Hello, this is the Chorus Call Conference Operator. Thank you for standing by. Welcome to Boston Pizza's Fourth Quarter Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded on February 14th, 2024 . After the presentation, there will be a question-and-answer session. Participants on the call may also pose their questions via email to Boston Pizza's investor relations department at investorrelations@bostonpizza.com. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Michael Harbinson, Chief Financial Officer. Please go ahead.
Thank you, and welcome to the call. Today, we'll be discussing the 2023 fourth quarter results for Boston Pizza Royalties Income Fund for the fund and for Boston Pizza International, or BPI. For complete details on our financial results, please see our fourth quarter materials filed earlier today on SEDAR+, or visit the fund's website at bpincomefund.com. Should you require additional information after the call, you can reach us via the investor relations phone number that is listed in our press release. The fund is a limited purpose, open-ended trust established under the laws of British Columbia to acquire, indirectly, certain trademarks and trade names used by BPI and its Boston Pizza restaurants in Canada. BPI pays royalty and distribution income to the fund based on franchise revenues of royalty pool restaurants.
For a complete description of the fund and its business, please see the annual information form dated February 13th, 2024, which was filed on sedarplus.ca. Before I turn the call over to Jordan Holm, President of BPI, I'd like to note that certain information in the following discussion may constitute forward-looking information. For a more complete definition of forward-looking information and the associated risks, please refer to the fund's management discussion and analysis issued earlier today. Forward-looking information is provided as of the date of this call, and except as required by law, we assume no obligation to update or revise forward-looking information to reflect new events or circumstances. With that, I will turn the call over to Jordan. Jordan?
Thank you, Michael, and welcome everyone to Boston Pizza's fourth quarter investor conference call. Today, I'll be discussing our fourth quarter results and share a brief outlook. Michael will then summarize our key financial highlights. As usual, we'll leave time for your questions at the end of today's call. We are pleased that our positive sales continued fourth quarter of 2023. Turning to our financial results, the fund posted franchise Sales from restaurants in the royalty pool of CAD 227.7 million for the quarter and CAD 925.7 million for the year, representing increases of 0.2% and 8.3%, respectively, versus the same periods one year ago. Same Restaurant Sales was up 0.6% for the quarter and 8.7% for the year.
SRS for the quarter was principally due to an increase in average guest check due to menu pricing. SRS for the year was principally due to increases in restaurant guest traffic compared to 2022 and average guest check due to a combination of menu pricing and larger per guest ordering levels. COVID-19 restrictions existed in most of the country during 2021 and the first quarter of 2022 and a part of the second quarter of 2022 that negatively impacted in-restaurant guest traffic. Those restrictions were largely eliminated during the second quarter of 2022. From a marketing standpoint, we began the fourth quarter of 2023 with our Hockey Night in Canada partnership, which was supported by significant TV, digital, and social media channels, along with in-restaurant promotions at participating Boston Pizza restaurants across the country.
In addition to this, we launched our 2023 holiday menu, which featured a selection of innovative items, along with a promotion bonus card offer. Guests also received a free Ferrero Rocher three pack of chocolates with the purchase of any qualifying holiday menu item. We had the highest gift card sales in 2023 than we've had in any previous year, helped by a successful year-end holiday gift card promotion. Turning to restaurant development, one restaurant opened, four restaurants were closed, and nine restaurants were renovated during the quarter. During the year, one restaurant opened, six restaurants were closed, and 20 restaurants were renovated. The quarter saw the first opening of a new Boston Pizza restaurant since 2020. We have some exciting initiatives planned to drive sales in the first quarter of 2024, which I'll speak about in a moment.
First, I'll turn the call back to Michael for a review of the fund's financial performance. Michael?
Thank you, Jordan. The fund posted royalty income of CAD 9.1 million for the quarter and CAD 37 million for the year, compared to CAD 9.1 million and CAD 34.2 million, respectively, for the same periods one year ago. The fund posted distribution income of CAD 3 million for the quarter and CAD 12.2 million for the year, compared to CAD 3 million and CAD 11.3 million for the same periods one year ago. The royalty and distribution income for the quarter and the year were based on 377 Boston Pizza restaurants in the royalty pool that reported franchise sales of CAD 227.7 million for the quarter and CAD 925.7 million for the year.
For the same periods in 2022, royalty and distribution income were based on the royalty pool of 383 Boston Pizza restaurants, reporting franchise sales of CAD 227.2 million for the fourth quarter and CAD 855 million in 2022. The Fund's net and comprehensive income was CAD 5.2 million for the quarter and CAD 29.6 million for the year, compared to CAD 6.2 million and CAD 30.6 million for the same periods in 2022.
The CAD 1.2 million decrease in the Fund's net and comprehensive income for the quarter compared to the fourth quarter of 2022, was primarily due to a CAD 1.2 million increase in fair value loss and a CAD 0.2 million increase in income tax expense for the quarter, partially offset by a CAD 0.2 million decrease in interest expense on Class B unit liability. The CAD 1 million decrease in the Fund's net and comprehensive income for the year compared to the same period in 2022, was primarily due to a CAD 3.5 million increase in fair value loss and CAD 1.3 million increase in income tax expense for the period, partially offset by a CAD 3.7 million increase in royalty and distribution income.
The Fund's cash flows generated from operating activities were CAD 9.3 million for the quarter and CAD 37.9 million for the year, compared to CAD 8.9 million and CAD 34.4 million for the same periods in 2022. The increase of CAD 0.4 million for the quarter was primarily due to an increase in changes in working capital of CAD 0.2 million and a decrease in income taxes paid of CAD 0.2 million. The increase of CAD 3.5 million for the year was primarily due to an increase in royalty and distribution income of CAD 3.7 million and an increase in changes in working capital of CAD 0.8 million, all partially offset by an increase in income taxes paid of CAD 1.1 million.
While net and comprehensive income or loss and cash flows from operating activities are both measures under IFRS accounting standards or IFRS, the Fund is of the view that net income or loss and cash flows from operating activities both do not provide the most meaningful measurement of the Fund's ability to pay distributions. Net income contains non-cash items that do not affect the Fund's cash flows, whereas cash flows from operating activities is not inclusive of all of the Fund's required cash outflows and therefore is not indicative of cash available for distribution to unitholders. Non-cash items include fair value adjustments on the investment in Boston Pizza Canada Limited Partnership, the Class B unit liability, interest rate swaps, and changes in deferred income taxes.
Consequently, the Fund reports the non-IFRS metrics of distributable cash and payout ratio to provide investors with, in the Fund's opinion, more meaningful information regarding the Fund's ability to pay distributions to unitholders. The Fund generated distributable cash of CAD 7.4 million for the quarter and CAD 30.7 million for the year, compared to CAD 7.2 million and CAD 25.6 million, respectively, for the same periods in 2022. The increase in distributable cash of CAD 0.2 million or 1.8% in the quarter, was primarily due to increased cash flows generated from operating activities of CAD 0.4 million, partially offset by a withholding tax on units adjustment of CAD 0.2 million.
The increase in distributable cash of CAD 5.1 million or 19.8% for the year was primarily due to increased cash flows generated from operating activities of CAD 3.5 million, lower repayments of debt of CAD 1.5 million, and lower interest paid on debt of CAD 0.2 million, partially offset by increased BPI Class B unit entitlement of CAD 0.2 million. The Fund generated distributable cash per unit of CAD 0.346 for the quarter and CAD 1.432 for the year, compared to CAD 0.336 per unit and CAD 1.189 per unit, respectively, for the same periods in 2022.
The increase in distributable cash per unit of CAD 0.01 or 3% in the quarter was primarily due to the increase in distributable cash mentioned earlier, and fewer units outstanding compared to the same period in 2022 due to the Fund's normal course issuer bid that is in effect from June 20th, 2023, to no later than June 19th, 2024. The increase in distributable cash per unit of CAD 0.243 or 20.4% for the year was primarily due to the increase in distributable cash mentioned earlier, and fewer units outstanding compared to the same period in 2022, due to the Fund's NCIB.
The Fund's payout ratio for the quarter was 92.7% and 88.6% for the year, compared to a 115.1% and 99.4% , respectively, for the same periods in 2022. The decrease in the Fund's payout ratio for the quarter was due to the distributions paid decreasing by CAD 1.5 million or 18%, being the result of the special one-time cash distribution to unitholders of CAD 0.085 per unit, which was declared on December 8th, 2022, and was paid on December 30th, 2022, and distributable cash increasing by CAD 0.2 million or 1.8%.
The decrease in the Fund's payout ratio for the year was due to distributable cash increasing by CAD 5.1 million or 19.8%, partially offset by distributions paid, increasing by CAD 1.8 million or 6.8%. The Fund's payout ratio is typically higher in the first and fourth quarters compared to the second and third quarters... Since Boston Pizza restaurants generally experience higher franchise sales levels during the summer months when restaurants open their patios and benefit from increased tourist traffic. As Jordan mentioned earlier, with the recent solid financial performance of Boston Pizza International and the Fund, the Fund increased its monthly distribution rate to CAD 0.113. This is an increase of CAD 0.006 per unit, or 5.6% from the previous monthly distribution rate of CAD 0.107 per unit.
On an annualized basis, the new monthly distribution rate equates to CAD 1.356 per unit, compared to CAD 1.284 per unit for the previous monthly distribution rate. On February 13th, 2024, the trustees of the fund approved the cash distribution for the period of January 1st, 2024 to January 31st, 2024 of CAD 0.113 per unit. This will be paid on February 29th, 2024 to unitholders of record at the close of business on February 21st, 2024. The trustees' objective in setting a monthly distribution amount is that it be sustainable. The trustees will continue to closely monitor the fund's available cash balances, given the fluctuating economic outlook. And with that, I will turn the call back over to Jordan for more on the outlook. Jordan?
Thank you, Michael. Boston Pizza began our first quarter of 2024 with the popular Pasta Tuesday all month long promotion, where guests were able to enjoy pastas every day of the week, starting at just CAD 11.99, and gourmet pastas for CAD 15.99, all January long. This promotion paired perfectly with the lineup of sporting events this winter, as we continued our partnership with Hockey Night in Canada throughout the full regular NHL season. On Saturdays, guests will be offered access to a predictive hockey trivia game with every qualifying purchase and with many great prizes up for grabs throughout the hockey season. In addition, today is our favorite day at Boston Pizza, as we celebrate Valentine's Day with a promotion where heart-shaped pizzas will be served, and CAD 1 from each pizza sold will go to help local charities.
In 2024, Boston Pizza is celebrating its remarkable 60th anniversary, marking six decades of culinary innovation, warm hospitality, and unforgettable dining experiences. From our humble beginnings to becoming a beloved institution, Boston Pizza has been a gathering place for communities across Canada for 60 years. To commemorate this special occasion, throughout this year, we have planned a series of special events, exclusive promotions, and culinary delights that pay homage to our rich history. We continue to be extremely pleased with the efforts of our team and franchisees. However, with supply chain challenges, rising interest rates, and increasing input costs impacting most of the restaurant industry, BPI's management remains cautious. Our management team continues to adapt the business to mitigate these challenges and work diligently to support our franchisees and maintain the positive sales momentum that was achieved in 2023.
With that, I'd like to begin the question and answer session. Operator?
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star, then one on their touchtone phone, or send the question via email to investorrelations@bostonpizza.com. Please note, those questions that we do not get to during the call will be answered via email immediately following the end of the investor conference call. Our first question comes from Nick Corcoran of Acumen Capital. Please go ahead.
Morning, guys. A few questions for me. The first is on the same-restaurant sales growth that improved a lot in the fourth quarter. Can you break down what might have driven this?
Yeah. Thank you, Nick. Maybe I'll turn that over to Michael, but just to clarify, so that we're moving in the right direction here, you're talking about breaking it down between guest visitation, menu pricing, sales mix, average guest check, things like that?
Yes, exactly.
Okay. Michael?
Yeah, I can get us refreshed on just what the metrics are. So, if we're talking about same-restaurant sales on a franchise sales basis throughout 2023. So just as a recap, the first quarter, that in Q1 was a positive 25.7%. So obviously that's a very large number, but that's because we're lapping some kind of negative COVID-related results in the first quarter. From that point forward, we weren't so much lapping COVID, and it was a, you know, more back to kind of business as usual. So Q2 in 2023, again, on a franchise sales SRS basis, it was positive 6.6%. Q3 was similar, so positive 5.3%.
I think what Nick was referring to just now is Q4, things started to taper off. Still positive, so positive 0.6%, but a softening of the positive growth compared to what we saw in Q2 and Q3. Jordan, I'll turn it back to you for any comment on the reason for the trend.
You know a s Michael said, you know, there's the fourth quarter trend for the fourth quarters of 2023. So, there was no year-over-year benefit for the fourth quarter of 2023 versus the fourth quarter of 2022 from any COVID-related restrictions or anything like that. We had a strong finish to 2022, and we were rolling against that quarter. You know, I think, more broadly, there have been increased household expenses across Canada. We mentioned some of them on the at the end of the call in the outlook, things like rising interest rates and inflation affecting Canadian households. And the result can be a restriction or a reduce of distributable or, sorry, disposable income and disposable spending, discretionary spending, like full service restaurants.
So, that may be one of the reasons that, you know, Canadians were tightening their belts a little bit in the fourth quarter. We didn't see as strong a finish on the SRS basis, but again, it was compared to a relatively strong quarter in the fourth quarter of 2022.
And I guess a related question is: how did guest traffic compare year-over-year?
Yeah, so I think we've touched on this in the past. I mean, the guest traffic continues to be our primary focus, the number of guests coming into each and every Boston Pizza restaurant, and it is lagging where we were in 2019. Even though our sales have rebounded to beyond 2019 levels, nationally, we still see fewer guests coming in, which tells you that the sales increase is a large factor. And we did, you know, call this out in the remarks earlier on the call, a factor of menu pricing, particularly in the fourth quarter.
And so our focus going forward with things like Pasta Tuesday all month long and sports promotions, Super Bowl on the weekend, Valentine's Day today, is really a focus on bringing more guests into our restaurants and getting back to 2019 guest levels and beyond.
Great. And then any indication what you've seen year to date in 2024 in terms of either guest traffic or same restaurant sales?
So it's certainly early in the year. We're pleased with the lineup that we have. I think, you know, the January promotion is a good fit. But pasta is a good category for Boston Pizza. We have a wide selection. Let's say, it's a, you know, a comfort category, if you will, that pasta's warm in the cold Canadian winter, and the Pasta Tuesday promotion has been long established in the Boston Pizza brand. Every Tuesday, we do reduced price pasta.
So to do that out of the gate in restaurant only, really brought in more guests, and then that, you know, again, to my previous comment, is a real focus for us, is bringing people into our restaurants, in addition to maintaining the larger takeout and delivery business that was built up during the COVID period. We've always done takeout and delivery, but its order of magnitude has certainly grown in total sales for Boston Pizza and for individual BP restaurants. So, you know, interesting start to the year because we, you know, we're pleased with our plans, our execution in the restaurants, our promotional strategies and opportunities with days like Super Bowl and Valentine's Day.
At the same time, we're conscious of the backdrop of, you know, Canadian households, and, we wanna make sure that we very much position ourselves, as a, an affordable luxury, that, when Canadians do wanna treat themselves, coming out to a Boston Pizza, restaurant, whether it's, you know, a quick business lunch or whether it's coming out for the game or hosting a birthday party or family dinner, that people, really feel the, the value of those experiences. And so that's gonna be our focus, you know, day in and day out, whether it's our menu offering, promotional strategies, or the events that we put on, like, again, Valentine's Day and Super Bowl.
Great. And then, maybe one last question for me. You opened the first new restaurant since 2020. Where was that restaurant, and what does the pipeline for new restaurants look like?
Yeah, thanks, Nick. It was a big milestone for us. I mentioned on the call that 2020 was the last time that we opened a new Boston Pizza location. This one had been planned for quite a while, but because of all the disruption in our industry and construction delays and so forth, we opened in Hope, British Columbia, in December, and really pleased with the look of the new location. We're all up there for the big grand opening with the franchisee and the operators, and it's a great location. I was chatting with the mayor.
Seven million people pass through Hope as they head out from the Lower Mainland out into the Interior of BC, so lots of visitors to attract in, and it's a beautiful, brand-new location. So we're happy with that. As I said, you know, it had been a while, and we're really pleased to have that location open. We've actually opened another location since then to start the year. So it was early in January that we opened one in Ontario. And you know, these are good signs. These are signs that the Boston Pizza brand has not only kind of survived the pandemic, but in some ways come out stronger than before.
We have a pipeline of existing franchisees, as well as new investors, people who have either targeted sites or will move to a site that they, that we want to develop in an underserviced full-service restaurant marketplace. And we have our development and real estate and construction teams with plans and, you know, pins and maps, if you will, either things in production or plans to look for a combination of great real estate and outstanding franchise owners to continue getting back to expanding the Boston Pizza brand. So I won't give a forecast for the year because these things can be flexible. Construction delays sometimes push restaurant openings, as we saw in Ontario.
That could have opened in the fourth quarter, but it slid into January. So rather than give you a number, I'll just sort of generally point to those two recent openings as signs that we're back in the development phase and and really eager to bring Boston Pizza to new, new locations and, and new communities, so.
That's great, Colin. Thanks a lot. Pass it on.
Thanks, Nick.
This concludes the question and answer session. I would like to turn the conference back over to Jordan Holm for any closing remarks.
All right. Thank you, Operator. As there are no further questions, I'd like to thank everyone for taking the time to listen in. Remember to celebrate Valentine's Day today with a heart-shaped pizza at your local Boston Pizza and help support a charity in your community. Happy Valentine's Day, everyone, and we look forward to speaking with you all again at our first quarter conference call in May of this year. Take care.
Thanks, everyone. Bye.
This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.