Hello. This is the Chorus Call conference operator. Thank you for standing by. Welcome to Boston Pizza's third quarter conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded on November 9th, 2026. 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 you need assistance during the conference, you may reach an operator by pressing star then one, star zero on your 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 will discuss the 2026 third quarter results for both Boston Pizza Royalties Income Fund, or the Fund, and for Boston Pizza International, or BPI. For complete details on our financial results, please see our third quarter materials filed earlier today on SEDAR+, or visit the fund website at bpincomefund.com. Should you require additional information after the call, you can reach out to our Investor Relations email address at investorrelations@bostonpizza.com. The Fund is a limited purpose open-ended trust established under the laws of British Columbia. Its purpose is to acquire indirectly certain trademarks and trade names used by BPI in its Boston Pizza restaurants in Canada. BPI pays royalty income 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 the 12th, 2026, which was filed on sedarplus.ca. Before I turn the call over to Jordan Holm, President of BPI, I would 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 now turn the call over to Jordan. Jordan?
Thank you, Michael, and welcome everyone to Boston Pizza's third quarter investor conference call. Today, I will discuss our third quarter results and provide a brief outlook. Michael will summarize our key financial highlights, and as usual, we will leave time for your questions at the end of today's call. This quarter marks Boston Pizza's eighth consecutive quarter of positive Same Restaurant Sales. These strong results demonstrate Boston Pizza's ability to maintain sustained momentum throughout the year by investing in promotions to amplify guest sentiment, guest engagement, and through its continued involvement with the takeout delivery business.
The Fund posted Franchise Sales from restaurants in the Royalty Pool of CAD 257.5 million for the quarter and CAD 752.4 million year-to-date, representing increases of 3.4% and 2.8% respectively versus the same periods one year ago. We are pleased to announce that these results set a record high for both quarterly and year-to-date Franchise Sales.
Same Restaurant Sales was 3.9% for the quarter and 3.1% year-to-date. Same Restaurant Sales for the quarter and year-to-date was principally driven by continued momentum in the takeout and delivery business, promotional initiatives, and increased restaurant traffic associated with the FIFA World Cup. From a marketing standpoint, in the third quarter of 2026, Boston Pizza kicked off the summer with the Live & Local initiative, during which restaurants hosted local artists to showcase their musical talents through live performances. We also welcomed the start of the football season with the launch of a feature menu containing new menu innovations ideal for game day gatherings and watch parties. Our popular Kids Cards promotion made its return in the third quarter as well, with families receiving a card for five free kids meals in exchange for a CAD 5 donation to the Boston Pizza Foundation.
This promotion raises over CAD 900,000 in total for local charities. Near the end of the quarter, the Kids Eat Free promotion further offered one free kids meal per child with each qualifying purchase throughout the month of September, providing additional value for family diners. Turning to restaurant development, during the quarter, one new Boston Pizza restaurant opened, none permanently closed, and 13 restaurants were renovated. Year-to-date, one new restaurant has opened, four restaurants have permanently closed, and 34 restaurants have completed full renovations. We have more exciting initiatives in store for the fourth quarter designed to maintain our strong sales momentum through to the end of 2026. Before I discuss those, however, 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 10.3 million for the quarter and CAD 30.1 million year-to-date, compared to CAD 10 million and CAD 29.3 million respectively for the same periods one year ago. The Fund posted distribution income of CAD 3.4 million for the quarter and CAD 9.9 million year-to-date, compared to CAD 3.3 million and CAD 9.6 million respectively for the same periods one year ago. The royalty income and distribution income for the quarter and year-to-date were based on 372 Boston Pizza restaurants in the Royalty Pool that reported Franchise Sales of CAD 257.5 million for the quarter and CAD 752.4 million year-to-date. For the same periods in 2025, royalty income and distribution income were based on the Royalty Pool of 372 Boston Pizza restaurants reporting Franchise Sales of CAD 248.9 million and CAD 731.9 million respectively.
The Fund's net and comprehensive income was CAD 0.7 million for the quarter, compared to CAD 10.4 million for the third quarter of 2025. The CAD 9.7 million decrease in the Fund's net and comprehensive income for the quarter compared to the third quarter of 2025 was primarily due to a CAD 13 million increase in fair value loss and a CAD 0.2 million increase in net interest expense, partially offset by a CAD 3.1 million decrease in income tax expense and a CAD 0.5 million increase in royalty income and distribution income. The Fund's net and comprehensive income was CAD 18.8 million year-to-date, compared to CAD 31.1 million year-to-date in 2025.
The CAD 12.3 million decrease in the Fund's net and comprehensive income year-to-date compared to the same period in 2025 was primarily due to a CAD 16.7 million increase in fair value loss and a CAD 0.7 million increase in net interest expense, partially offset by a CAD 3.9 million decrease in income tax expense and a CAD 1.1 million increase in royalty income and distribution income. The fair value losses for the quarter and year-to-date primarily reflected the decline in the trading price of the Fund's units, which was consistent with broader declines in interest rate-sensitive securities. The Fund's cash flows generated from operating activities for the quarter was CAD 10.7 million compared to CAD 10.6 million in the third quarter of 2025.
The increase of CAD 0.1 million was primarily due to an increase in royalty income and distribution income of CAD 0.5 million, partially offset by a decrease in changes in working capital of CAD 0.3 million and nominally higher income taxes paid. Cash flows generated from operating activities year-to-date was CAD 30.7 million compared to CAD 29.8 million in the same period in 2025. The increase of CAD 0.9 million was primarily due to an increase in royalty income and distribution income of CAD 1.1 million, partially offset by an increase in income taxes paid of CAD 0.2 million.
While net and comprehensive income or loss and cash flows from operating activities are both measures under IFRS accounting standards, the Fund is of the view that net income or loss and cash flows from operating activities 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 flow, whereas cash flows from operating activities is not inclusive of all of the Fund's required cash outflows, and therefore is not indicative of the cash available for distribution to unitholders. Non-cash items include the 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 distribution to unitholders. The Fund generated Distributable Cash of CAD 8.4 million for the quarter, compared to CAD 8.5 million for the same period in 2025. The decrease in Distributable Cash of CAD 0.1 million, or 0.9%, was primarily due to higher interest paid on debt of CAD 0.2 million, partially offset by an increase in cash flows generated from operating activities of CAD 0.1 million. The Fund generated Distributable Cash of CAD 24.2 million year-to-date, compared to CAD 23.8 million for the same period in 2025.
The increase in Distributable Cash of CAD 0.4 million, or 1.7%, was primarily due to an increase in cash flows generating from operating activities of CAD 0.9 million, partially offset by higher interest paid on debt of CAD 0.4 million and higher BPI Class B Unit entitlement of CAD 0.1 million. The Fund generated Distributable Cash per unit of CAD 0.396 for the quarter and CAD 1.137 year-to-date, compared to CAD 0.40 and CAD 1.118 respectively for the same periods in 2025. The decrease in Distributable Cash per unit of CAD 0.004, or 0.9% for the quarter, and increase of CAD 0.019, or 1.7% year-to-date, was primarily due to the respective decrease and increase in Distributable Cash as outlined above. The Fund's Payout Ratio for the quarter was 93.8%, compared to 88.8% in the third quarter of 2025.
The increase in the Fund's Payout Ratio for the quarter was due to distributions paid increasing by CAD 0.4 million, or 4.8%, and Distributable Cash decreasing by CAD 0.1 million, or 0.9%. year-to-date, the Fund's Payout Ratio was 97.1%, compared to 93.5% year-to-date in 2025. The increase in the Fund's Payout Ratio year-to-date was due to distributions paid increasing by CAD 1.3 million, or 5.6%, partially offset by Distributable Cash increasing by CAD 0.4 million or 1.7%. On a trailing 12-month basis, the Fund's Payout Ratio was 104.5% as at September 30, 2026. This trailing 12-month Payout Ratio is greater than 100% because it includes a CAD 0.11 per unit special distribution paid in December 2025, which was funded by cash generated throughout the full year of 2025. Excluding the special distribution, the trailing 12-month Payout Ratio would have been 97.2%.
On November 6, 2026, the trustees of the Fund increased the monthly distribution rate to CAD 0.126 per unit, starting with the distribution for the period of October 1, 2026, to October 31, 2026. The new monthly distribution rate represents an increase of CAD 0.002 per unit, or 1.6%, from the previous monthly distribution rate of CAD 0.124 per unit. On an annualized basis, the new distribution rate is equal to CAD 1.512 per unit, compared to CAD 1.488 per unit for the previous rate. The October 2026 distribution will be paid on November 30, 2026, to unitholders of record on November 21, 2026. 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.
I'll turn the call back over to Jordan for more on the outlook. Jordan?
Thank you, Michael. As we approach the end of 2026, Boston Pizza's fourth quarter is off to a strong start with the launch of our refreshed main menu and our new holiday feature menu. These initiatives are designed to enhance the guest experience, drive restaurant traffic, and build on our positive sales momentum. Our new holiday feature menu has delicious innovations such as the Baked Bruschetta Bandera Bread, Creamy Mushroom Ravioli, Savoury Sausage Pizza, braised beef and mashed potatoes, and merry drink offerings such as the Sparkling Pom Punch. We are also doubling down on our festive spirit with a special offer during the holiday season where guests in most regions will receive a free CAD 10 promo card with the purchase of any CAD 50 Boston Pizza gift card in-restaurant.
Our Franchise Sales maintained solid momentum through the third quarter of 2026, driven by our continued focus on delivering everyday value, consistent quality, and flexible dining across both dine-in and off-premise channels. The Boston Pizza system has consistently demonstrated resilience in dynamic operating environments, and our priorities remain clear: supporting franchisee profitability, driving traffic, and strengthening our brand presence. Backed by our nationwide footprint and brand resilience, Boston Pizza remains well-positioned to sustain growth throughout the remainder of 2026. With that, I would like to begin the question-and-answer session. I will turn it back to the 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 touch-tone phone or send the questions 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. Once again, to ask a question, please press star then one. Since there are no questions, I would like to turn the conference back over to Jordan Holm for any closing remarks. Please go ahead.
All right, thank you, operator. Since there are no questions, we would like to thank you all for taking the time to join us today and invite you to celebrate the holiday season at your local Boston Pizza. We look forward to speaking with you all again on our fourth quarter investor conference call, which is scheduled in February 2027. So thank you, everyone, and enjoy the rest of your day.
This brings to an end today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.