Pizza Pizza Royalty Corp. (PZRIF) CEO Paul Goddard on Q4 2020 Results - Earnings Call Transcript
Pizza Pizza Royalty Corp. (OTCPK:PZRIF) Q4 2020 Results Conference Call March 2, 2021 5:00 PM ET
Company Participants
Christine D’Sylva - Chief Financial Officer
Paul Goddard - Chief Executive Officer
Curt Feltner - Senior Vice President of Strategic Analysis and Implementation
Conference Call Participants
Derek Lessard - TD Securities
Operator
Ladies and gentlemen, thank you for standing by. And welcome to the Pizza Pizza Royalty Corp. Earnings Call for the Fourth Quarter of 2020. During the presentation, all participants will be in a listen-only mode. After the speakers’ remarks, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded on Tuesday, March 2, 2021.
I will now turn the call over to Christine D’Sylva, CFO. Please go ahead.
Christine D’Sylva
Thank you. Good afternoon, everyone. And welcome to Pizza Pizza Royalty Corp.’s earnings call for the third quarter ended December 31, 2020. Joining me on the call today are Pizza Pizza Limited’s Chief Executive Officer, Paul Goddard; and Senior Vice President of Strategic Analysis and Implementation, Curt Feltner.
Our discussion today will contain forward-looking statements that may involve risks relating to future events. Actual events may differ materially from the projections discussed today. All forward-looking statements should be considered in conjunction with the cautionary language in our earnings release and the risk factors included in our annual information form.
Please refer to our earnings press release and the MD&A in the Investor Relations section of our website for a reconciliation and other disclosures relating to non-IFRS measures mentioned on this call. As a reminder, analysts are welcomed to ask questions after the prepared remark. Portfolio managers, media and shareholders can contact us after the call.
Before turning the call over to Paul for the business updates, I wanted to spend a few moments reviewing the structure of the Corp for our new investors. Pizza Pizza Royalty Corp., indirectly owns the Pizza Pizza and Pizza 73 brands and trademarks through its subsidiary Pizza Pizza Royalty Limited Partnership. This partnership has two partners Pizza Pizza Royalty Corp, the public company, which owns 76.5%; and the other partner Pizza Pizza Limited, the private operating company, who owns the remaining '23.5%.
The Royalty Corp is a top-line restaurant Royalty Corp that currents monthly royalties through a lease agreement with Pizza Pizza Limited. In exchange for the use of the Pizza Pizza and Pizza 73 trademarks and its restaurant operations, Pizza Pizza pays the partnership, a monthly royalty calculated as a percentage of Royalty Pool sales. Royalty is lost due to the permanent closure of restaurants are replaced with royalties from new restaurants opened on the next Royalty Pool adjustment date.
Until that date, Pizza Pizza continues to pay the royalties as if the restaurants have not closed. Growth in the Corp is derived from increasing same-store sales of the restaurants in the Royalty Pool and by adding new restaurants to the pool each year. The Royalty Pool is adjusted at the beginning of each year, by adding new restaurants opened less any restaurants that have been permanently closed. For the fiscal year 2020, the Royalty Pool was adjusted on January 1st, 2020 to include 645 Pizza Pizza restaurants and 104 Pizza 73 restaurants.
So with that brief review, I'll turn the call over to Paul Goddard to provide the business update.
Paul Goddard
Thank you, Justine, for that structural overview and good afternoon everybody. Thank you all of you for taking the time to attend our call today. And before we get started here, I just would like to take this opportunity to personally thank all of our employees, our restaurant owners and their team members, our credible delivery drivers on the front lines and our suppliers, of course, as well.
They've shown tremendous, courage and leadership over this past year, and despite this pandemic, our team has continued to really perform well under extreme circumstances, and it's truly inspiring for me to see everyone helping each other out, particularly during these trying times and to our customers and to you, our investors, thank you for your continued trust and loyalty.
Moving on to the business side of our call, I would like to first congratulate Christine on her appointment earlier this year, as of Jan 1 as Chief Financial Officer position of Pizza Pizza and Pizza Realty Corp. Christina's worked alongside Curt and myself for 14 years now, and as previously our VP Finance and Investor Relations and real excited to have her in this role.
And I'd also like to extend my appreciation and thanks to Curt Feltner on his transition from CFO into the new cross-functional role of Senior Vice President of Strategic Analysis and Implementation. We've got a lot of exciting initiatives and strategies that are we're embarking on here in 2021, and I'm proud of the exceptional senior management team that we have at the Company. Both Christina and Curt are here on the call today with me.
Obviously, the main purpose of our call this afternoon is to highlight the results of our fourth quarter and year-end for December 31, 2020. And as a reminder, our business is comprised of two key revenue streams. First, our traditional restaurant network, which generates 90% of our Royalty Pool sales, and second are non-traditional and special event locations, which generate the remaining 10%.
So, within our traditional restaurant network, our customers are able to enjoy our food by ordering an advance for delivery or for pickup, or by simply walking into one of our restaurants on an unpremeditated business for takeout or for dine-in, and about 60% of all of our orders by the way done through our websites or numerous apps as well, and that's increasing over time, which is great.
Fortunately, our traditional restaurants have remained open for delivery and take out business since the pandemic begun. Our customer dining options have generally been closed since the onset of the pandemic, following public health guidelines with exception of a brief period during the summer months in 2020, where we did see some good momentum.
While our traditional business has been deemed essential and therefore allowed to remain open, Pizza Pizza and Pizza 73 System Sales have still been impacted in material ways, as restaurant operators took significant unnecessary measures in their restaurants protect the health of their employees and our customers.
Our teams have also been proactive and agile in complying with all social distancing recommendations and requirements of the applicable health authorities, including the closure of all restaurant seating areas.
So, the lack of normally robust dining business combined with work from home mandates virtual schooling, a reduction in broader social and business activities of all combined and lead to a significant decrease in our walk in sales, especially for those in our urban locations, which typically represent all that that group there have locked in about 40% of our total store sales, so definitely very significant.
But again, fortunately for delivering pickup channels, which represent that 60% of our sales, we continue to see that offset a large portion of those last walk in sales. During the early stages of the pandemic, we quickly introduced innovative customer centric safety methods such as contactless pickup and delivery transactions, literally in about four days.
So hats off to the IT operations and marketing folks for making that happen is laser fast, and also an industry first award winning tamper free pizza box, which provides customers additional assurances when ordering from us. And all of these innovations have been very well received by our customers and appreciated.
The other aspects of our business, our non-traditional locations and special events have had to remain almost entirely closed due to government mandates during the pandemic. Our non-traditional business including sporting arenas, colleges and universities and major outdoor entertainment venues such as Canada's Wonderland, many others, are largely responsible for the reported decrease in our fourth quarter sales.
As I noted at the beginning, this component generally accounts for 10% of our sales, that non-traditional bucket. The fourth quarter typically signals the start of the new sports season holiday gatherings that are stronger sales quarter. However, during this last fourth quarter as government restrictions and stay at home orders resumed, the start of sports was delayed, for example, the beginning of the new NHL season was delayed until mid January, whereas back in 2019, it began in early October.
And of course, this past year, no spectators have been allowed in sporting venues either. HALLOWEEN parties, seasonal holiday gatherings, they just were not permitted to happen this past December either. We also normally see substantial group ordering catering orders, high volume orders at businesses, school orders, during Q4 as well, right from September through to, especially the holiday season.
But this is another area where we were, where we were not permitted to operate. Basically, we were open for business, but there just was no demand there because of what's going on with the pandemic restrictions. And in addition, I would also say that we saw increased pressure from third party aggregators, through a substantial amount of discounting on their part and heavy advertising in the marketplace.
So, our sales momentum from the summer months that we had was really materially pressured lower during the fourth quarter, the resumption of all these restrictions and the different set of behaviors going on associated with that. So, for the quarter, our same-store sales, the key driver of yield growth for shareholders decreased 17.6%, and the total Royalty Pool sales decreased 15.8% to 123.7 million from 146.9 million.
While system sales and royalty income are meaningfully lower in the fourth quarter than prior years, our ability to pay our monthly dividends remains strong. As a reminder, to everyone, our Board of Trustees made the prudent decision to reduce our monthly dividend in April 2020 by 30% ahead of potential uncertainties in our business. However, I'm proud to say that our business outperformed those expectations, and we were able to announce a 10% dividend increase last year.
During the quarter, we generated 745,000 in excess cash which added to our working capital reserve, which is now a very robust $5.4 million. As a result, our payout ratio is 84% for Q4 and 90% for the year. We'll continue to monitor that payout ratio carefully as we always do, and while our target payout ratio remains at 100%, we also need to remain vigilant given the ongoing effects of the pandemic across Canada and the possibility of a resurgence in COVID-19 cases and variants which does appear to be happening right now in parts of Ontario, for instance.
And until we see a broader vaccination rollout, hopefully by the end of September as a federal government is promised us we expect consumer confidence and therefore domestic economic fundamentals to remain quite weak. Nevertheless, our goal remains to be providing stability and our dividends to shareholders and increase them over time as we move past this pandemic.
Turning to the operations of PPL, the private operating company, at both Pizza Pizza and Pizza 73, our marketing strategies are structured to support restaurant profitability while also increasing customer orders and order frequency, whether it's via traditional phone call in digital app engagement or walking traffic. This year, we're focused on going on the offense. Our innovation pipeline is strong and we see excellent growth potential, particularly key markets.
Consumers have moved online faster than ever before during 2020 and are purchasing in large numbers, in large part due to the pandemic and increasing consumer comfort with e-commerce and contactless experiences in general. And we feel they are going to be back offline after the pandemic recedes either. With this trend in mind, Pizza Pizza also launched a new e-gift card program focusing on driving digital sales and quick contactless redemptions as well versus using the more tedious plastic gift cards still so common in the industry.
And for many, many years, Pizza Pizza Limited has invested heavily in our digital platforms. And we said this before, and I'll say it again here, no other pizza player in Canada has more digital channels for customers to choose from. Our customer delivery and pickup orders transacted through our array of digital ordering platforms accounts for over 60% of all orders. And like I said, this percentage will continue to increase benefiting our customers, our company and our franchisees.
Innovation is key to our growth and it's one of the most important brand attributes we're known for, not only in tech, but also in our menu offerings and really in everything we do. In 2020, we continue to our core menu promotional activity, featuring our very popular unlimited two topping 799 medium pizza special a Pizza Pizza, and our 973 solo special a Pizza 73. And we also promoted our alternative crusts, particularly the keto and cauliflower crust now paired with a side order of cauliflower bites.
And for the holidays, pizza promoted to the dessert option with funnel cake sticks featuring two holiday inspired dips. Our diverse high-quality menu together with our award-winning websites and apps and our top-notch customer service have positioned us well to weather this pandemic and come out stronger at the other end.
Now turning to restaurant development for a moment, during the quarter, we opened one traditional restaurant and one non-traditional Pizza Pizza location. However, we permanently closed three Pizza Pizza restaurants. Additionally, we open one traditional Pizza 73 restaurant. For the year, we open six traditional restaurants and three non-traditional Pizza Pizza locations, but closing 17 traditional and 15 non-traditional Pizza Pizza restaurants.
Additionally, two traditional Pizza 73 restaurants opens while one traditional and one non-traditional restaurant were closed. And as previously mentioned, during the quarter substantially all traditional Pizza, Pizza and Pizza 73 restaurants are made open across Canada, however, the majority of the non-traditional Pizza Pizza and Pizza 73 restaurants have remained closed with the exception of a few small locations and several hospitals and gas stations and the like.
So while we have not opened as many new restaurants as originally envisioned in 2020, during the pandemic, we have accelerated our renovation and refresh program now. And in fact, 70% of our traditional stores now showcase our new look. And also, we put through new uniforms and a bunch of other changes too. So if you have been on our stores lately, I think you'll see a very new and refreshed look right through and through, which is great to see.
And that really demonstrates to the market that we will always reinvent ourselves and keep refreshing our brands. We're not waiting around for various restrictions to be lifted. That's something we're not in direct control over. So we're going to focus on what we can control and we believe our current store network is strong, it's ubiquitous, and our franchisees are as ambitious as we are to grow faster.
So we've ramped up the restaurant construction and renovations for 2021. And barring any resurgence or adverse long term effects of the pandemic, or unexpected further delays and vaccine rollout later this year, currently expect to see traditional restaurant growth to be approximately 5% in 2021.
As I said at the beginning, this year has been of course very challenging for everyone. And I want to personally thank our entire team for their hard work their sheer perseverance and unrelenting efforts this past year. The health and safety of our customers and our restaurant teams continues to remain our top priority.
And we've implemented strict protocols in our restaurants and in our deliveries to our customer safe and our track record has been really good in that regard. So we're committed to as always delivering great food, providing the best customer experience and we know that will translate into loyal customers and improve performance over the long term for investors as well.
So thanks again for joining the call this afternoon. I'll now turn things over briefly to Curt to say a few words, followed by Christine as our newly CFO who will provide the full financial update, but first over to you, Curt.
Curt Feltner
Thank you, Paul. I would just like to take a moment just to add, it's been a pleasure working with our shareholders, our investment bankers and our financial institutions and our analysts over the years since our public offering in 2005. I'm personally very proud of what we've accomplished with our market, leading brands, and I'm particularly pleased to have Christine now lead the Company in a Chief Financial Officer role.
She and I've worked closely over the year, and I'm fully confident, she'll serve the Company extremely well. She has excellent technical skills and has gained solid industry knowledge, and she's been at the table for all of our major company decisions at least in the past decade. So, yes, she's well versed on our company.
So, with regards to my, new role, I'm well into our strategic and analytical role, and initially focusing on business intelligence and specifically, currently, on customer data analysis. So, it's good stuff for the Company, and we're making good progress. But, just, thank you for the time.
And with that, I'll now pass the call to Christine for our Q4 financial update. Christine?
Christine D’Sylva
Thanks Curt for glowing introduction. I'd just like to briefly cover the financial results for the quarter and our financial results as Paul has mentioned continue to be impacted by COVID-19.
Same-store sales growth, the key driver of yield growth for shareholders, as Paul mentioned, decreased 17.6% for the quarter and decreased 12.5% for the year.
The last walk-in sales and non-traditional sales, as previously discussed, are responsible for the reduction in system sales. However, delivery and pickup at both brands are working hard to offset this reduction, though same-store sales, is expected to be negative in the near future as the pandemic continues.
Gross sales reported by the restaurants in the Royalty Pool for the fourth quarter were $123.7 million. This is a 15.8% decrease, as compared to $146.9 million in the fourth quarter of 2019. By brand, sales from the 645 Pizza Pizza restaurants in the pool decreased 15.6% to $103.4 million and sales from the 104 Pizza 73 restaurants decreased 16.6% to $20.3 million for the quarter.
For the year, Royalty Pool system sales decreased 11.8% to $488.3 million. Royalty income for the quarter was $8 million, as compared to $9.5 million and was $31.8 million for the year compared to $35.9 in 2019. The decrease in Royalty Pool system fails and Royalty income for the quarter and year is largely a result of a negative impact COVID-19 has had on our business and the change in the number of restaurants on January 1st, 2020.
Turning to the partnership expenses, administrative expenses include director, legal, auditor fees, listing costs and annual shareholder meeting costs. Administrative expenses for the quarter were 183,636 for the year. In addition to administrative expenses, the partnership pays interest expense on its $47 million credit facility. Interest paid for the quarter decreased to 319,000 from 329,000 last year.
The partnership is currently making interest-only payments on the non-revolving credit facility. The partnership's new interest rate swap agreement came into effect in April of 2020. The new interest rate swap agreements fixed the facilities, interest rates at the bank acceptance rate of 1.81%, plus the credit spread, which is currently 0.875, for a combined rate of 2.685.
The previous interest rate agreements expired in April of 2020 at a combined rate of 2.75. The facilities include affirmative and negative covenants customary for agreements of this nature. And as at December 31, 2020, all covenants have been met. The partnership is required to maintain a funded debt-to-EBITDA ratio, not to exceed 2.5:1.
The debt-to-EBITDA ratio for the last four rolling four quarter period was 1.51:1, and the credit spread range is based on this level of debt-to-EBITDA. Due to the impact of COVID-19 on the partnership, it is likely that the credit spread will increase to the next year, and you can refer to the MD&A for the full credit spreads schedule.
So, after the partnership with fee growth income and pays administrative and interest expenses, then resulting net cash position is available to distribute to two partners based on their ownership. Now speaking to shareholder dividends, the Company declared shareholder dividends of 3.9 million for the quarter or $0.16 per share, compared to 5.3 million or $0.2139 per share in the prior year's comparable quarter.
The payout ratio was 84% sort of quarter, compared to 95% in the prior year. For the year the Company declared shareholder dividends of 16.6 million or $0.6739 per share, compared to 21.1 million or $0.8556 per share in 2019. The payout ratio for the year was 90% and was 103% in 2019.
When COVID-19 first impacted system sales in March, the Company reduced its dividend from $0.713 per share to $0.05 per share, beginning in April 2020. Since April system sales have partially recovered, and after careful consideration, the Board of Directors announced a 10% increase to the monthly dividend beginning in November 2020. This has resulted in the 90% payout ratio for the year and the working capital reserves ended the year at 5.4 million.
The working capital reserves increased over $700,000 in the quarter and $1.8 million in a year. And it's largely attributable to the April dividend reduction offset offsetting the first quarter's payout ratio of 123%. It is expected that future dividends will continue to be funded entirely by cash flow from operations and the cash reserves.
The Company will continue to monitor system sales and royalty income and will consider future changes to the monthly dividend taking into account the duration and impact of the pandemic on our restaurant operations, as well as the timing and pace of economic recovery in the markets in which we operate.
That concludes my financial overview. I'd like to turn the call back now to the operator to pole for questions.
Question-and-Answer Session
Operator
[Operator instructions] Your first question comes from the line of Derek Lessard with TD Securities. Your line is open.
Derek Lessard
Hi, good afternoon, everybody, and I hope everybody's there and their loved ones are safe.
Paul Goddard
Thanks Derek. Same to you.
Derek Lessard
And I just congratulations to both you, and Christine and Kurt. Good luck in your new roles. Just a question, Paul, I think it looks like the second lockdown hurt you guys more in terms of sales than it did the first time. You did add some color, but just maybe on the surface, it looks like it was a much weaker and Pizza 73 which up to this point has held in pretty well. Is that the gist of it?
Paul Goddard
Yes, that's pretty much it. I mean, I would say that the unique thing about Q4 as well, right is that the catering orders and that whole seasonal aspect, which probably as I said is such a big thing for us. It was just so anemic this year because of what's going on, right? And so I think that's what I would highlight is the main difference is not just the fact that, you can sit down in our restaurants because that's what also happened before the summer.
But just the back-to-school catering surge that we see all the seasonal parties, we did okay, on Halloween and Christmas Eve in New Year's things, but not as robust as they normally would be right? People are just not physically gathering, and so that's one part I really would highlight is just that that effect.
And also as I tried to allude to, we just saw more activity in that back part of the year from third-party aggregators in particular, and you may notice just the sheer level of advertising spend going on there from those folks, and I think people are using those apps quite a bit. There's a lot of choice out there even though it's very financially tough on those independent restaurants that use them heavily, but I think those are two key things I would highlight is why we saw more pain in that fourth quarter.
Derek Lessard
Okay, and still being shut…
Paul Goddard
Yes, non-traditional as well are impacted by that to all the college kids are not back right or if they are back there, maybe on campus or they're in their town or the university is in some cases, if they're not home in Toronto or Calgary or Montreal or whatever, but they're not on campus as well. So, that there's all those compounding effects, I guess.
And that's I contrast that also with something like the United States where you saw, it's definitely different state by state, but a lot more of a return to somewhat more normal behavior with restaurants, especially QSR general down there was. We have, if you look at our restaurants, and we're saying roughly 725 locations. I mean basically about 300 locations of all our non-traditionals are pretty much not able to offer it right now. So that's a quite a unique factor for us.
Derek Lessard
Okay, that makes sense. Have you noticed as well from maybe some of your competitors or other QSRs, I guess, in the second wave that they were more prepared for offering curbside pickup and different offerings than they were the first time around?
Paul Goddard
I think so. Yes, I think that we perhaps that we were one of the quickest ones, along with maybe a few other brands that were had the capability to shift really quickly to contact use especially for our own organic delivery. And pick up and I think a lot of other independence restaurants and non-pizza players they're pretty much at the mercy of the third parties.
And so it's, it helps them get in that game. And I think there is also more of a surge of those people to get on those platforms, which just makes sense, because it was their only option. If you're in placing a sports bar somewhere that's more fast casual, your only option in most cases is to use those third party aggregators, and albeit at very high commission levels.
So, I do wonder about the sustainability of that. But in the short term, it does get those folks sales more. And I think there was a catch up to some of those different competitors of different types, may have been able to do more as the year wore on versus in the sort of late spring, early summer. I think we were one of the few.
Derek Lessard
Okay, and how's that and how's the competitive environment playing out, I guess, as we exit or kind of get into the end of the first quarter here?
Paul Goddard
Yes, I mean, we'll see. I mean, we certainly still have many of those -- but there's restrictions in place for instance in Ontario. It's definitely an impact for us still our non-traditional business is still very, essentially non-existent, largely right now. But do you think that we'll come back, we'll read down, especially when will it rebound, and right now, which is truly to say.
I'm pretty conservative on when it will return, in my old view just I think it'll be more towards the end of this year, that's just my thought. But it will take a while. And I think if people are vaccinated, or we get some combination of broad backs vaccination, nationwide pretty much and also and/or here herd immunity as well.
People are still not going to be confident enough or even if they are confident, there's government restrictions are still going to keep people in some of these most populated regions like Ontario, Quebec from actually enjoying restaurants in a closed environment, we see those numbers stay down for a long time. So, we're really trying to focus on look, pickups is actually been quite strong for us deliveries, those things we know we're good at and the delivery done better mantra that we have, in the Company that let's prove that we can do it better than anyone else, including third party delivery people, it's trusted driver and a uniform can be hot, our time guarantee is something that is a key part of our brand as well that people expect and differentiates us from these folks who just can't really do that, right.
And you're typically going to get it even a driver you recognize many times with us, so trying to highlight that service aspect of food quality, and innovation as well. We've got the pipeline, there are some exciting things, I think that will help play out this year. So I feel sort of optimistic, but it's going to take a while for that non-traditional comeback, and that group ordering catering behavior, schools, all that stuffs, very significant volume for us. And it's just still a big question mark as to when does that return? I think we'll be in a good position when it does. But until then, it's hard for us to really replace that volume, if you know what I mean.
Derek Lessard
Yes, I mean, that makes perfect sense. And maybe, maybe still touching on the subject as you alluded to more from a high level, how are you thinking about the business and how you're position coming out of the pandemic?
Paul Goddard
Well, I guess what I tried to give people a sense of was that we are really seeing it as an opportunity to take share, there's so many things that we are not happy about, obviously with our non-traditional and group order business being so non-existent. But we do see because of the weakness, I mean, there's real estate opportunities, we are starting to see signs of prices coming down there. We've been able to successfully negotiate lease extensions and things at quite an attractive level.
And I think people also see that we're a really solid financial player and brand in the market as well. So that all does give us leverage and so, we're quite ambitious about our belts this year, accelerating the our renovations and we're trying to make sure we keep our costs down for the franchisees so and time it for them so that we're not hurting the cash flow of the of the units, the unit level for the stores. But I just see -- I do see a lot of opportunity because if we can really push, and do the things well that we can control the drive volume, obviously value is continuing to be a very key part, but we've really also, I think emphasize quality and food innovation.
So, we're getting new customers we didn't use to get, where there's the alternative crusts and things, gourmet tins, and our digital channel focus. We're leveraging the data. I mean, the whole purpose, Curt's role is to just provide more strategic oversight right across the enterprise as well, and really leverage all that investments that we've spent for years to build up our data platform and our data warehouse to really just get more insights into true household view, like never before in terms of what our customers are doing.
We've tracked the transaction data very well for a long time now, with our loyalty program and what not. But we haven't necessarily been able to until recently been able to really get a full household view of everything that a household might be doing. And that's actually quite complex, easy to say, but complex to actually do. So, we think that the level of insights we have is something that very few people have maybe only the top few players in QSR. So, we think that we should be able to leverage that more, especially with a real focus and a senior level focus of Curt and his team.
Derek Lessard
Looking forward to that, I guess there's just one more for me because you touched on it. Just maybe if you can speak to some about your franchisee pipeline and the franchisee health, I mean, it seems it's pretty healthy given, 5% growth that you're looking for this year, but maybe just some comments on that.
Paul Goddard
Sure. I mean, I'm not, I don't want to take a picture of the things are rosy all over the place. But I think that, I've got a, this past year, I did a lot of advocacy with the industry as well, with Chamber of Commerce and Restaurants Canada and things. And everyone is sort of arm in arm trying to get hopefully better policy from governments on the wage subsidy and things like that. And so, the government's listen, they send not necessarily a great job on execution, but I think that there's at least the intention.
But certainly, what I learned is that, so many restaurants, I mean, almost every restaurant I can think of out there in the industry is suffering, right. I mean some more than others and sports bars and fast casual, and those that don't really have a deliverable product. It's really terrible for them, and I think when subsidies run out, it's going to be a really a tough picture. But, I think for us, we see our financial health overall quite good. We went through a lot of pain last year by really closing locations that were just, probably should have been closed even sooner.
So, I think the worst performers that are at the bottom of our pile really, we've made some decisions to not extend leases and renew, which in a given case, even I can think of some cases, even in downtown Toronto where we decided not to renew a lease and actually a really good location, but it wasn't really doing that great, and now those two adjacent territories are doing so much better and we're still very close to the customers.
So, we've needed to maintain the service level and help to franchisees with the financial performance much better. So, I think the sort of EBITDA per store type of metric is actually pretty good overall, and I think stores seem to be, now that we've kind of achieved that critical mass of that fresh new look and the uniforms and even if they're, light front lobby refreshes in some cases versus a brand new store, it really does rejuvenate people, I think, and people will say, I want that.
So I think that, there's a pretty good sort of overall group psychology going on, and I think despite the fact that we're not physically in the office, most of us it's, you know, we're almost all remote, our operations team and our overall broader team, no matter what part of the Company you're working in, they're very connected to the franchisees. And I think the franchisees are ironically probably more in touch with everybody inside the Company too. So, I think we're working through it with them and they know that we're very ambitious along with them to try and come out of this more strongly.
So, there's frustrations there too, but I think overall, we've weathered it quite well relative to others. I mean, I think at least we're in Pizza delivery business, right. I mean, versus some other sectors or even other parts of QSR that still really have a really uphill battle. I mean, we want to get back to obviously increasing dividends eventually, but we've got work to do to get that to that level. But I do like our financial position obviously, right, our dividends very safe. We've in a good place, I think, to go on offense here while others are in a timid retreating mode.
Derek Lessard
Yes. Thanks for the color, Paul, and yes, understandably a tough market all around. And I think you guys are operating quite well, given the circumstances. That's all the questions for me. Thanks guys.
Paul Goddard
Okay. Thanks very much, Derek.
Operator
There are no further questions at this time. I will turn the call back over to Christine D’Sylva.
Christine D’Sylva
Thank you, and thank you everyone for being on the call with us this afternoon. If you do have any questions on the call, please contact us. Our information is on the earnings release.
Have a great evening. Stay safe and healthy.
Operator
Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.
- Read more current PZRIF analysis and news
- View all earnings call transcripts