Ms. Susan Senecal reports

A&W REVENUE ROYALTIES INCOME FUND ANNOUNCES THIRD 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 third quarter ended Sept. 10, 2023, which are expected to be filed today on SEDAR+. The fund will hold a conference call to discuss the results today, Wednesday, Oct. 18, 2023, at 1 p.m. PT (4 p.m. ET).

The call will be webcast live and may be accessed on-line. Participants who wish to ask questions or are unable to join via webcast may dial in by calling toll-free 1-888-259-6580 or 1-416-764-8624, and by using the conference ID 02286643 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 on-line.

"We are pleased with the year-to-date royalty pool same store sales growth of 3 per cent and our results for the first three quarters of 2023, particularly in comparison to very strong quarterly performance in 2022," said Susan Senecal, president and chief executive officer of A&W Food Services.

Royalty income for the third quarter of 2023 increased by 3.8 per cent in Q3 2023 and 5.4 per cent year-to-date, as compared with comparable periods in 2022. The royalty income for Q3 2023 was $13,705,000 and is based on gross sales reported by A&W restaurants in the royalty pool of $456,842,000, compared with royalty income of $13,198,000 and gross sales reported by A&W restaurants in the royalty pool of $439.95-million for the third quarter of 2022. Year-to-date royalty income was $37,917,000 based on gross sales reported by A&W restaurants in the royalty pool of $1,263,908,000, compared with royalty income of $35,963,000 and gross sales reported by A&W restaurants in the royalty pool of $1,198,779,000 for the comparable period in 2022.

The increase in royalty income for the quarter and year-to-date period was driven by royalty pool same store sales growth, which was plus 1.1 per cent for the quarter and plus 3 per cent year-to-date, and the gross sales from the 22 net new restaurants added to the royalty pool on Jan. 5, 2023. The increase for the year-to-date period was partially offset by there being one less day in the year-to-date period of 2023 as compared with the year-to-date period of 2022. Royalty pool same store sales growth is based on an equal number of days in the quarter and year.

The royalty pool same store sales growth in both the quarter and year-to-date period was primarily driven by growth in average check size, which was mainly attributable modest increases in response to industry-wide inflation on goods, services and labour.

Three monthly distributions totalling 48 cents per unit were declared in the third quarter of 2023, compared with three monthly distributions totalling 46.5 cents per unit in the third quarter of 2022. Eight monthly distributions totalling $1.28 per unit were declared in the 2023 year-to-date period, compared with eight monthly distributions totalling $1.24 per unit for the comparable period in 2022. Total distributions declared and accrued per equivalent unit year-to-date were $1.331 for 2023 compared with $1.294 for the comparable period in 2022.

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 third quarter of 2023 was 81.3 per cent, compared with 80.3 per cent for the third quarter of 2022. The payout ratio of 92.6 per cent for the year-to-date period in 2023 is higher than the trailing-four-quarter-payout ratio of 91.9 per cent, due to both the seasonality of sales and 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 LP, 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.

About A&W Food Services of Canada Inc.

A&W is the second-largest quick-service hamburger restaurant chain in Canada. Operating coast to coast, A&W restaurants feature famous trademarked menu items such as The Burger Family, Chubby Chicken and A&W Root Beer.

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