Mr. Jordan Holm reports

BOSTON PIZZA ROYALTIES INCOME FUND ANNOUNCES 2023 THIRD QUARTER RESULTS AND OCTOBER 2023 CASH DISTRIBUTION OF $0.107 PER UNIT

Boston Pizza Royalties Income Fund has released its financial results for the third quarter period from July 1, 2023, to Sept. 30, 2023, and Jan. 1, 2023, to Sept. 30, 2023. A copy of this press release, the condensed consolidated interim financial statements, and related management's discussion and analysis (MD&A) of the fund and BPI are available on SEDAR-plus and the fund's website. The fund will host a conference call to discuss the results on Nov. 9, 2023, at 8:30 a.m. PT/11:30 a.m. ET. The call can be accessed by dialling 1-800-319-4610 or 604-638-5340. A replay will be available until Dec. 9, 2023, by dialling 1-800-319-6413 or 604-638-9010 and entering the access code 0410, followed by the number sign. The replay will also be available at the fund's website.

COVID-19 impacted the business of the fund, BPI and Boston Pizza Canada LP, and the operation of Boston Pizza restaurants significantly during 2020, 2021 and the first half of 2022. Since then, COVID-19 case counts improved, government restrictions related to COVID-19 were largely eliminated and sales levels of Boston Pizza restaurants have returned to levels more consistent with times prior to COVID-19.

"We are pleased that the encouraging sales trend has continued into the third quarter of 2023. This achievement is a testament to our franchisees' dedication to delivering exceptional guest experiences," stated Jordan Holm, BPI's president. "In the midst of ongoing economic uncertainty, inflationary pressures and high interest rates, we are dedicated to the continued success of the Boston Pizza brand and our restaurant network."

Period and YTD (year to date) results

SRS, a key driver of distribution growth for unitholders, was 5.3 per cent for the period compared with 8.4 per cent reported in the third quarter of 2022. SRS was principally due to an increase in average guest cheque due to a combination of menu pricing and larger per guest ordering levels. SRS YTD was 11.6 per cent compared with 32.6 per cent reported year to date in 2022. SRS was principally due to increases in restaurant guest traffic compared with year to date in 2022 and average guest cheque due to a combination of menu pricing and larger per guest ordering levels. COVID-19 restrictions existed in most of the country during the first quarter of 2022 and part of the second quarter of 2022 that negatively impacted in-restaurant guest traffic. Those restrictions were largely eliminated during the second quarter of 2022.

Franchise sales of Boston Pizza restaurants in the royalty pool were $240.1-million for the period and $698-million YTD compared with $229.8-million and $627.8-million, respectively, for the same periods one year ago. The $10.3-million increase in franchise sales for the period and $70.2-million increase in franchise sales YTD were primarily due to positive SRS.

The fund's net and comprehensive income was $4.9-million for the period compared with $9.5-million for the third quarter of 2022. The $4.6-million decrease in the fund's net and comprehensive income for the period compared with the third quarter of 2022 was primarily due to a $5.8-million increase in fair value loss and a $100,000 increase in net interest expense, partially offset by an $800,000 decrease in income tax expense and a $600,000 increase in royalty and distribution income. The fund's net and comprehensive income was $24.3-million YTD compared with $24.2-million year to date in 2022. The $100,000 increase in the fund's net and comprehensive income YTD compared with the same period in 2022 was primarily due to a $3.7-million increase in royalty and distribution income, partially offset by a $2.2-million decrease in fair value gain, a $1.1-million increase in income tax expense and a $100,000 increase in net interest expense.

The fund's cash flows generated from operating activities was $9.7-million for the period compared with $9.7-million in the third quarter of 2022. An increase in income taxes paid of $500,000 and a decrease in changes in working capital of $100,000 were offset by an increase in royalty and distribution income of $600,000. Cash flows generated from operating activities YTD was $28.6-million compared with $25.4-million in the same period in 2022. The increase of $3.2-million was primarily due to an increase of royalty and distribution income of $3.7-million and an increase in changes in working capital of $700,000, partially offset by an increase in income taxes paid of $1.2-million.

The fund generated distributable cash of $8.3-million for the period compared with $7.5-million for the third quarter of 2022. The increase in distributable cash of $800,000, or 10.5 per cent, was primarily due to decreased BPI Class B unit entitlement of $300,000, SIFT tax on units adjustment of $300,000 and lower interest paid on long-term debt of $100,000. The fund generated distributable cash of $23.3-million YTD compared with $18.4-million year to date in 2022. The increase in distributable cash of $4.9-million or 27.0 per cent was primarily due to increased cash flows generated from operating activities of $3.2-million, lower repayments of long-term debt of $1.5-million, SIFT tax on units adjustment of $200,000 and lower interest paid on long-term debt of $200,000, partially offset by increased BPI Class B unit entitlement of $200,000.

The fund generated distributable cash per unit of 38.7 cents for the period and $1.086 YTD compared with 34.7 cents and 85.3 cents, respectively, for the same periods in 2022. The increase in distributable cash per unit of four cents, or 11.5 per cent, for the period and 23.3 cents, or 27.3 per cent, YTD were primarily attributable to the increase in distributable cash outlined above and fewer units outstanding compared with the same period in 2022 due to the fund's NCIB (normal course issuer bid).

The fund's payout ratio for the period was 82.9 per cent compared with 82.0 per cent in the third quarter of 2022. The increase in the fund's payout ratio for the period was due to distributions paid increasing by $700,000, or 11.7 per cent, partially offset by distributable cash increasing by $800,000, or 10.5 per cent, YTD, the fund's payout ratio was 87.3 per cent compared with 93.2 per cent year to date in 2022. The decrease in the fund's payout ratio YTD was due to distributable cash increasing by $4.9-million, or 27.0 per cent, partially offset by distributions paid increasing by $3.2-million, or 18.9 per cent. Payout ratio is calculated by dividing the amount of distributions paid during the applicable period by the distributable cash for that period. The fund's payout ratio is typically higher in the first and fourth quarters compared with the second and third quarters since Boston Pizza restaurants generally experience higher franchise sales levels during the summer months when restaurants open their patios and benefit from increased tourist traffic. On a trailing 12-month basis, the fund's payout ratio was 93.9 per cent as at Sept. 30, 2023.

Normal course issuer bid

On June 15, 2023, the fund announced that it had received Toronto Stock Exchange approval of a notice of intention to make a normal course issuer bid through the facilities of the TSX, other designated exchanges and/or alternative Canadian trading systems from June 20, 2023, to no later than June 19, 2024. The NCIB permits the fund to repurchase for cancellation up to 400,000 units, being approximately 1.86 per cent of the fund's issued and outstanding units (as at June 6, 2023).

The fund established an automatic securities purchase plan (ASPP) with its broker to allow for the repurchase of units under the NCIB at any time, including when it ordinarily would not be active in the market due to its own internal trading blackout periods, insider trading rules or otherwise. The ASPP automatically terminated by its terms on Aug. 22, 2023, as a result of the purchase limits specified in the ASPP having been attained. All purchases under the ASPP were made on the open market through the facilities of the TSX, other designated exchanges and/or alternative Canadian trading systems.

As at June 30, 2023, the fund acquired 54,200 units under the NCIB at an average price of $16.28 per unit. During the period, the fund acquired an additional 188,700 units under the NCIB at an average price of $16.55 per unit. Accordingly, as at Sept. 30, 2023, the fund acquired a total of 242,900 units at an average price of $16.49 per unit. The fund did not acquire any additional units under the NCIB after Sept. 30, 2023. The fund financed units purchased under the NCIB from cash on hand. All units that were or will be purchased under the NCIB were or will be cancelled.

Distributions

During the period, the fund declared distributions on the units in the aggregate amount of $6.8-million, or 32.1 cents per unit. During the third quarter of 2022, the fund declared distributions on the units in the aggregate amount of $6.1-million, or 8.5 cents per unit. During the period, the fund paid distributions on the units in the aggregate amount of $6.8-million, or 32.1 cents per unit. During the third quarter of 2022, the fund paid distributions on the units in the aggregate amount of $6.1-million, or 28.5 cents per unit. The amount of distributions declared during the period increased by $700,000, or 3.6 cents per unit, due to the monthly distribution rate increasing from 8.5 cents per unit to 10 cents per unit commencing with the July, 2022, distribution, increasing again from 10 cents per unit to 10.2 cents per unit commencing with the November, 2022, distribution and increasing again from 10.2 cents per unit to 10.7 cents per unit commencing with the March, 2023, distribution. Distributions paid during the period increased by $700,000, or 3.6 cents per unit, due to the 2022 to 2023 distribution increases. YTD, the fund declared distributions on the units in the aggregate amount of $18.1-million, or 84.6 cents per unit. During the same period in 2022, the fund declared distributions on the units in the aggregate amount of $15.3-million, or 71 cents per unit. YTD, the fund paid distributions on the units in the aggregate amount of $20.3-million, or 94.8 cents. During the same period in 2022, the fund paid distributions on the units in the aggregate amount of $17.1-million, or 79.5 cents per unit. The amount of distributions declared YTD increased by $2.8-million, or 13.6 cents per unit, due to the 2022 to 2023 distribution increases. Distributions paid YTD increased by $3.2-million, or 15.3 cents per unit, due to the 2022 to 2023 distribution increases.

On Nov. 8, 2023, the trustees of the fund declared a distribution for the period of Oct. 1, 2023, to Oct. 31, 2023, of 10.7 cents per unit, which will be payable on Nov. 30, 2023, to unitholders of record on Nov. 21, 2023. Including the October, 2023, distribution, which will be paid on Nov. 30, 2023, the fund will have paid out total distributions of $418.2-million, or $25.80 per unit, which includes 250 monthly distributions and two special distributions.

Financial summary

The attached tables set out selected information from the fund's condensed consolidated interim financial statements together with other data and should be read in conjunction with the condensed consolidated interim financial statements and MD&A of the fund for the three-month and nine-month periods ended Sept. 30, 2023, and Sept. 30, 2022.

Short-term outlook

The two principal factors that affect SRS are changes in guest traffic and changes in average guest cheque. BPI's and BP Canada LP's strategies to drive higher guest traffic include attracting a wide variety of guests into the restaurant, sports bar and takeout and delivery parts of each location, offering a compelling value proposition to guests and leveraging a larger marketing budget versus the previous year along with a revised calendar of national and local store promotions. Increased average cheque levels are expected to be achieved through a combination of culinary innovation and menu repricing.

The success of BPI, BP Canada LP and Boston Pizza restaurants, and the amount of franchise sales, royalty, distribution income and distributable cash available for distribution to unitholders, are dependent upon many economic factors, including impacts of inflation, increases in interest rates, unemployment rates, consumer confidence, recession, supply chain disruption, labour availability and other globally disruptive events. Despite the current state of economic uncertainty, Boston Pizza restaurants have been able to generate solid franchise sales and offer affordable dining options, both on and off-premise, for guests in economically uncertain times. As demonstrated during COVID-19, BPI, BP Canada LP and Boston Pizza restaurants have the ability to adapt to changes in operating environments and economic conditions. However, with supply chain challenges, rising interest rates, increasing input costs and labour shortages impacting most of the restaurant industry, together with widespread focus on sustainability and climate related issues, BPI's management remains cautious. The focus of BPI's management is to adapt the business to mitigate these challenges and maintain the positive sales momentum achieved in 2022 and the first three quarters of 2023.

The trustees of the fund will continue to closely monitor the fund's available cash balances given the uncertain economic outlook and industry challenges.

We seek Safe Harbor.