A & W Food Services of Canada (AW) Q1 2026 earnings summary

Executive summary

• Q1 2026 saw system sales rise 1.5% to $402.8 million, driven by new restaurant openings, with Western Canada outperforming and Eastern Canada lagging due to severe weather and macroeconomic headwinds.

• Four new A&W restaurants and a second standalone Pret A Manger in Toronto opened; leases secured for additional Pret sites with 3–4 franchised openings expected by year-end.

• Operates 1,097 franchised and 10 corporate restaurants, serving over 130 million guests annually as of March 22, 2026.

• Strategic focus remains on operational excellence, menu innovation, digital engagement, and value-driven promotions.

• Recognized as a top Canadian brand, with #1 strongest brand in 2024 and #3 in 2025, and winner of multiple franchise and environmental awards.

Financial highlights

• Q1 2026 total revenue was $59.4 million, down 3% year-over-year, mainly due to fewer new restaurant openings and lower equipment/turnkey sales.

• Adjusted EBITDA was $19.5 million, with margin up to 32.9% from 31.8% in Q1 2025.

• Free cash flow improved to $13.1 million in Q1 2026 from negative $61,000 in Q1 2025.

• Operating costs decreased 2% to $33.3 million; G&A expenses rose 7% to $11.7 million, partly from higher employee and stock-based compensation.

• Income before taxes increased by $1.2 million, aided by a $2.6 million gain on an interest rate swap; net income rose to $9.9 million.

Outlook and guidance

• Fiscal 2026 guidance unchanged: adjusted EBITDA expected at $103–$105 million, up from $100 million in 2025.

• System sales growth projected at 2.5%–5%; same-store sales growth at 0.5%–3%.

• Restaurant count expected to reach 1,112–1,120 by year-end, up from 1,094.

• Three to four new franchised Pret A Manger locations planned for opening by year-end, with construction starting summer 2026.