A&W Revenue Royalties Income Fund

Press Releases

A&W Revenue Royalties Income Fund Announces Temporary Suspension of Monthly Distributions Due to the Impact of COVID-19

TRADING SYMBOL:  The Toronto Stock Exchange – AW.UN   

VANCOUVER, March 31, 2020 /CNW/ -

  • Temporarily suspends distributions on its units ("Units")
  • Provides update on impact of COVID-19 on the Canadian QSR industry

A&W Revenue Royalties Income Fund (the Fund) and A&W Food Services of Canada Inc. ("A&W Food Services") are providing an update on the impact of the COVID-19 virus on the Canadian quick service restaurant (QSR) industry and A&W restaurant operations, and the Fund is announcing that in response it is temporarily suspending distributions on its Units to preserve capital during this period of uncertainty.

Update on impact of COVID-19 on A&W Operations

A&W Food Services and its franchisees have voluntarily taken significant measures in their restaurants and broader operations in conjunction with their business partners and stakeholders to protect the health of employees and guests in addition to complying with social-distancing recommendations and mandates of relevant public health authorities. These measures include significantly restricting food service operations in A&W restaurants. In particular, A&W Food Services has made the decision to voluntarily close all dining rooms in A&W restaurants across Canada on a temporary basis. Drive thru operations, delivery and mobile ordering for pick up remain open, where possible. As a result approximately 200 A&W restaurants of the 996 total A&W restaurants are presently closed on a temporary basis. Customer traffic in the remaining restaurants is down significantly as more guests remain at home and exercise social distancing. A&W Food Services will be making special accommodations at some restaurants to serve communities most in need of food service, with specific consideration for healthcare workers, truck drivers and essential retail and food service workers.

"This is a difficult time for all Canadians" said Susan Senecal, President and Chief Executive Officer of A&W Food Services.  "Our primary goal is to protect the health of all Canadians, most particularly our team members and our guests."

A&W Food Services will continue to monitor developments related to COVID-19 closely and will continue to follow the guidance of public health authorities. As conditions change, A&W Food Services may decide to make additional temporary modifications at their restaurants to further protect the health of its guests and team members, which remains its top priority.

Temporary Suspension of Monthly Distributions

While the extent and duration of the financial impact of COVID-19 and the proactive measures being taken by A&W Food Services and its franchisees is unknown, as noted above, such measures have resulted in significant declines in restaurant performance. As a result, the top-line royalty payable to the Fund by A&W Food Services will also decline significantly for an uncertain period of time. Without a clear understanding of the duration of the impact of COVID-19 on the revenues of the A&W Restaurants, the Trustees have determined to temporarily suspend monthly distributions on the Units commencing with the distribution that would ordinarily have been declared in April 2020 and been payable on or about April 30, 2020 to unitholders of record on or about April 15, 2020. The previously announced distribution of $0.159 per Unit payable on March 31, 2020 has been paid to unitholders of record as of March 15, 2020.  

John McLernon, the Chairman of the Fund noted, "This is a difficult time for Canada, our communities, our guests, franchisees and the staff who work in the restaurants. We therefore believe it is appropriate, and in the long-term best interests of the Fund and its unitholders, to pause distributions until we have much greater clarity around the sales levels in the restaurants."

The Fund (and A&W Food Services) currently have a strong cash position and the temporary suspension of its monthly distributions will allow it to preserve liquidity until the sales by A&W restaurants improve. The board of trustees of the Fund will continue to regularly monitor the performance of A&W Food Services in order to determine an appropriate time for reinstatement of monthly distributions. In addition, to the extent royalty payments from A&W Food Services are not paid as they become due, the unpaid amounts will accrue interest in accordance with the terms of the existing agreements governing the royalty payments until such amounts are paid.


The Fund is a limited purpose trust established to invest in Trade Marks, which through its interest in A&W Trade Marks Limited Partnership (the Partnership), owns the A&W trade-marks used in the A&W quick service restaurant business in Canada.  In return for licensing A&W Food Services to use its trade-marks, Trade Marks (through the Partnership) receives royalties equal to 3% 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 limited partnership units (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 shares of Trade Marks which are exchangeable for units of the Fund.

As at March 31, 2020 A&W Food Services owned 23.6% of the common shares of Trade Marks, and therefore owned the equivalent of 23.6% of the Units of the Fund on a fully-diluted basis.   

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.


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

Follow A&W on Facebook (www.facebook.com/AWCanada) and Twitter @AWCanada or visit www.awincomefund.ca.


Certain statements in this press release may contain forward-looking information within the meaning of applicable securities laws in Canada (forward-looking information). The words "anticipates", "believes", "budgets", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "schedule", "should", "will", "would" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. Specific forward-looking statements include statements with respect to: the temporary suspension of the Fund's monthly distribution starting in April 2020 and the reasons for such temporary suspension; the board of trustees will continue to regularly monitor the performance of A&W Food Services in order to determine an appropriate time for reinstatement of monthly distributions; drive thru, delivery and mobile ordering remaining available, where possible; A&W Food Services making special accommodation at certain restaurants and the details thereof; A&W Food Services will continue to monitor developments related to COVID-19 closely and will continue to follow the guidance of public health authorities and may need to make further modifications at their restaurants; and interest will be accrued on any delayed royalty payments from A&W Food Services until paid. The forward-looking information is based on assumptions that management considered reasonable at the time it was prepared, which assumptions include: current store closures will be temporary and restaurant performance will recover post COVID-19; and the Fund will receive sufficient revenue in the future (in the form of royalty payments from A&W Food Services) to recommence the payment of monthly distributions.  The forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by the forward-looking information.  Those risks and uncertainties include, among other things, risks related to: the impacts of the COVID-19 outbreak on the Canadian economy, the QSR industry, the willingness of the general public to dine outside their homes and travel, the level of consumer confidence in the safety of QSR restaurants and A&W restaurants, all of which are expected to negatively impact A&W Food Services and the Fund and may materially adversely affect each of A&W Food Services, their franchisees and the Fund's respective investments, results of operations, financial condition, their ability to obtain additional equity or debt financing, or re-finance existing debt, or make interest and principal payments to their respective lenders, and otherwise satisfy their respective financial obligations as they become due and may cause each of A&W Food Services, their franchisees and the Fund to be in non-compliance with one or more of the financial covenants under their respective existing credit facilities and cause a default thereunder; there is no guarantee that monthly distributions will be reinstated, and if reinstated, as to the timing thereof or what the amount of the monthly distribution will be; the temporary suspension of monthly distributions is expected to negatively impact the market price of the Units; the pace of recovery following the COVID-19 outbreak cannot be accurately predicated and may be slow; certain A&W restaurants that are currently temporarily closed may not reopen; and further government restrictions related to COVID-19 may be imposed, which restrict the ability of A&W restaurants to operate, or result in forced closures, further reduced guest traffic, supply interruptions or staff shortages. Additional factors which could cause results to differ from current expectations are described in the Fund's most recent Management Discussion and Analysis under the heading "Risks and Uncertainties" and the Fund's Annual Information Form under the heading "Risk Factors", available on SEDAR at www.sedar.com. The forward-looking information contained in this news release represent the Fund's expectations as of the date of this news release and are subject to change after this date. The Fund assumes no obligation to update or revise any forward-looking information, except as required by applicable law. 

SOURCE A&W Revenue Royalties Income Fund

For further information: For the Fund and A&W Food Services: Don Leslie, Chief Financial Officer: (604) 988-2141 or investorrelations@aw.ca