VANCOUVER, BC, July 23, 2026 /CNW/ – A&W Food Services of Canada Inc. (TSX: AW) (“A&W”, “Food Services”, “we” or “our”) today announced its financial results for the 12-week and 24-week periods ended June 14, 2026.
All references to “Q2 2026” are to Food Services’ 12-week period ended June 14, 2026, to “YTD 2026” are to Food Services’ 24-week period ended June 14, 2026, to “Q2 2025” are to Food Services’ 12-week period ended June 15, 2025 and to “YTD 2025” are to Food Services’ 24-week period ended June 15, 2025.
“With Q2 2026 Same Store Sales Growth(i) of 2.1%, we delivered our strongest quarterly Same Store Sales Growth in over two years, demonstrating the strength of A&W’s menu innovation and marketing. The success of our national smash-style burger promotion was the primary driver of this performance, increasing both guest counts and average cheque and contributing to our System Sales Growth(i) of 3.9% for the quarter,” said Susan Senecal, President and CEO. “Our bottom line results this quarter also reflect the impact of hosting our biennial A&W National Convention, which brought our franchisee community together and, as expected, created a temporary increase in our general and administrative expenses. We are also thrilled to have reached an important milestone in our Pret A Manger expansion, having opened our first franchised Pret shop at Vancouver International Airport on June 12th,” added Ms. Senecal. “We have secured additional leases and are actively pursuing new sites in Vancouver, Calgary, Toronto and Montreal, and expect to have three to four franchised Pret locations open by the end of the year.”
| (i) | System Sales Growth and Same Store Sales Growth are non-IFRS ratios and supplementary financial measures. Please see the “Non-IFRS Measures” section of this news release for further details. |
SECOND QUARTER HIGHLIGHTS
For Q2 2026, compared to Q2 2025
- System Sales(i) of $469.7 million increased by $17.4 million (3.9%)
- Revenue increased by $2.1 million (3%) to $70.8 million
- Operating costs increased by $1.1 million (3%) to $37.2 million
- General and administrative expenses increased by $2.0 million (18%) to $13.1 million, largely due to the biennial A&W National Convention that was held in Q2 2026
- Income before income taxes decreased by $1.2 million (7%) to $16.0 million
- Adjusted EBITDA(i) decreased by $1.1 million (4%) to $24.4 million and Adjusted EBITDA Margin(i) decreased 260 bps to 34.5% from 37.1% as a result of the increase in general and administrative expenses
- Cash Dividend of $0.480 per share was declared on June 1, 2026 and paid June 30, 2026
- Opened 8 new A&W restaurants and the first franchised Pret shop
| (i) | System Sales and Adjusted EBITDA are non-IFRS financial measures and Adjusted EBITDA Margin is a non-IFRS ratio. Please see the “Non-IFRS Measures” section of this news release for further details. |
SUMMARY OF RESULTS
| (unaudited, in thousands of Canadian $) | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 | |||
| Financial Summary | |||||||
| Revenue from franchising | 65,185 | 62,988 | 119,510 | 118,914 | |||
| Revenue from corporate restaurants | 5,656 | 5,789 | 10,721 | 10,996 | |||
| Total revenue | 70,841 | 68,777 | 130,231 | 129,910 | |||
| Operating costs | (37,172) | (36,041) | (70,457) | (69,967) | |||
| General and administrative expenses | (13,074) | (11,116) | (24,771) | (22,010) | |||
| Recovery of (impairment) of leases receivable | 16 | – | (131) | – | |||
| Net finance expense | (3,157) | (3,665) | (6,348) | (7,534) | |||
| (Loss) gain on interest rate swap | (1,451) | (757) | 1,134 | (757) | |||
| Income before income taxes | 16,003 | 17,198 | 29,658 | 29,642 | |||
| Income tax expense | (4,286) | (4,672) | (8,036) | (7,859) | |||
| Net income | 11,717 | 12,526 | 21,622 | 21,783 | |||
| Net cash generated from operating activities | 11,696 | 4,794 | 25,539 | 5,301 | |||
| Other Metrics | |||||||
| System Sales(i) | 469,720 | 452,291 | 872,566 | 849,215 | |||
| System Sales Growth(i) | 3.9 % | 3.4 % | 2.7 % | 2.7 % | |||
| Same Store Sales Growth(i) | 2.1 % | 1.6 % | 1.1 % | 1.1 % | |||
| Number of A&W restaurants | 1,105 | 1,082 | 1,105 | 1,082 | |||
| Net annual restaurant unit growth(ii) | 2.1 % | 1.9 % | 2.1 % | 1.9 % | |||
| Adjusted EBITDA(i) | 24,430 | 25,485 | 43,968 | 44,921 | |||
| Adjusted EBITDA Margin(i) | 34.5 % | 37.1 % | 33.8 % | 34.6 % | |||
| Adjusted EBITDA Margin(i)– trailing 4 quarters | 33.7 % | 32.6 % | 33.7 % | 32.6 % | |||
| (i) System Sales, System Sales Growth, Same Store Sales Growth, Adjusted EBITDA and Adjusted EBITDA Margin are non-IFRS financial measures, non-IFRS ratios and supplementary financial measures. Please see the “Non-IFRS Measures” section of this news release for further details. |
| (ii) Net annual restaurant unit growth reflects the percent increase in A&W restaurants at the end of the reporting period as compared to the end of the prior year comparable reporting period on a trailing 4 quarter basis. |
Q2 2026 Results Compared to Q2 2025
In Q2 2026, total revenue of $70.8 million increased $2.1 million, or 3%, from Q2 2025’s total revenue of $68.8 million. The increase was due to increases in revenue streams that are primarily driven by System Sales, including advertising fund contributions, service fees and revenue generated from the distribution of food and supplies. The increase in service fee revenue also reflects the continuing migration of A&W restaurants from a 2.5% to a 3.5% service fee rate, leading to a higher weighted average service fee rate. These increases were partially offset by lower equipment and turnkey revenue, reflecting a smaller proportion of new A&W restaurants opened in Q2 2026 being turnkey, and the non-recurrence of revenue from the 2025 rollout of A&W’s new point of sale (“POS”) system.
System Sales(i) for Q2 2026 were $469.7 million and increased 3.9% from Q2 2025 System Sales of $452.3 million due to an increase in the number of A&W restaurants and Same Store Sales Growth(i) of 2.1%.
Same Store Sales Growth(i) was 2.1% for Q2 2026 and was driven by the success of A&W’s smash-style burger promotion, which ran for 3 of the 12 weeks in the quarter and led to increases in both guest counts and average cheque.
Revenue from corporate restaurants includes the revenue from the ten A&W restaurants and two Pret restaurants that are owned and operated corporately, all of which are located in Ontario. Revenue from corporate restaurants was $5.7 million for Q2 2026, down 2% from $5.8 million for Q2 2025. The decrease is mainly attributed to two of the A&W corporate restaurants being closed for modernization for several weeks during the quarter, partially offset by the opening of the second corporately owned Pret location in Q1 2026.
Income before income taxes decreased by $1.2 million in Q2 2026, largely as a result of the increase in general and administrative expenses discussed below, partially offset by the increase in revenue. General and administration expenses for Q2 2026 were $13.1 million, $2.0 million or 18% higher than Q2 2025, largely related to the cost of the biennial A&W National Convention, which was held in Q2 2026 but not held in 2025, as well as higher employee compensation, partially driven by inflation and the addition of resources to support the expansion of the Pret brand. Operating costs for Q2 2026 were $37.2 million and were 3% higher than operating costs for Q2 2025, in line with the increase in franchising revenue which also increased 3% quarter over quarter due to the reasons discussed above. Net finance expense decreased by $0.5 million, reflecting a decrease in the average debt balance and a reduction in the interest rate on the operating loan. A $1.5 million unrealized loss on the interest rate swap was also recorded in Q2 2026, compared to a $0.8 million loss in Q2 2025.
Food Services reported net income of $11.7 million in Q2 2026, compared to net income of $12.5 million in Q2 2025, due to the factors discussed above. Net income per share was $0.46 ($0.46 per diluted share) in Q2 2026, versus $0.51 ($0.50 per diluted share) in Q2 2025.
Adjusted EBITDA(i) of $24.4 million for Q2 2026 decreased $1.1 million, or 4%, from Adjusted EBITDA of $25.5 million for Q2 2025, due largely to the increase in general and administrative expenses discussed above. Adjusted EBITDA Margin(i) decreased from 37.1% in Q2 2025 to 34.5% in Q2 2026, reflecting the impact of hosting the A&W National Convention in the quarter.
| (i) System Sales, Same Store Sales Growth, Adjusted EBITDA and Adjusted EBITDA Margin are non-IFRS financial measures, non-IFRS ratios and supplementary financial measures. Please see the “Non-IFRS Measures” section of this news release for further details. |
YTD 2026 Results Compared to YTD 2025
Total revenue of $130.2 million for YTD 2026 increased $0.3 million from YTD 2025’s total revenue of $129.9 million. The increase was due to increases in revenue streams that are primarily driven by System Sales, including advertising fund contributions, service fees and revenue generated from the distribution of food and supplies, partially offset by lower equipment and turnkey revenue.
System Sales(i) for YTD 2026 were $872.6 million, up 2.7% from YTD 2025 System Sales of $849.2 million, due to an increase in the number of A&W restaurants and Same Store Sales Growth(i) of 1.1%. Same Store Sales Growth for YTD 2026 reflected an increase in average cheque, partially offset by a decline in same store guest counts, as the benefit of the Q2 2026 smash-style burger promotion was offset by the impact of severe weather events in Eastern Canada in Q1 2026 and the non-recurrence of the 2025 GST/HST holiday.
Revenue from corporate restaurants was $10.7 million for YTD 2026, down 3% from $11.0 million for YTD 2025, mainly attributable to the temporary closure of two A&W corporate restaurants for modernization in Q2 2026, the adverse impacts of severe weather in Q1 2026 and the prevailing economic environment in Ontario, partially offset by the opening of the second corporately owned Pret location in Q1 2026.
Income before income taxes of $29.7 million for YTD 2026 was consistent with $29.6 million for YTD 2025, as the increase in general and administrative expenses, discussed below, were largely offset by a gain on the interest rate swap and a decrease in net finance expense. General and administrative expenses of $24.8 million increased $2.8 million, or 13%, largely related to the cost of the biennial A&W National Convention, which was held in Q2 2026 but not held in 2025, as well as higher employee compensation, partially driven by inflation and the addition of resources to support the expansion of the Pret brand. The net finance expense for YTD 2026 decreased by $1.2 million due primarily to the decrease in the average debt balance which also led to a reduction in the interest rate on the operating loan.
Food Services reported net income of $21.6 million for YTD 2026, compared to $21.8 million for YTD 2025. Net income per share was $0.86 ($0.85 per diluted share) for YTD 2026, versus $0.88 ($0.88 per diluted share) for YTD 2025.
Adjusted EBITDA(i) of $44.0 million for YTD 2026 decreased $1.0 million, or 2%, from Adjusted EBITDA of $44.9 million for YTD 2025, due to the increase in general and administrative expenses, partially offset by the increase in revenue. Adjusted EBITDA Margin(i) decreased from 34.6% in YTD 2025 to 33.8% in YTD 2026. The impact of hosting the A&W National Convention reduced YTD 2026 Adjusted EBITDA Margin by approximately 0.9%.
| (i) System Sales, Same Store Sales Growth, Adjusted EBITDA and Adjusted EBITDA Margin are non-IFRS financial measures, non-IFRS ratios and supplementary financial measures. Please see the “Non-IFRS Measures” section of this news release for further details. |
2026 OUTLOOK
Food Services’ outlook for Fiscal 2026(ii), along with its underlying assumptions, remains consistent with the ranges announced on March 5, 2026:
- Adjusted EBITDA(i) to be between $103 million and $105 million ($100 million in Fiscal 2025, Income before income taxes of $76.7 million in Fiscal 2025);
- Total A&W restaurants to be between 1,112 and 1,120 by the end of Fiscal 2026 (1,094 at the end of Fiscal 2025);
- System Sales Growth(i) of 2.5% – 5.0% (2.8% in Fiscal 2025); and
- Same Store Sales Growth(i) of 0.5% – 3.0% (1.2% in Fiscal 2025).
(i) System Sales Growth, Adjusted EBITDA and Same Store Sales Growth are non-IFRS financial measures, non-IFRS ratios and supplementary financial measures. Please see the “Non-IFRS Measures” section of this news release for further details.
(ii) Fiscal 2026 is a 53-week period and ends January 3, 2027. System Sales Growth and Same Store Sales Growth for Fiscal 2026 are based on 52-weeks so that they are comparable to other years.
CONFERENCE CALL
A&W will host a conference call to discuss its Q2 2026 results on Thursday, July 23, 2026 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time).
The call will be webcast live and may be accessed at: https://events.q4inc.com/attendee/179885409
Participants who wish to ask questions will need to register in advance of the conference call using the following link: https://events.q4inc.com/analyst/179885409?pwd=b2eKSlZa
For those unable to attend the live call, a replay will be made available for one year at: https://events.q4inc.com/attendee/179885409
NON-IFRS MEASURES
This news release makes references to certain non-IFRS measures. These measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Food Services believes that disclosing these non-IFRS measures provides readers of this news release with important information regarding Food Services’ financial performance. By considering these measures in combination with IFRS measures, Food Services believes that readers are provided with additional and more useful information about Food Services than readers would have if they simply considered IFRS measures alone. We use non-IFRS financial measures including “System Sales”, “EBITDA”, and “Adjusted EBITDA”; the non-IFRS ratios of “System Sales Growth” and “Adjusted EBITDA Margin” and non-IFRS supplementary financial measures such as “Same Store Sales Growth”.
These non-IFRS measures, ratios and supplementary financial measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We believe that securities analysts, investors and other interested parties frequently use non-IFRS measures and industry metrics in the evaluation of issuers. A&W’s management also uses non-IFRS measures and industry metrics to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. The non-IFRS measures reported by Food Services do not have a standardized meaning prescribed by IFRS and Food Services’ method of calculating these measures may differ from those of other issuers or companies and may not be comparable to similar measures used by other issuers or companies. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS.
Certain information, including definitions, about non-IFRS financial measures, non-IFRS ratios, and supplementary financial measures is found in Food Services’ Q2 2026 MD&A and is incorporated by reference. This information is found in the sections entitled “How We Assess the Performance of our Business”, “Non-IFRS Measures” and “Selected Financial Information” of Food Services’ Q2 2026 MD&A which is available on Food Services’ SEDAR+ profile at www.sedarplus.ca. Reconciliations for each non-IFRS financial measure can be found below.
(in thousands of Canadian Dollars)
| Reconciliation of System Sales to Revenue from | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 | |||
| Revenue from corporate restaurants | 5,656 | 5,789 | 10,721 | 10,996 | |||
| Sales reported by franchised restaurants(i) | 464,064 | 446,502 | 861,845 | 838,219 | |||
| System Sales(ii) | 469,720 | 452,291 | 872,566 | 849,215 |
(i) Represents gross sales reported to Food Services by franchisees of such restaurants without any form of independent assurance.
(ii) System Sales is a non-IFRS financial measure.
| Reconciliation of EBITDA and Adjusted EBITDA to | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 | ||||
| Income before income taxes | 16,003 | 17,198 | 29,658 | 29,642 | ||||
| Depreciation of plant, equipment, intangible assets and right-of-use assets | 1,470 | 1,624 | 2,931 | 3,182 | ||||
| Net finance expense | 3,157 | 3,665 | 6,348 | 7,534 | ||||
| EBITDA(i) | 20,630 | 22,487 | 38,937 | 40,358 | ||||
| Adjustments to EBITDA: | ||||||||
| Income before taxes attributable to non-controlling interest in A&W Beverages | (963) | (516) | (1,474) | (1,012) | ||||
| (Recovery of) impairment of leases receivable | (16) | – | 131 | – | ||||
| Net loss on disposal of plant and equipment | – | – | – | 23 | ||||
| Unrealized loss (gain) on foreign exchange | 3 | 1 | 17 | (7) | ||||
| Unrealized loss (gain) on interest rate swap | 1,451 | 757 | (1,134) | 757 | ||||
| Stock-based compensation | 361 | 528 | 760 | 598 | ||||
| Net income impacts created by advertising fund deficits(ii) | 2,498 | 2,373 | 5,820 | 4,344 | ||||
| Recovery of capitalized costs | – | (448) | – | (758) | ||||
| Start up net losses on Pret | 466 | 303 | 911 | 618 | ||||
| Adjusted EBITDA(i) | 24,430 | 25,485 | 43,968 | 44,921 |
(i) EBITDA and Adjusted EBITDA are non-IFRS financial measures.
(ii) Under IFRS, income or loss is recognized when advertising funds are in deficit position. The income or loss is calculated as the change in the deficit balance during the reporting period. This income or loss is excluded from Adjusted EBITDA, as it represents timing differences between advertising expenditure and contributions to the advertising funds.
FORWARD-LOOKING INFORMATION
Certain statements in this news release contain forward-looking information within the meaning of applicable securities laws in Canada. The words “anticipates”, “believes”, “budgets”, “could”, “estimates”, “expects”, “forecasts”, “intends”, “may”, “might”, “plans”, “projects”, “schedule”, “should”, “will”, “would”, “outlook” and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words.
The forward-looking information in this news release includes but is not limited to: Food Services’ expectation that it will open three to four franchised Pret locations in Fiscal 2026 and Food Services’ 2026 outlook.
The forward-looking information, including the 2026 outlook, is based on assumptions that management considered reasonable at the time it was prepared, which assumptions include, but are not limited to:
- no material impact to supply chain availability, cost of inputs or franchisee ability to operate because of international conflict and/or actual or threatened tariffs;
- no material impact to consumer discretionary spending due to changes in economic conditions including economic recession or changes in the rate of inflation or deflation, employment rates and household debt, political uncertainty, interest rates, currency exchange rates, derivative and commodity prices or actual or threatened tariffs;
- the general risks that affect the restaurant industry will not arise;
- there are no changes in availability of experienced management and hourly employees;
- there are no material changes in government regulations concerning drive–thru restrictions, franchise legislation or sales taxes;
- no incidences of food borne illness;
- no material changes in competition;
- no material changes in the quick service restaurant burger market including as a result of changes in consumer taste or preferences or changes in economic conditions or unemployment, or a disease outbreak;
- no material increases in food and labour costs;
- the continued availability of quality ingredients;
- continued additional franchise sales and maintenance of franchise operations;
- Food Services’ continued ability to grow same store sales;
- Food Services is able to maintain and grow the current system of franchises;
- Food Services is able to locate new retail sites in desirable locations;
- Food Services is able to obtain qualified operators to become A&W and Pret franchisees;
- A&W franchisees are able to successfully operate and grow their businesses, maintain profitability and consistently pay rent and other payments required under their leases and franchise agreement;
- no material number of closures of A&W restaurants;
- no material impact on sales from closures of “anchor” stores in shopping centres;
- no material declines in traffic patterns at shopping centres and other retail and urban nodes;
- no material closures to shopping centres or other retail nodes in which A&W operates;
- no supply disruptions;
- no material impact on sales from new or increased sales taxes;
- no material impact on sales from new or increased fees related to third-party delivery services;
- continued availability of key personnel;
- continued ability to preserve intellectual property;
- no material litigation from guests at A&W or Pret restaurants;
- Food Services will receive sufficient revenue in the future to maintain the payment of quarterly dividends;
- Food Services can continue to comply with its obligations under its credit arrangements;
- the projections for the A&W business provided by Food Services are accurate; and
- Food Services will be successful in executing on its business strategies and such strategies will achieve their intended results.
Inherent in forward-looking information are risks and uncertainties beyond management’s or Food Services’ ability to predict or control that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. The forward-looking information in this news release is subject to risks, uncertainties and other factors including, among others, the risks identified in Food Services’ Q2 2026 MD&A and Food Services’ annual information form for the period ended December 28, 2025 (“AIF”) under the heading “Risk Factors“. The Q2 2026 MD&A and AIF are both available on Food Services’ SEDAR+ profile at www.sedarplus.ca. Additional risks and uncertainties not currently known to Food Services or that are currently not considered to be material also may impair Food Services’ business.
All forward-looking information in this news release is qualified in its entirety by this cautionary statement and, except as required by law, Food Services undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date hereof.
INVESTOR COMMUNICATIONS
For important updates and information regarding A&W, including the timing of future earnings calls, visit A&W’s investor relations website at www.awinvestors.ca. A&W uses this website as a primary channel for disclosing key information to its investors.
ABOUT FOOD SERVICES
A&W is a publicly traded company and 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®. A&W’s shares are listed for trading on the Toronto Stock Exchange in Canada under the trading symbol “AW”.
SOURCE A&W Food Services of Canada Inc.