A&W Revenue Royalties Income Fund -2022 Earninngs, 2023 Forecast

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A&W Revenue Royalties Income Fund (AW.UN) is the third-largest quick-service chain in Canada with 1,015 restaurants in the royalty pool as of Dec-31-2022. (994-Dec-2021; 971 as of Dec-31-2020). Since 2002, the number of A&W restaurants paid royalties to the Fund has increased from 585 to 1,039. The fund earns a 3% royalty for use of trademarks by the restaurants in the royalty pool. The trademarks comprise some of the best-known brand names in the Canadian food service industry. With a larger restaurant footprint in Western Canada, the expansion strategy has focused predominantly on Ontario, Atlantic Canada, and Quebec and offers different franchise configurations. Approximately 97% of outlets are owned and operated by owner/operators under franchise agreements with Food Services and nine are owned and operated by Food Services. A&W trade-marked menu items include The Burger Family, Chubby Chicken, and A&W Root Beer. The franchisees have the right to use A&W trade marks in Canada for a term expiring Dec-30-2100, for which franchisees pay a 3% royalty.

A&W Food Services 'better ingredients health-oriented marketing strategy that commenced approximately 4 years ago has been driving same-store revenue growth and the addition of new franchised outlets. Consistent with their better ingredients program $5M was donated towards the University of Saskatchewan's Livestock and Forage Centre of Excellence - an investment that will be used to develop new approaches for healthy, sustainable agricultural practices. This donation was made by A&W Food Services Inc. and not borne by the A&W Revenue Royalties Income Fund.

A&W restaurants operate as freestanding restaurants with drive-thru facilities, restaurants in shopping centers, restaurants on street fronts in urban areas, or gas/convenience store restaurants on shared sites. The A&W shopping center concept restaurants located in the food courts of shopping centers, airports, and universities, represent the highest number of hamburger quick service restaurants operating under a single brand name in enclosed shopping centers, airports, and universities in Canada.

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