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  • Pizza Pizza Royalty Corp. Investor Presentation

  • Forward-Looking Statement

    This presentation will contain forward-looking statements.

    Investors should be aware that any forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those disclosed here today.

    Investors are directed to the Companys Annual Information Form for a full discussion of risks.

    Management does not intend to discuss any undisclosed material information today.

    2

  • 3

    Curt Feltner Pizza Pizza Limited

    Chief Financial Officer

  • Overview

    Pizza Pizza Limited Business Fundamentals Restaurant Growth and Concepts Innovation Social Responsibility

    Pizza Pizza Royalty Corp. Restaurant Royalty Structure Financial Results 2015 Transactions Summary

    4

  • Business Fundamentals

    Canadas #1 pizzeria Seasoned management team Strong and proven business model Powerful brands Geographic diversification Modernized restaurant chain Innovation leader since 1967

    5The private operating company pays a monthly royalty

    for use of trademarks.

  • Turn-Key Franchise System

    6

    Pizza Pizza Limited performs all back office activity for our franchisees, allowing them to focus on the customer experience.

    Pizza Pizza Limited

    Centralized Distribution Centre

    Centralized Site Selection

    & Lease

    Administration

    Administration of

    Payables

    Weekly Sales Auditing

    Centralized Order

    Processing Centre

    Centralized Marketing Team

  • Pizza Pizza honoured with industry and consumer choice awards. 7

  • 505 531616 640

    671 695 694690723

    Number of Restaurants

    8

    732

    0

    200

    400

    600

    800

    05 06 07 08 09 10 11 12 13 14

    10294898988817257

    222231219225228216199192176165

    408398386376379374369367355340

    Traditional - Pizza Pizza Non-Traditional - Pizza Pizza Pizza 73

    With over 730 restaurants across Canada, we serve over 33 million customers annually.

  • 9

    21

    418

    55338

    9

    1

    1

    96

    3NFLD

    Canadas #1 Pizza Franchise

    9Building a national presence outside our core

    Alberta and Ontario markets.

  • TM

    Sponsorships Non-traditional locations

    Special Events

    Non-traditional Partnerships Build Brand Awareness

    Partnering with major sports arenas, entertainment venues and special community events provide marketing and business opportunities. 10

  • 11

    The Pizza 73 brand dominates the Alberta pizza market.

  • 12

  • Consumer Preferences

    13New international flavours satisfy consumer cravings.

  • Product Quality

    14Pizza Pizzas R&D team source

    the highest quality and freshest ingredients.

  • Product Innovation

    15$30 million marketing budget is key to building sales.

  • Technological Innovation

    16Partnering innovation with consumer convenience

    leads to sales growth.

  • Social Responsibility

    Need to insert some specials etc which pat speaks to each quarter

    17Our fundraising events have raised over $1,700,000

    for various charities including the Childrens Miracle Network.

  • 18

    Financial Update

  • Organizational Structure

    19

    Shareholders

    Pizza Pizza Royalty Corp.

    Pizza Pizza Royalty Limited Partnership

    Pizza Pizza and Pizza 73 Rights

    Bank Indebtedness

    Pizza Pizza Limited (privately-held)

    Licence and Royalty

    Agreements

    19.9% 80.1%

    Licence and royalty agreements with Pizza Pizza Limited provide cash flow stability to investors with limited operational risks.

  • Organizational Structure

    20With a strong cash reserve in place, PPRC targets a payout ratio of 100%.

    Restaurant Retail Sales

    Royalty IncomeLess:

    Admin. Expenses Interest,

    and Taxes

    Shareholder Dividends

  • 0

    150

    300

    450

    600

    05 06 07 08 09 10 11 12 13 14

    90838077768181

    33 415408402391380370390376

    353335

    Pizza Pizza Restaurants Pizza 73 Restaurants

    409

    471 468456451

    505482

    Royalty Pool System Sales

    21

    491

    ($ millions)

    In 2014 the Royalty Pool Sales surpassed the $500 million mark.

  • $24.9M in Royalty Revenue $8.1M in Royalty Revenue6% of System Sales 9% of System Sales

    Royalty Revenues

    22

  • System Sales Drivers

    Royalty Pool System Sales are driven by: Same Store Sales Growth

    Customer Traffic Average Ticket

    and New Restaurant Openings

    23

  • -7%

    -5%

    -2%

    0%

    2%

    5%

    7%

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    2012

    2013

    2014

    YTD 2

    015

    4.9

    1.12.12.72.6

    0.0

    -5.9

    1.7

    4.64.55.4

    Same Store Sales Growth

    24

    (%)

  • -1%

    0%

    1%

    2%

    4%

    5%

    6%

    7%

    Mar-1

    4

    Jun-1

    4

    Sep-1

    4

    Dec-1

    4

    Mar-1

    5

    Jun-1

    5

    Sep-1

    5

    6.3%6%

    2.5%2%

    0.8%

    -0.3%

    1.6%

    SSSG - Quarterly

    25Consumer traffic growth is driving Same Store Sales Growth.

  • $0

    $1,200

    $2,400

    $3,600

    $4,800

    $6,000

    -7%

    -4%

    -1%

    3%

    6%

    9%

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    2012

    2013

    2014

    SSSG Working Capital (000s)

    1.12.12.72.6

    0.0

    -5.9

    1.74.64.55.4

    Sales Growth and Cash Reserve

    26

    Share buy-back

    PPRCs cash reserve is available to stabilize dividends in the event of short -to-medium term variability in System Sales.

  • $0.000

    $0.010

    $0.020

    $0.030

    $0.040

    $0.050

    $0.060

    $0.070

    $0.080

    $0.090

    $0.100

    July-

    05

    Nov-0

    5

    Feb-0

    6

    July-

    06

    Jan-0

    7

    Sept

    -07

    Jun-0

    8

    Jan-1

    1

    May-1

    2

    Jan -

    13

    Jun-1

    3

    Jan-1

    4

    Apr-1

    5

    Nov-1

    5

    $0.0697$0.0680$0.0667$0.0650$0.0625

    $0.0600$0.0584

    $0.0775$0.0760$0.0730$0.0710$0.0695$0.0681$0.0667

    Tax+2.7%

    Dividends Since IPO

    27

    +4.2% +4.1%+2.6%

    +1.9%

    Since its IPO in 2005, PZA has increased its dividends 12 times.

    +2.0%

  • 2014 Performance Highlights

    Royalty Pool System Sales $505 M SSSG 1.1% Royalty Pool restaurants increased to 722 $3.9 million working capital reserve Dividend increased 2.6% in January 2014 Loan interest rate reduced 0.25% Adjusted earnings per share $0.861 Dividends per share $0.8004

    28

  • Q3 15 Performance Highlights

    Royalty Pool System Sales of $133 M SSSG 6.3% Adjusted earnings per share $0.221 Dividend increased twice in 2015 Dividend per share $0.204 Pay-out ratio = 96% Royalty Pool increased to 730 restaurants $4.4 million working capital reserve

    29

  • Pizza Pizza Limiteds March 2015 Bought Deal

    30

    Public Float PPL Equivalent Shares Fully-diluted Shares

    January 1, 2015 21,818,392 8,924,133 30,742,525

    March 23, 2015 2,800,000 (2,800,000) -

    Current 24,618,392 6,124,133 30,742,525

    PPL, the private operating company, sells 2.8 million equivalent shares in a bought deal.

  • Credit Facility Renewal

    31The early renewal of the Partnerships credit facility resulted in

    annual interest savings of $640,000.

    New Facility Old Facility

    Maturity April 24, 2020 December 6, 2016

    Interest Rate 2.75% (1.875% + 0.875%)4.12%

    (2.87% + 1.25%)

    Annual Interest Savings $640,000

  • Shareholder Information

    TSX exchange listing PZA Publicly traded shares

    outstanding24,618,392

    Fully Diluted shares 30,742,525 Market Capitalization $435M Pizza Pizza Limiteds ownership 19.9% Current monthly dividend $0.0697 Recent trading price $14.15 Recent yield 5.9% Credit facility matures April 2020 $47M

    32

  • 33