusted EBITDA(i) |
25,793 |
|
24,677 |
|
70,714 |
|
65,542 |
| (i) |
System Sales, System Sales Growth, Same Store Sales Growth, and Adjusted EBITDA are non-IFRS financial measures, non-IFRS ratios and supplementary financial measures. Please see the "Non-IFRS Measures" section of this news release for further details. |
| (ii) |
Net annual restaurant unit growth reflects the percent increase in A&W restaurants at the ending of the reporting period as compared to the end of the prior year comparable reporting period on a trailing 4 quarter basis. |
On October 17, 2024, A&W completed a transaction (the "Transaction") in which Food Services indirectly acquired the trademarks used in the A&W business in Canada through the acquisition of all of the units of A&W Revenue Royalties Income Fund (the "Fund") which it did not already own. Due to the Transaction, the financial results for Q3 2025 are not directly comparable to the financial results for Q3 2024.
For further information regarding the Transaction, please refer to Food Services Q3 2025 Management's Discussion and Analysis ("MD&A") and Food Services' Annual MD&A for the 52-week period ended December 29, 2024, both of which are available on Food Services' SEDAR+ profile at www.sedarplus.ca., as well as the Fund's management information circular dated August 29, 2024 available on the Fund's SEDAR+ profile at www.sedarplus.ca.
Q3 2025 Results Compared to Q3 2024
Total revenue decreased by $4.8 million primarily due to a difference in the timing of restaurant openings. There were seven fewer openings in Q3 2025 compared to Q3 2024, as the timing of restaurant openings is subject to various factors and fluctuates each quarter. New restaurant openings impact the revenue generated from the sale of equipment and the revenue associated with turnkey restaurants and as such the lower number of openings in Q3 2025 led to a reduction in those streams of revenue, when compared to Q3 2024.
System Sales(i) increased 3.1% in Q3 2025 (0.4% in Q3 2024) due to an increase in the number of A&W restaurants and the 1.4% Same Store Sales Growth(i) achieved in Q3 2025. Revenue from service fees, contributions to the National Advertising Fund ("NAF") and revenue generated from the distribution of food and supplies fluctuate with the movement in System Sales and as such, were up quarter over quarter and partially offset the decrease in revenue related to new restaurant openings. The increase in service fee revenue also reflects the continuing migration of A&W restaurants from a 2.5% to a 3.5% service fee rate, leading to a higher weighted average service fee rate and margin expansion in Q3 2025.
Same Store Sales Growth(i) for Q3 2025 was 1.4%, due to an increase in both average cheque size and guest counts. The growth in guest counts demonstrates the ongoing success of our marketing campaigns, which we began to see positive impacts from in Q1 2025 and reflects the attractiveness of our value offerings in the current consumer market, including our Value Deals menu, which was introduced in Q3 2025 and features a variety of menu items priced under $4.00. The increase in average cheque size is partially attributed to industry-wide inflation affecting goods, services, and labour. Same Store Sales Growth is impacted by shifts in guest counts, cheque size (including party size, menu prices, and menu mix), and changes in consumer discretionary spending. On August 21, 2025 we held our 17th annual Burgers to Beat MS Day, an annual campaign where $2.00 from every Teen Burger sold is donated to MS Canada. We celebrated another successful campaign and surpassed the number of Teen Burgers sold during the 2024 campaign.
Income before income taxes increased by $14.6 million in Q3 2025 largely as a result of the cessation of the royalty expense following the completion of the Transaction and also due to a decrease in operating costs, partially offset by a decrease in revenue and an increase in net finance expense and loss on interest rate swap as well as the cessation of the income from associates and amortization of deferred gain following completion of the Transaction. In Q3 2025 the NAF's contributions exceeded its expenses by $4.5 million whereas in Q3 2024, the NAF's expenses exceeded its contributions by $3.3 million resulting in a $7.8 million quarter over quarter variance in net income before taxes due to the timing of expenses incurred by the NAF. The remaining decrease in operating costs is correlated with the decrease in revenue discussed above and is due to seven fewer new A&W restaurants opened in the quarter.
Food Services reported net income per share of $0.71 ($0.71 per diluted share) in Q3 2025 versus net income per share of $0.42 ($0.42 per diluted share) in Q3 2024 due to the increase in income attributable to shareholders of Food Services, partially offset by the weighted average number of shares outstanding increasing as a result of the Transaction and the issuance of stock-based compensation.
In order to improve comparability of net income per share, the number of shares used to calculate the net income per share for Q3 2024, has been adjusted to reflect the equivalent number of common shares of Food Services that were outstanding after the reorganization that was undertaken as part of the Transaction.
Adjusted EBITDA(i) increased by $1.1 million to $25.8 million ($24.7 million in Q3 2024) largely due to decrease in operating costs, excluding items such as NAF expenses that are added back for the purposes of calculating Adjusted EBITDA as it represents a timing difference between advertising expenditures and NAF contributions. The decrease in operating expenses was partially offset by the decrease in revenue, however, on a net basis it reflects an increase in margin that was driven by the growth in System Sales. Adjusted EBITDA Margin(i) increased from 32.5% in Q3 2024 to 36.2% in Q3 2025.
On September 2, 2025 Food Services declared a cash dividend of $0.480 per share and remains committed to maintaining such level of quarterly dividends for the foreseeable future.
| (i) System Sales, System Sales Growth, Adjusted EBITDA, Adjusted EBITDA Margin and Same Store Sales Growth are non-IFRS financial measures, non-IFRS ratios and supplementary financial measures. Please see the "Non-IFRS Measures" section of this news release for further details. |
YTD 2025 Results Compared to YTD 2024
Total revenue increased by $2.0 million to $201.1 million which was driven by the 2.9% increase in System Sales(i) (1.3% for YTD 2024) which reflects an increase in the number of A&W restaurants and YTD 2025 Same Store Sales Growth(i) of 1.3% that is attributable to an increase in the average cheque size. Same store guest counts are consistent with YTD 2024 due to a slight decline in same store guest counts in Q1 2025 which was attributed to severe weather in certain geographical regions being offset by positive guest count growth in Q2 2025 and Q3 2025 due to the success of our marketing campaigns. Revenue from service fees, contributions to the NAF and revenue generated from the distribution of food and supplies fluctuate with the movement in System Sales and as such, were up year over year. The increase in service fee revenue also reflects the migration of A&W restaurants from a 2.5% to a 3.5% service fee rate, leading to a higher weighted average service fee rate and margin expansion. The increases were partially offset by a decrease in revenue related to new restaurants as Food Services has opened five fewer new A&W restaurants in YTD 2025 as compared to YTD 2024. The timing of restaurant openings is subject to various factors and fluctuates each quarter.
Income before income taxes increased by $24.3 million largely as a result of the cessation of the royalty expense following the completion of the Transaction, an increase in revenue and a decrease in operating costs and general and administrative expenses. These increases were partially offset by an increase in the loss on interest rate swap and net finance expense as well as the cessation of the income from associates and amortization of deferred gain following completion of the Transaction.
Food Services reported net income of $39.3 million in YTD 2025 compared to net income of $22.8 million in YTD 2024 due to the factors discussed above and a $7.7 million increase in income tax expense due to an increase in taxable income which is largely due to the cessation of the royalty expense following completion of the Transaction. The amortization of deferred gain and income from associates recognized in YTD 2024 were not taxable and therefore diluted the effective tax rate in YTD 2024.
Food Services reported net income per share of $1.59 ($1.59 per diluted share) in YTD 2025 versus net income per share of $1.51 ($1.51 per diluted share) in YTD 2024 due to the increase in income attributable to shareholders of Food Services, partially offset by the weighted average number of shares outstanding increasing as a result of the Transaction and the issuance of stock-based compensation.
In order to improve comparability of net income per share, the number of shares used to calculate the net income per share for YTD 2024, has been adjusted to reflect the equivalent number of common shares of Food Services that were outstanding after the reorganization that was undertaken as part of the Transaction.
Adjusted EBITDA(i) increased by $5.2 million to $70.7 million ($65.5 million for YTD 2024) due to the increase in revenue and decrease in operating costs general and administration expenses (excluding depreciation, NAF related expenses and other items included in general and administration expenses and operating costs that are added back for the purposes of calculating Adjusted EBITDA). Adjusted EBITDA Margin(i) increased from 32.9% in YTD 2024 to 35.2% in YTD 2025.
Full quarterly results are available on Food Services' SEDAR+ profile at www.sedarplus.ca.
| (i) System Sales, System Sales Growth, Adjusted EBITDA, Adjusted EBITDA Margin and Same Store Sales Growth are non-IFRS financial measures, non-IFRS ratios and supplementary financial measures. Please see the "Non-IFRS Measures" section of this news release for further details. |
2025 OUTLOOK
Food Services' annual financial guidance for Fiscal 2025, along with its underlying assumptions, remains consistent with the ranges announced on May 2, 2025:
- Adjusted EBITDA(i) to be between $96 million and $101 million ($93.5 million in Fiscal 2024, Income before income taxes of $50.0 million in Fiscal 2024);
- Total A&W restaurants to be between 1,085 and 1,100 by the end of Fiscal 2025 (1,073 by end of Fiscal 2024);
- Annual System Sales Growth(i) of 1.5% - 4.5% (0.8% in Fiscal 2024); and
- Annual Same Store Sales Growth(i) of 0.0% - 3.0% (-0.6% in Fiscal 2024).
| (i) System Sales Growth, Adjusted EBITDA and Same Store Sales Growth are non-IFRS financial measures, non-IFRS ratios and supplementary financial measures. Please see the "Non-IFRS Measures" section of this news release for further details. |
CONFERENCE CALL
A&W will hold a conference call to discuss its Q3 2025 results on Friday, October 17, 2025 at 1:00 p.m. Pacific Time (4:00 p.m. Eastern Time).
The call will be webcast live and may be accessed at https://events.q4inc.com/attendee/798309984. Participants who wish to ask questions will need to register in advance of the conference call using the following link: https://events.q4inc.com/analyst/798309984?pwd=%3DWRo%402d5.
For those unable to attend the live call, a replay will be made available for one year at https://events.q4inc.com/attendee/798309984.
NON-IFRS MEASURES
This news release makes references to certain non-IFRS measures. These measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Food Services believes that disclosing these non-IFRS measures provides readers of this news release with important information regarding Food Services' financial performance. By considering these measures in combination with IFRS measures, Food Services believes that readers are provided with additional and more useful information about Food Services than readers would have if they simply considered IFRS measures alone. We use non-IFRS financial measures including "System Sales", "EBITDA", and "Adjusted EBITDA"; the non-IFRS ratios of "System Sales Growth" and "Adjusted EBITDA Margin" and non-IFRS supplementary financial measures such as "Same Store Sales Growth".
These non-IFRS measures, ratios and supplementary financial measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We believe that securities analysts, investors and other interested parties frequently use non-IFRS measures and industry metrics in the evaluation of issuers. A&W's management also uses non-IFRS measures and industry metrics to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. The non-IFRS measures reported by Food Services do not have a standardized meaning prescribed by IFRS and Food Services' method of calculating these measures may differ from those of other issuers or companies and may not be comparable to similar measures used by other issuers or companies. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS.
Certain information, including definitions, about non-IFRS financial measures, non-IFRS ratios, and supplementary financial measures is found in Food Services' Q3 2025 MD&A (and, in the case of Fiscal 2024 results, in Food Services Q4 2024 MD&A) and is incorporated by reference. This information is found in the sections entitled "How We Assess the Performance of our Business", "Non-IFRS Measures" and "Selected Financial Information" of Food Services' Q3 2025 MD&A (and, in the case of Fiscal 2024 results, in Food Services' Q4 2024 MD&A) which is available on Food Services' SEDAR+ profile at www.sedarplus.ca. Reconciliations for each non-IFRS financial measure can be found below.
| (in thousands of Canadian Dollars) |
|||||||
| |
|||||||
| Reconciliation of System Sales to Revenue from Corporate Restaurants : |
Q3 2025 |
|
Q3 2024 |
|
YTD 2025 |
|
YTD 2024 |
| |
|
|
|
|
|
|
|
| Revenue from corporate restaurants |
5,904 |
|
6,061 |
|
16,900 |
|
17,117 |
| Sales reported by franchised restaurants |
473,703 |
|
459,043 |
|
1,311,922 |
|
1,274,565 |
| System Sales |
479,607 |
|
465,104 |
|
1,328,822 |
|
1,291,682 |
| |
|||||||
| Reconciliation of EBITDA and Adjusted EBITDA to Income before income taxes: |
Q3 2025 |
|
Q3 2024 |
|
YTD 2025 |
|
YTD 2024 |
| Income before income taxes |
23,611 |
|
8,968 |
|
53,253 |
|
28,989 |
| Depreciation of plant, equipment, intangible assets and right-of-use assets |
1,442 |
|
1,440 |
|
4,624 |
|
4,191 |
| Amortization of deferred gain |
- |
|
(880) |
|
- |
|
(2,641) |
| Net finance expense |
3,615 |
|
233 |
|
11,149 |
|
1,067 |
| EBITDA |
28,668 |
|
9,761 |
|
69,026 |
|
31,606 |
| |
|
|
|
|
|
|
|
| Adjustments to EBITDA: |
|
|
|
|
|
|
|
| Income before taxes attributable to non-controlling interest in A&W Beverages |
(597) |
|
(499) |
|
(1,609) |
|
(1,284) |
| Royalty expense |
- |
|
13,742 |
|
- |
|
38,260 |
| Share of income from associates |
- |
|
(2,786) |
|
- |
|
(8,230) |
| Net loss on disposal of plant and equipment |
- |
|
636 |
|
23 |
|
636 |
| Unrealized loss (gain) on foreign exchange |
2 |
|
18 |
|
(5) |
|
37 |
| Unrealized loss in interest rate swap |
1,420 |
|
- |
|
2,177 |
|
- |
| Stock-based compensation |
459 |
|
- |
|
1,057 |
|
- |
| (Income) loss related to the NAF(i) |
(4,463) |
|
3,325 |
|
(119) |
|
3,325 |
| Recovery of capitalized costs |
- |
|
(335) |
|
(758) |
|
(446) |
| Start up net losses on Pret |
304 |
|
535 |
|
922 |
|
1,358 |
| Transaction costs |
- |
|
280 |
|
- |
|
280 |
| Adjusted EBITDA |
25,793 |
|
24,677 |
|
70,714 |
|
65,542 |
| (i) |
Under IFRS, income or loss is recognized when the NAF is in deficit position. The income or loss is calculated as the change in the deficit balance during the reporting period. This income or loss is excluded from Adjusted EBITDA, as it represents timing differences between advertising expenditure and NAF contributions. |
FORWARD-LOOKING INFORMATION
Certain statements in this news release contain forward-looking information within the meaning of applicable securities laws in Canada. The words "anticipates", "believes", "budgets", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "schedule", "should", "will", "would", "outlook" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words.
The forward-looking information in this news release includes but is not limited to: the expectations that Food Services will continue to pay dividends at the current level; and Food Services' 2025 outlook.
The forward-looking information, including the 2025 outlook, is based on assumptions that management considered reasonable at the time it was prepared, which assumptions include, but are not limited to:
- there are no changes in availability of experienced management and hourly employees;
- there are no material changes in government regulations concerning menu labelling and disclosure and drive-thru restrictions;
- no incidences of food borne illness;
- no material changes in competition;
- no material impact to supply chain availability, cost of inputs or franchisee ability to operate because of the actual or threatened tariffs;
- no material impact to consumer discretionary spending due to changes in economic conditions including economic recession or changes in the rate of inflation or deflation, employment rates and household debt, political uncertainty, interest rates, currency exchange rates, derivative and commodity prices or actual or threatened tariffs;
- no material increases in food and labour costs;
- the continued availability of quality raw materials;
- continued additional franchise sales and maintenance of franchise operations;
- A&W is able to maintain and grow the current system of franchises;
- Suncor being able to execute their development plan to open new A&W restaurants in their Petro-Canada retail locations;
- A&W is able to locate new retail sites in desirable locations;
- A&W is able to obtain qualified operators to become A&W or Pret franchisees;
- A&W franchisees are able to successfully operate and grow their businesses, maintain profitability and consistently pay rent and other payments required under their leases;
- no material impact from new or increased sales taxes upon gross sales;
- no material impact on sales from new or increased fees related to third-party delivery services;
- continued ability to preserve intellectual property;
- no material litigation from suppliers, franchisees, key partners or guests at A&W or Pret restaurants;
- Food Services can continue to comply with its obligations under its credit arrangements;
- the projections for the A&W business provided by management are accurate; and
- A&W will be successful in executing on its business strategies and such strategies will achieve their intended results.
Inherent in forward-looking information are risks and uncertainties beyond management's or Food Services' ability to predict or control that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. The forward-looking information in this news release is subject to risks, uncertainties and other factors including, among others, the risks identified in Food Services' Q3 2025 MD&A and Food Services' annual information form for the period ended December 29, 2024, ("AIF") under the heading "Risk Factors". The Q3 2025 MD&A and AIF are both available on Food Services' SEDAR+ profile at www.sedarplus.ca. Additional risks and uncertainties not currently known to Food Services or that are currently not considered to be material also may impair Food Services' business.
All forward-looking information in this news release is qualified in its entirety by this cautionary statement and, except as required by law, Food Services undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date hereof.
INVESTOR COMMUNICATIONS
For important updates and information regarding A&W, including the timing of future earnings calls, visit A&W's investor relations website at www.awinvestors.ca. A&W uses this website as a primary channel for disclosing key information to its investors.
ABOUT FOOD SERVICES
A&W is a publicly traded company and is the second largest quick-service hamburger restaurant chain in Canada. Operating coast-to-coast, A&W restaurants feature famous trade-marked menu items such as The Burger Family®, Chubby Chicken® and A&W Root Beer®. A&W's shares are listed for trading on the Toronto Stock Exchange in Canada under the trading symbol "AW".
SOURCE A&W Food Services of Canada Inc.
For further information: Kelly Blankstein, Chief Financial Officer, 604-988-2141, Email: [email protected], www.awinvestors.ca
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