Boston Pizza Keeps Growing

Date: AUG 8th, 2007

Topic: Franchise News

Michael Kane, Vancouver Sun

Published: Wednesday, August 08, 2007

Richmond-based Boston Pizza is cementing its status as Canada's largest casual dining chain with plans to open 40 more restaurants over the course of 2007.

Also this year, franchisees will renovate 24 locations as part of their contractual obligation to upgrade to the latest design standards every seven years.

"It is a win-win arrangement for all concerned, as newly renovated locations can generate substantial new business," chief executive Mike Cordoba said Wednesday.

"Historically, same-store sales growth for renovated locations has averaged 10 to 15 per cent in the year following the renovation." So far this year, 15 Boston Pizza outlets have completed major renovations and one was moved to a better location. Nine new restaurants have opened, and Cordoba said he is confident that about 40 planned new openings will be achieved by the end of the year, despite construction delays and labour shortages in Western Canada.

 Boston Pizza Royalties Income Fund posted record second-quarter franchise sales of $146.3 million Wednesday, up 22 per cent from the same period last year. Royalty income from the fund's pool of 266 restaurants across Canada rose to $5.9 million over the quarter, from $4.8 million a year ago.

"This figure is well in excess of the overall growth rate in Canadian food services," Cordoba told analysts. "It reflects the addition of 40 net new royalty pool stores on Jan. 1, 2007, plus the 6.7 per cent same-store sales growth achieved in the second quarter."

Boston Pizza boasts industry leading same-store sales growth averaging 6.5 per cent annually over the last 10 years.

On Wednesday, the fund's trustees declared a monthly cash distribution of 11.3 cents for July, the 61st consecutive monthly distribution since the fund's inception. During that time there have been 12 distribution increases for a total of 35.6 per cent, said chief financial officer Mark Powell.

 Marketing efforts which contributed to the fund's performance in the second quarter included a "Simply Italian" campaign in April and an NHL playoff promotion in collaboration with Molson, Cordoba said. Boston Pizza also rolled out a new menu nationwide which includes 14 new items and highlights specific items under the national health check program. The chain has eliminated all industrially added trans fats.

Boston Pizza's national marketing budget is linked to franchise sales and funded entirely by franchisees.

"With a 21-per-cent increase in franchise sales posted year-to-date, we've already begun to deploy more marketing resources to drive customer traffic in the second half of 2007," Cordoba said.

Upcoming initiatives include NFL and NHL pre-season sports bar promotions and new national TV ads in the fall. With 275 stores in operation today, Cordoba said Boston Pizza is the largest casual dining chain in Canada.

"We feel there is room to grow the chain for many more years to come . . . and we believe that Boston Pizza will continue to outperform overall growth in the full-service restaurant sector."