Investment Thesis
Boston Pizza Royalties Income Fund (OTC:BPZZF) (TSX:BPF.UN) collects about 4% of royalty income from its 390 restaurants across Canada. Thanks to its strategy to open 5-10 net new stores per year and its ability to increase same store sales in the past, the company has a good track record of increasing its distributable cash and dividends in the past decade. However, Boston Pizza is struggling to grow its same store sales in the past two years. Although it has several initiatives to grow its same store sales, we will be more comfortable investing if we can see its growth rate re-accelerate.
Source: Company Website
What we like about Boston Pizza
A national brand
Boston Pizza is one of the largest casual dining restaurant brands in Canada. It currently operates 390 restaurants in 10 provinces and 2 territories in the country. Although Alberta represents about 28% of its total restaurants, it is not overly concentrated in one province. Hence, any regional market weakness will not significantly impact its total royalty income.
