Ms. Kelly Blankstein reports

A&W REVENUE ROYALTIES INCOME FUND ANNOUNCES STRONG FIRST QUARTER 2023 RESULTS

A&W Revenue Royalties Income Fund and A&W Food Services of Canada Inc. have released the fund's results for the first quarter ended March 26, 2023, which will be filed on SEDAR on May 5, 2023. The fund will hold a conference call to discuss the results on Wednesday, May 3, 2023, at 1 p.m. Pacific Time (4 p.m. Eastern Time).

The call will be webcast live and may be viewed on-line. Participants who wish to ask questions or are unable to join by webcast may dial in by calling toll-free 1-888-886-7786 or 1-416-764-8658 and by using the conference ID 97827278 or quoting A&W Revenue Royalties when prompted by the operator. For those unable to participate in the live call, a replay will be made available for one year.

"A&W is pleased to report strong results for the first quarter of 2023, with our royalty pool same-store-sales growth coming in at 6.1 per cent," said Susan Senecal, president and chief executive officer of A&W Food Services. "We believe our mission 'to become No. 1 with millennial burger lovers, chosen and trusted for truly good food and the convenience they crave' will help us continue to grow successfully and win the loyalty of our guests."

Royalty income for the first quarter of 2023 was $11,439,000 based on gross sales reported by restaurants in the royalty pool of $381,298,000, compared with royalty income of $10,578,000 and gross sales reported by A&W restaurants in the royalty pool of $352,614,000 for the first quarter of 2022.

The increase in royalty income for the quarter is driven by royalty pool same-store-sales growth, which was 6.1 per cent for the quarter, and the gross sales from the 22 net new restaurants added to the royalty pool on Jan. 5, 2023. The increase was partially offset by there being one less day in the first quarter of 2023 as compared with the first quarter of 2022. Royalty pool same-store-sales growth is based on an equal number of days in the quarter and year.

Royalty pool same-store-sales growth for the first quarter of 2023 was 6.1 per cent as compared with the same quarter of 2022. The royalty pool same-store-sales growth was primarily driven by there being no public health restrictions related to COVID-19 in place across Canada during the first quarter of 2023 as compared with the first quarter of 2022. There were no temporary closures of A&W restaurants due to COVID-19 restrictions in first quarter 2022; however, many A&W restaurants were still required to operate with reduced operating hours and capacity limits on dine-in guests for all, or a portion, of the quarter.

Two monthly distributions totalling 32.0 cents per unit were declared in the first quarter of 2023 compared with two monthly distributions totalling 31.0 cents per unit in the first quarter of 2021.

The quarterly payout ratio reported by the fund is impacted by seasonality of sales of the A&W restaurants and the timing of current income taxes, which can vary by quarter, and the distribution rate in effect at the time. The payout ratio for the first quarter of 2023 was 112.9 per cent, which is higher than the trailing four-quarter payout ratio of 92.0 per cent, due primarily to the timing impact of current income taxes.

About A&W Revenue Royalties Income Fund

The fund is a limited-purpose trust established to invest in Trade Marks, which, through its interest in the A&W Trade Marks Limited Partnership, owns the A&W trademarks used in the A&W quick-service restaurant business in Canada. The A&W trademarks comprise some of the best-known brand names in the Canadian food service industry. In return for licensing A&W Food Services to use its trademarks, Trade Marks (through the partnership) is entitled to royalties equal to 3 per cent of the gross sales reported by A&W restaurants in the royalty pool.

The royalty pool is adjusted annually to reflect gross sales from new A&W restaurants, net of the gross sales of any A&W restaurants that have permanently closed. Additional LP units are issued to A&W Food Services to reflect the annual adjustment. A&W Food Services' additional LP units are exchanged for additional common shares of Trade Marks, which are exchangeable for trust units. The 21st annual adjustment to the royalty pool took place on Jan. 5, 2023, at which time the number of restaurants in the royalty pool increased from 1,015 to 1,037.

Trade Marks' dividends to A&W Food Services and the fund, and the fund's distributions to unitholders, are based on top-line revenues of the A&W restaurants in the royalty pool, less interest, general and administrative expenses, and current income taxes of Trade Marks.

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