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Edited Transcript of BPF.UN.TO earnings conference call or presentation 14-Feb-19 4:30pm GMT

Q4 2018 Boston Pizza Royalties Income Fund Earnings Call

Richmond Feb 20, 2019 (Thomson StreetEvents) -- Edited Transcript of Boston Pizza Royalties Income Fund earnings conference call or presentation Thursday, February 14, 2019 at 4:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jordan Holm

Boston Pizza International Inc. - President

* Robert Kirincic

Boston Pizza Royalties Income Fund - Director & VP of Finance of Royalties GP

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Conference Call Participants

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* Elizabeth Johnston

Laurentian Bank Securities, Inc., Research Division - Analyst

* Nick Corcoran

Acumen Capital Finance Partners Limited, Research Division - Equity Research Analyst

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Presentation

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Operator [1]

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Hello, this is the Chorus Call conference operator. Thank you for standing by. Welcome to Boston Pizza's Fourth Quarter Conference Call. (Operator Instructions) The conference is being recorded on February 14, 2019. (Operator Instructions) Participants on the call may also post their questions via email to Boston Pizza's Investor Relations department at investorrelations@bostonpizza.com. (Operator Instructions)

At this time, I would like to turn the conference over to Rob Kirincic, Vice President, Finance. Please go ahead.

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Robert Kirincic, Boston Pizza Royalties Income Fund - Director & VP of Finance of Royalties GP [2]

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Thank you, and welcome to the call. We'll be discussing the 2018 fourth quarter and annual results for Boston Pizza Royalties Income Fund, or the Fund, and Boston Pizza International, or BPI. For complete details on our financial results, please see our 2018 fourth quarter materials filed earlier today on SEDAR or visit the Fund's website at www.bpincomefund.com. Should you require additional information after the call, you can reach us via the Investor Relations phone number listed in our press release.

The Fund is a limited purpose, open-ended trust established under the laws of British Columbia to acquire indirectly certain trademarks and trade names used by BPI in its Boston Pizza Restaurants in Canada, whereby BPI pays an amount to the Fund based on franchise revenues of Royalty Pool restaurants. For a complete description of the Fund, please see the Annual Information Form dated February 13, 2019, which was filed on SEDAR, www.sedar.com.

Before I turn the call over to Jordan Holm, President of BPI and the Fund, I have to remind everyone about the risks inherent in forward-looking information. Certain information in the following discussion may constitute forward-looking information that involves known and unknown risks, uncertainties, future expectations and other factors, which may cause the actual results, performance or achievements of the Fund, Boston Pizza Holdings Trust, Boston Pizza Royalties Limited Partnership, Boston Pizza Holding Limited Partnership, Boston Pizza Holdings GP Inc., Boston Pizza GP Inc., BPI, Boston Pizza Canada Limited Partnership, Boston Pizza Canada Holdings Inc., Boston Pizza Canada Holdings Partnership, Boston Pizza Restaurants or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information.

For a complete definition of forward-looking information and associated risks, please refer to the Fund's management discussion and analysis issued earlier today. Forward-looking information is provided as of the date of this call. And except as required by law, we assume no obligation to update or revise forward-looking information to reflect new events or circumstances.

With that, I'll turn the call over to Jordan.

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Jordan Holm, Boston Pizza International Inc. - President [3]

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Thank you, Rob, and welcome, everyone, to Boston Pizza's fourth quarter investor conference call. Today, I'll discuss our results for the fourth quarter and the year ended December 31, 2018, and Rob will review our key financial items. Later, I'll discuss Boston Pizza's plans for the remainder of the first quarter of 2019, and we'll leave time for your questions at the end.

As you can see from the press release and financial statements filed earlier this morning, Boston Pizza posted systemwide gross sales of $278.5 million for the period and over $1.1 billion for the year, representing increases of 1.1% and 1.5%, respectively, versus the same periods in 2017.

In addition, the Fund posted franchise sales from restaurants in the Royalty Pool of $211.4 million for the period and $855.1 million for the year, representing increases of 1.7% and 1.3%, respectively, versus the same periods in 2017. The key driver of our sales results for both the period and the year was additional sales from the 8 net new restaurants opened in 2017 and rolled into the Royalty Pool on January 1, 2018.

Same-store sales growth, or SSSG, for the period was negative 0.2% and ended the year positive at 0.1%. SSSG for the period and the year was principally due to menu repricing and increased takeout and delivery sales, offset by weak general economic conditions in regions directly connected to the oil and gas industry and lower guest traffic. Much of the menu price increases were made in response to provincial minimum wage increases, and those menu price increases did contribute to reduced guest traffic compared to the same period 1 year ago.

BPI continues to monitor reactions to menu pricing strategies in order to adapt to the competitive restaurant environment. Takeout delivery sales continued to be positively impacted by our national delivery service partnership with SkipTheDishes.

BPI completed 9 restaurant renovations during the period compared to 13 in the fourth quarter 1 year ago. This brings our total to 36 restaurant renovations for 2018 and a remarkable total of 221 completed restaurant renovations over the last 5 years. Restaurants typically close for 2 to 3 weeks to complete the restaurant renovation and experience an incremental sales increase in the year following the reopening.

We started the fourth quarter with a national marketing campaign to promote our new Appy Hour with drinks and appetizers starting at just $4 during the 3:00 to 6:00 p.m. afternoon time and 9:00 p.m. to closing Sunday through Thursday nationally. The promotion was supported by customized digital and social media and radio campaigns.

On October 31, we began our new national takeout delivery campaign to continue to drive awareness of our mobile and online takeout and delivery experience supported by our Boston Pizza website and by the BP -- MyBP app. The promotion was supported by television advertising as well as targeted digital and social media campaigns.

Our 2018 holiday promotion began on November 13 and included a selection of shareable appetizers and a bonus promotion card offer. Boston Pizza's holiday menu featured our 4-cheese lasagna and delicious pasta dishes as well as tasty entrées like slow-roasted pork back ribs and our new baked salmon and avocado smash. For dessert, we featured our chocolate explosion cake.

Sharing the spotlight with our tasty holiday menu was our annual gift card incentive. When a guest purchases at least $50 worth of Boston Pizza gift cards, they receive a promotional card for $10 off their food purchases between January 2 and February 13, 2019.

Turning to restaurant development. We opened 7 new Boston Pizza Restaurants during the fourth quarter of 2018, bringing our total to 10 new Boston Pizza Restaurants opened during the year. This continued expansion further solidifies our position as Canada's #1 casual dining brand by serving more than 50 million guests annually in more locations than any other full-service restaurant brand in Canada.

We do have some exciting initiatives planned to drive sales for the rest of 2019, which I'll speak more about in a moment. But for now, I'd like to turn the call back over to Rob for a review of the Fund's financial performance. Rob?

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Robert Kirincic, Boston Pizza Royalties Income Fund - Director & VP of Finance of Royalties GP [4]

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Thank you, Jordan. The Fund posted royalty income of $8.5 million for the period and $34.2 million for the year, compared to $8.3 million and $33.8 million, respectively, for the same periods 1 year ago. This represents an increase of 1.7% for the period and 1.3% for the year.

The Fund posted distribution income of $2.8 million for the period and $11.4 million for the year compared to $2.8 million and $10.9 million for the same periods one year ago. Royalty and distribution income in respect to the period and year were based on the Royalty Pool of 391 Boston Pizza Restaurants reporting franchise sales of $211.4 million for the period and $855.1 million for the year. In the fourth quarter and year for 2017, royalty and distribution income were based on a Royalty Pool of 383 Boston Pizza Restaurants reporting franchise sales of $207.9 million and $844.5 million, respectively.

The Fund's net and comprehensive loss was $1 million for the period compared to net and comprehensive income of $7.1 million for the same period in 2017. The $8.1 million decrease in the Fund's net and comprehensive income for the period compared to the fourth quarter of 2017 was primarily due to an $8.6 million change in fair value adjustments, partially offset by lower income taxes of $0.6 million.

For the year, net and comprehensive income was $8.7 million compared to net and comprehensive income of $27.0 million in 2017. The $18.3 million decrease in net and comprehensive income for the year compared to 2017 was primarily due to a $22.7 million net change in fair value adjustments, partially offset by lower income taxes of $2.8 million and higher royalty income of $0.4 million and distribution income of $0.5 million.

While net and comprehensive income is a measurement of the Fund's earnings under International Financial Reporting Standards, or IFRS, the Fund is of the view that net income does not provide the most meaningful measurement of the Fund's ability to pay distributions as the calculation of net income contains noncash items that do not affect the Fund's cash flow.

Noncash items include the fair value adjustments on the investment in Boston Pizza Canada Limited Partnership, the Class B unit liability, interest rate swaps and changes in deferred income taxes. Consequently, the Fund reports the non-IFRS metrics of distributable cash and payout ratio to provide, in the Fund's opinion, investors with more meaningful information regarding the Fund's ability to pay distributions to unitholders.

The Fund generated distributable cash of $7.3 million for the period compared to $7.2 million for the fourth quarter of 2017. The increase in distributable cash of 0.2% was primarily attributable to higher royalty and distribution income of $0.2 million, partially offset by higher interest paid on debt of $0.1 million.

For the year, the Fund generated distributable cash of $29.2 million compared to $28.6 million in 2017. The increase in distributable cash of 2.4% was primarily attributable to higher royalty and distribution income of $0.9 million and a decrease in BPI's Class B entitlement of $0.9 million as a result of BPI having exchanged $1.9 million Class B general partner units of Boston Pizza Royalties Limited Partnership and $40.8 million Class 2 general partner units of Boston Pizza Canada Limited Partnership for 1.6 million units of the Fund on September 26, 2017. This was partially offset by a higher SIFT tax of $0.8 million and higher interest paid on debt of $0.3 million.

The Fund generated distributable cash per unit of 0.3-3-2 or $0.332 for the period compared to $0.331 per unit for the fourth quarter of 2017. The increase in distributable cash per unit of 0.3% was primarily attributable to the positive SSSG on a franchise sale basis for the period, partially offset by the British Columbia provincial government increasing the general corporate tax rate by 1% effective January 1, 2018, which increased the Fund's SIFT tax rate by 1% to 27% for the period.

For the year, the Fund generated distributable cash per unit of $1.336 compared to $1.379 per unit in 2017. The decrease in distributable cash per unit of 3.1% was primarily attributable to SIFT tax, as mentioned, and negative SSSG on a franchise sales basis for the year.

The Fund's payout ratio for the period was 103.8% and 103.3% for the year compared to 104.2% and 100.0%, respectively, for the same periods in 2017. The decrease in the Fund's payout ratio for the period compared to the same period in 2017 was due to the combined effects of distributions paid decreasing by a nominal amount due to the NCIB program purchase and cancellation of 98,300 units at an average price of $15.86 during the current period and distributable cash increasing by 0.2%.

The increase in the Fund's payout ratio for the year compared to the same period in 2017 was due to the combined effects of distributions paid increasing by 5.8% and distributable cash increasing by 2.4%. The increase in distributions paid for the year compared to the same period 1 year ago was due to there being more units outstanding as a result of the unit exchanges just previously mentioned.

The Fund strives to provide unitholders with constant monthly distributions. And as a result, the Fund will generally experience seasonal fluctuations in its payout ratio. The Fund's payout ratio is likely to be higher in the first and fourth quarters each year compared with the second and third quarters each year since Boston Pizza Restaurants generally experience higher franchise sales during the summer months when restaurants open their patios and benefit from increased tourist traffic. Higher franchise sales generally results in higher -- in increases in distributable cash.

Given the top line structure of the Fund and no current mandate to retain capital for other purposes, it is important to note that a payout ratio close to 100% is expected over time. For additional context, the Fund's annual payout ratio for the prior 3 years ended December 31 were 100.0% in 2017, 98.9% in 2016 and 94.0% in 2015. The Fund also ended the year with $2.7 million in cash.

On February 8, 2018, the trustees declared a monthly cash distribution to unitholders of $0.115 per unit for January 2019. This distribution will be payable on February 28 to unitholders of record on February 21. This represents the 199th consecutive monthly distribution since the Fund's initial public offering. And with this distribution, the Fund will have paid out total cash distributions of $309.3 million or $20.76 per unit since the IPO in July 2002.

With that, I'll turn the call back to Jordan for the outlook. Jordan?

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Jordan Holm, Boston Pizza International Inc. - President [5]

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Thank you, Rob. As I mentioned, we have some excellent promotions this quarter for our guests at Boston Pizza in 2019. We started the first quarter of this year with our Big Rib Deal, which featured our delicious slow-roasted barbecue back ribs, 2 sides and garlic bread for $19.99. The Big Rib promotion ran from January 18 and wrapped up yesterday, and it was supported with digital and social media campaigns as well as in-store materials.

Today, February 14, is traditionally the busiest single business day of the year at our Boston Pizza restaurants across the country because it is our Valentine's Day heart-shaped pizza promotion. Last year, we saw double-digit increases in the total number of heart-shaped pizzas sold. We expect to surpass last year's total this year.

And as part of Valentine's Day campaign, Boston Pizza locations are raising funds for local charities by providing red paper heart decorations for a $2 donation, and we also feature our special triple chocolate mousse cake with all proceeds from the paper heart sale along with $1 from the sale of each of the heart-shaped pizzas and $1 from each of the cake sales that go toward supporting a local charity chosen by the restaurant.

So stay tuned in the upcoming weeks when we announce the fund-raising total, but we do expect to surpass last year's $400,000 that was raised across the country on Valentine's Day.

We have 396 locations across the country today and 6 new restaurants under construction currently. So we're optimistic about the continued restaurant expansion opportunities for Boston Pizza.

We've also completed 2 restaurant renovations to date and have many more scheduled for completion during the rest of 2019. These renovations help keep Boston Pizza restaurants looking fresh and modern. They bring new technology and equipment up to the latest standards. And in addition, our experience shows that the franchisees' investment in a store renovation is rewarded with an incremental sales increase when a location reopens and the guests are attracted to the great new look.

Although we do continue to see economic challenges in some regions of the country that are directly connected to the oil and gas industry and rising labor costs across Canada, we have many exciting initiatives underway that we believe will drive guest traffic and positive results going forward. With this continued momentum, we remain Canada's #1 casual dining brand.

With that, I'd like to turn the call over to the operator to begin the question-and-answer session.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Nick Corcoran of Acumen Capital.

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Nick Corcoran, Acumen Capital Finance Partners Limited, Research Division - Equity Research Analyst [2]

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I was hoping if you can maybe give a little bit more color on the same-store sales growth by region and then also maybe, Jordan, with regard to urban versus rural locations.

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Robert Kirincic, Boston Pizza Royalties Income Fund - Director & VP of Finance of Royalties GP [3]

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Yes. I mean, Boston Pizza, as you know, just -- I'll tackle the second one first, urban versus rural. So Boston Pizza, as you know, is primarily a brand that's in smaller towns and suburbs. I would only classify a dozen or so of our locations across the country as being sort of truly urban, Front and John, for example, in Downtown Toronto; the stadium location and Theatre here in Downtown Vancouver. But primarily, we're in the small towns and suburbs. And we don't see material performance difference between sources that are closer to urban centers. So -- but getting to your first question, which is more about regional performance. As you know, we provide a national same-store sales growth number. We do not break it down provincially. But just for color, and I've commented on this on previous quarterly investor conference calls, we have seen -- we had about a 3.5-year period of weakness in the oil and gas sector in Canada. For us, that means Alberta, Saskatchewan and Newfoundland. About 40% of our revenues would come from those 3 provinces combined, long operating history. Certainly, Alberta is our home city in Edmonton, have a lot of stores in that province. We are seeing generically a slow but steady economic recovery in that affecting -- or being reflected in our results in Alberta. We haven't seen as much in Saskatchewan. It's the conventionalism, I believe. When it comes to Saskatchewan, it's that they tend to follow Alberta into a recession perhaps, lag on the recovery side. And then I would say that's reflected in the sales results of the locations we have in Saskatchewan. And Manitoba has been soft for us as well. Other regions, BC, Ontario, Quebec, Atlantic have been positive, resulting in the net effect of positive 0.1% same-store sales growth nationally over the blend of those positives and negatives in those regions.

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Nick Corcoran, Acumen Capital Finance Partners Limited, Research Division - Equity Research Analyst [4]

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That's great. And then can you maybe just talk about that pipeline for new stores? I know you opened 10 in 2018 and that is 5 net. What can we expect in 2019?

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Jordan Holm, Boston Pizza International Inc. - President [5]

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It's going to be a similar year. Obviously, we have a good pipeline of identified real estate and franchisees who are looking to open new Boston Pizza locations. I mentioned we have 6 under construction currently. Our range for new store openings for 2019 is 10 to 15 for the full year. And it's -- it's continuing to look for the combination of good real estate opportunities and franchisees that's continued to establish and open new profitable Boston Pizza locations across the country. Some of the upcoming openings that we have include Gander, Newfoundland, we have one in Regina that's opening soon. And so we'll continue to find new opportunities across the country. And like I said, our target is sort of 10 to 15 new stores a year, and that's the number for 2019.

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Operator [6]

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(Operator Instructions) Our next question comes from Elizabeth Johnston of Laurentian Bank Securities.

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Elizabeth Johnston, Laurentian Bank Securities, Inc., Research Division - Analyst [7]

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I just want to go back to some comments you made with respect to Alberta, and you already answered them in part in the previous question here. But slow into the recovery, I think we're all -- we're familiar with that. But I'm wondering about -- recent data point to a potentially another, albeit, smaller downturn in oil and gas regions. I'm wondering if you've seen any change in the pace of recovery as a result of some of that.

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Jordan Holm, Boston Pizza International Inc. - President [8]

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In Alberta specifically?

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Elizabeth Johnston, Laurentian Bank Securities, Inc., Research Division - Analyst [9]

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Yes.

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Jordan Holm, Boston Pizza International Inc. - President [10]

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Yes. Not in our fourth quarter results. We continued on the trend in that province that we had probably for the last 18 to 24 months of seeing improved numbers there, albeit not back to the levels we were at 3.5 years ago, but a bottoming and then had a feeling of recovery in the overall province. Northern Alberta for us has been a little bit stronger than Southern Alberta. But we didn't see anything in the last 3 to 6 months of 2018 that would indicate a re-weakening of our results or the economy in general.

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Elizabeth Johnston, Laurentian Bank Securities, Inc., Research Division - Analyst [11]

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Okay, great. And in the release this morning, your comments about changes in traffic and traffic pulling back particularly as a result of many increases, of which most of those came on the back of higher input costs, i.e. labor. I'm just wondering, when you think about 2019 going forward now, I mean, typically, you would take menu price increases every year. Given the change in traffic that you've seen, do you think that you would -- that would give you pause to making further price increases in this coming year or maybe just a change in that strategy? Any color you can provide will be helpful on that point.

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Jordan Holm, Boston Pizza International Inc. - President [12]

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Yes. So we manage menu pricing annually when we refresh our menu in June. And we work with the franchisees in regional groups. So we have about 19 different menu groups across the country. We would look specifically at the competitive environment, the other market factors that would influence our pricing decisions. Last year was an interesting year for labor changes, and we had in January 1, 2018, a 21% increase overnight to the minimum wage in Ontario. We had Alberta hit $15 of minimum wage on October 1. We had D.C. announce a long progression towards $15 and beyond in minimum wage with the new NDP government in British Columbia. And so those costs and projected increases in operating cost over time were factored into the 2018 menu repricing regionally. We don't see as abrupt changes in minimum wage certainly as we saw in Ontario. That was quite a remarkable instance. But nonetheless, we do take into account rising costs, but we're very cautious in how we manage that. We don't -- for example, we don't put it through all at once. We might stage it in various iterations of the menu. So not just once a year, but October or January in regions that require it. And we will be balancing that same growth for 2019, working with each of the regions to look at what's the appropriate pricing strategy, what menu items might be affected based on input cost beyond labor. But we're -- a lot of the planning goes into that to ensure that we don't outpace the regions in the markets that we operate in, and we don't negatively impact guest visitation as a result of taking price.

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Elizabeth Johnston, Laurentian Bank Securities, Inc., Research Division - Analyst [13]

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Okay, great. And when it comes to strategy overall, in terms of marketing activity, is there a potential to be more active in your marketing? Have you been more active this past year versus the year prior? Just wondering if that's an opportunity to be more active to help drive traffic.

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Jordan Holm, Boston Pizza International Inc. - President [14]

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Yes, I mean, I know you know this, Elizabeth. Just a reminder for everyone on the call. Our marketing budgets are funded through a co-op. 3% of franchise sales are collected from all the franchisees. We pool that, and we put it into a national marketing co-op. That goes to fund our television campaigns and all the digital and social media activity that we use for promotions throughout the year. I touched on a few of them that we've completed or in the middle of this year, and we've got a whole calendar of events coming up to -- specifically aimed at driving guest visitation and traffic and ultimately, sales. In addition to that, the franchisees and the franchise agreement commit to spending a minimum of 1% of franchise sales on local store marketing for their specific restaurant. And we find that to be very effective in reaching out to community groups, bringing teams in, celebrating things that are happening right around your local restaurant and what's relevant to your community. So that gives us in the neighborhood of $30 million a year that's dedicated to building the Boston Pizza brand and engaging with guests and celebrating reasons for them to come in and visit us, be it food or be it an occasion, sports or otherwise. So we feel like we have a good base for that. We're always looking at ways to make it more efficient, more effective, and we'll continue to do that for 2019.

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Elizabeth Johnston, Laurentian Bank Securities, Inc., Research Division - Analyst [15]

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And just maybe on different topic in terms of takeout and delivery. Do you think that, that channel is more important potentially now as an opportunity to help drive more traffic to the store? And is there anything you could do to help increase the pace of growth from it? And also wonder if you can comment on the SkipTheDishes partnership as well and how that's going.

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Jordan Holm, Boston Pizza International Inc. - President [16]

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Yes, absolutely. I mean, it's no secret that takeout delivery is the growing area of full-service restaurant for a lot of participants in delivery now. It's brand new for them. They've been brought on board with some of the delivery service companies out there and they're doing it for the first time. The advantage Boston Pizza has is that we've been in the delivery business for over 50 years. Our food and packaging and all of our procedures for transporting food to our guests, having them pick it or having us deliver it has all been established. We've invested heavily over the last 5-plus years in mobile and digital technology, our e-commerce platform. bostonpizza.com has a very seamless guest experience. It remembers who you are, what your last order was. It's kind of the perfect server in terms of having that frictionless guest experience. Same thing with the MyBP app. It has loyalty component to it to reward you for multiple orders. In terms of our partnership with SkipTheDishes, we launched it in the middle of last year, and it does add to the opportunity to reach guests that -- or consumers perhaps that are looking specifically at that as the platform that they're going to order from. And we do see a different guest and an incremental sales opportunity through reaching those guests through the SkipTheDishes platform. And it is -- it has its operational challenges because you have to adapt to a different way of receiving orders, and the drivers are newly onboarded in a lot of markets. So -- and they're not specifically, of course, our employees, so there's a learning curve there. But we have a couple of hundred Boston Pizza restaurants that have onboarded onto the SkipTheDishes platform, and that's a growing opportunity for them to expand their reach and pick up additional delivery sales that otherwise might be going elsewhere.

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Elizabeth Johnston, Laurentian Bank Securities, Inc., Research Division - Analyst [17]

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Okay, great. That's helpful. And just maybe one more question in terms of new openings. I know you gave us already the -- your outlook of 10 to 15 new openings. On a net basis, in 2018, there were actually fewer openings given that there were more closures compared to the year before. In terms of those numbers and that change, do you view this more as a timing issue? And if so, would you think that maybe in the coming year, 2019, there's potential for fewer closures? To the best of your ability to comment on that at least.

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Jordan Holm, Boston Pizza International Inc. - President [18]

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I mean, it's -- we do not forecast closures. Occasionally, there are strategic closures that we identify, for example, in a market where the -- Medicine Hat, I suppose, is one good example that kind of comes to mind where the commercial center of that community had moved. There's a new development that we wanted to be a part of. Our franchisee chose to develop that site and then close their older location that had been in the community for a long time in order to be in the commercial hub that was being newly developed. And so that happened last year. We had one as a closure, and we had the new -- it was actually a brand-new store prototype built from the ground up in Medicine Hat, so it's quite a remarkable store. But that was an example of a planned and strategic closure. Occasionally, we do have franchisee issues, lease issues that would cause us to close. But we -- it's really hard to forecast those. They -- we deal with them as they come up. And so we don't really have a target number for that this year. Your comments on timing issues is it was a factor in 2018. And you can tell the fact that in February we had 6 restaurants under construction is an indication that those were -- some of those were planned to be 2018 openings. And as for the construction cycle, the ability to get permitting and trades and seatwork before the deep freeze comes in parts of the country, we did push some of our planned 2018 openings into 2019. And so we will have a number that will open in the first half of the year, which is a bit unusual for us. We tend to follow the cycle of starting construction when things got out in the spring, working through the summer and then having the September to December time frame being when most of the new locations would open. So we did have some push in that, that might have affected the number. And the other 10 to 15 that I talked about was the gross number, obviously, offset by any potential closures along the way.

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Elizabeth Johnston, Laurentian Bank Securities, Inc., Research Division - Analyst [19]

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Okay, that's great. And then when it comes to any delays in new openings, is it fair to say that, as in the past and as is now, those delays tend to be construction or permitting-related rather than the interest from our franchisees? Is that fair?

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Jordan Holm, Boston Pizza International Inc. - President [20]

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Oh, yes. I mean, there was nothing -- there were no projects that were discontinued there. There's simply timing issue of did we have time to get it done before we ended the year. In a lot of places in Canada, it's inclement weather to do the construction next year. And so we hit a cutoff point essentially. And so yes, but to your point, it was -- it's permitting. Anybody who's done that, renovations in their home, knows that delays are to be expected, and we do run into that at some sites and some markets. And Gander would be an example for this year that we thought we might be able to get that one opened by the end of the year. But you're not going to do construction there kind of, what, September -- or December hits or even November, depending on how quickly the winter comes on. So that'll be one that opens relatively soon, I think, in the next couple of months. And once we can get it thought out and complete construction, that'll open.

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Operator [21]

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There are no further questions at this time.

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Jordan Holm, Boston Pizza International Inc. - President [22]

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All right. Well, that completes the question-and-answer session. I want to thank everybody for joining us on the call today, and we look forward to speaking with you again on our first quarter conference call in May of 2019. Thanks, everyone.

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Operator [23]

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This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.