A & W Food Services of Canada (AW) Q1 2025 earnings summary

Executive summary

• System Sales grew 2% to $396.9M in Q1 2025, with 7 new restaurants opened despite severe weather impacts.

• Same store sales increased 0.4%, reflecting value-focused offerings amid economic slowdown.

• Net income rose to $9.3M from $7.5M year-over-year, aided by higher revenue and cessation of royalty expense.

• Launched A&W Rewards loyalty program post-Q1 to drive digital engagement and guest visits.

• Strategic progress continues toward 30% franchisee profitability improvement by 2028.

Financial highlights

• Revenue increased 4% to $61.1M, driven by higher franchising revenue from equipment sales.

• Adjusted EBITDA was $19.4M, flat year-over-year as higher revenue offset increased operating costs.

• Operating costs rose 15% to $33.9M, mainly due to higher marketing expenses.

• Net finance expense increased to $3.9M from $0.5M year-over-year.

• Cash dividend of $0.480 per share declared and paid in Q1 2025.

Outlook and guidance

• 2025 Adjusted EBITDA expected between $96M–$101M (vs. $93.5M in 2024).

• System Sales Growth outlook revised to 1.5%–4.5% (from 0.8% in 2024) due to macroeconomic uncertainty.

• Same Store Sales Growth guidance set at 0.0%–3.0% (from -0.6% in 2024).

• Total restaurants projected at 1,085–1,100 by year-end 2025 (vs. 1,073 in 2024).

• Guidance revised downward for sales and EBITDA due to tariffs and economic headwinds.