A&W Food Services of Canada Inc. Announces Third Quarter Results for Fiscal 2026 and New Mission and Corporate Strategy

A&W Food Services of Canada Inc. Announces Third Quarter Results for Fiscal 2026 and New Mission and Corporate Strategy

VANCOUVER, BC, Oct. 16, 2026 /CNW/ - A&W Food Services of Canada Inc. (TSX: AW) ("A&W", "Food Services", the "Company", "we" or "our") today announced its financial results for the 12-week and 36-week periods ended September 6, 2026.

All references to "Q3 2026" are to Food Services' 12-week period ended September 6, 2026, to "YTD 2026" are to Food Services' 36-week period ended September 6, 2026, to "Q3 2025" are to Food Services' 12-week period ended September 7, 2025 and to "YTD 2025" are to Food Services' 36-week period ended September 7, 2025.

"Our third quarter results reflect continued momentum, with System Sales Growth⁽ⁱ⁾ of 3.8% and Same Store Sales Growth⁽ⁱ⁾ of 1.8%, driven primarily by the success of our smash-style burger promotion, which ran nationally for five of the 12 weeks in the quarter," said Susan Senecal, President and CEO. "We opened nine new A&W restaurants during the quarter, bringing our network to 1,113 restaurants across Canada, and opened our second franchised Pret shop at Vancouver International Airport, where early performance has been very encouraging. Today we are also introducing A&W's new mission and corporate strategy," added Ms. Senecal. "The Canadian consumer and the QSR landscape have changed significantly in recent years. We believe our new strategy is designed to make A&W #1 in Canada for today's generation of QSR fans, while creating new opportunities for success for our franchisees."

THIRD QUARTER HIGHLIGHTS

For Q3 2026, compared to Q3 2025

• System Sales⁽ⁱ⁾ of $497.6 million increased by $18.0 million (3.8%)
• Revenue increased by $8.1 million (11%) to $79.3 million
• Operating costs increased by $8.7 million (27%) to $40.5 million, of which $3.4 million is attributable to increased marketing-related costs incurred by A&W's advertising funds
• General and administrative expenses increased by $0.6 million (5%) to $11.4 million
• Income before income taxes increased by $2.8 million (12%) to $26.4 million
• Adjusted EBITDA⁽ⁱ⁾ increased by $0.8 million (3%) to $26.6 million and Adjusted EBITDA Margin⁽ⁱ⁾ decreased 260 bps to 33.6% from 36.2%, reflecting a higher proportion of lower-margin equipment and turnkey revenue
• Cash Dividend of $0.48 per share was declared on September 1, 2026 and paid September 29, 2026
• Opened 9 new A&W restaurants and one new franchised Pret shop
• Adopted a new mission statement and corporate strategy

NEW MISSION AND CORPORATE STRATEGY

Food Services has adopted a new mission statement (the "Mission") and corporate strategy (the "Corporate Strategy"). The Mission and Corporate Strategy will guide the Company's priorities, investment decisions, and operating plans and provide the framework against which management will report progress.

The consumer, business and economic environment for the Canadian quick service restaurant ("QSR") industry have changed significantly in recent years, and management believes these changes call for a renewed strategic direction. Elevated costs of living have affected households unevenly. Many guests have become more value-conscious, while others continue to spend on premium experiences. Our Strategy has evolved to address the change in circumstances and to seize the opportunity of sustained consumer interest in quality QSR. Excitingly, a new generation of guests, who discover food through social media and expect novelty, bold flavours, and globally inspired options, is becoming an increasingly important share of QSR visits. 

Our New Mission

"To transform A&W to become #1 in Canada for today's generation of QSR fans, delivering scroll-stopping food with iconic taste and quality, effortless convenience, and a consistently excellent experience that drives return visits, success and opportunity for franchisees."

The Mission reflects the Company's focus on building relevance with a new generation of QSR guests while remaining true to the taste and quality that have defined the A&W brand. It also reinforces the Company's view that sustained guest loyalty and franchisee success are closely linked.

Strategic Directions

The Company has established clear strategic directions to deliver on its Mission.

1. Expand and extend A&W's position as a leading burger brand to grow market share, capture many more visits from the fastest growing consumer groups, and enhance success for A&W franchisees.
   
   Priorities under this strategic direction include boosting interest and appeal with distinctive menu innovation including premium beef burgers, chicken, plant-based, and globally inspired offerings. The Company is also focused on delivering a consistently excellent experience to increase guest frequency by inspiring return visits.
   
   
2. Continue to support new restaurant growth, including developing new restaurant formats and business models that broaden access to franchise ownership and create additional opportunities for franchisees. 
   
   
3. Ready for Pret — and more.
   
   The Company plans to continue to expand the Pret brand, Canada's only premium grab & go concept, by opening additional shops in airports, city streets and other captive pedestrian locations across Canada. The Company will also evaluate other complementary brands that offer opportunities for growth.

Measuring Progress

Management will assess progress against these strategic directions using key performance indicators including Same Store Sales Growth, System Sales Growth, Adjusted EBITDA and the total number of A&W restaurants. Food Services expects to report on the execution of its strategy in future quarterly and annual reporting.

SUMMARY OF RESULTS

Q3 2026 Results Compared to Q3 2025

In Q3 2026, total revenue of $79.3 million increased $8.1 million, or 11%, from Q3 2025's total revenue of $71.2 million. The increase was driven by higher equipment and turnkey revenue and by 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 equipment and turnkey revenue reflects the opening of six additional A&W restaurants and one additional Pret shop in Q3 2026 relative to Q3 2025, with three of the nine new A&W restaurants and the one new Pret shop opened in Q3 2026 being turnkey (Q3 2025 – one of three new A&W restaurants was turnkey). 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.

System Sales⁽ⁱ⁾ for Q3 2026 were $497.6 million and increased 3.8% from Q3 2025 System Sales of $479.6 million due to an increase in the number of A&W restaurants and Same Store Sales Growth⁽ⁱ⁾ of 1.8%.

Same Store Sales Growth⁽ⁱ⁾ was 1.8% for Q3 2026 and was primarily driven by the success of A&W's smash-style burger promotion, which ran nationally for 5 of the 12 weeks in the quarter.

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 $5.8 million for Q3 2026, down 1% from $5.9 million for Q3 2025. The decrease reflects the prevailing difficult economic environment in Ontario, which is particularly acute in Ottawa, where all ten A&W corporate restaurants are located, due to government job losses and continued uncertainty. The decrease was partially offset by the opening of the second corporately owned Pret location in Q1 2026.

Income before income taxes increased by $2.8 million in Q3 2026, largely as a result of a $2.1 million unrealized gain on the interest rate swap, compared to a $1.4 million unrealized loss in Q3 2025, and a $0.5 million decrease in net finance expense, reflecting a decrease in the average debt balance and a reduction in the interest rate on the operating loan. The increase in revenue discussed above was largely offset by higher operating costs and general and administrative expenses. Operating costs for Q3 2026 were $40.5 million, $8.7 million or 27% higher than Q3 2025, reflecting the cost of sales associated with the additional A&W restaurants and Pret shop opened in the quarter, as well as a $3.4 million increase in marketing-related costs incurred by A&W's national and regional advertising funds, which is largely a timing difference. General and administrative expenses for Q3 2026 were $11.4 million, $0.6 million or 5% higher than Q3 2025, driven by higher professional fees due to timing differences and additional resources to support the expansion of the Pret brand.

Food Services reported net income of $19.5 million in Q3 2026, compared to net income of $17.6 million in Q3 2025, due to the factors discussed above. Net income per share was $0.80 ($0.80 per diluted share) in Q3 2026, versus $0.71 ($0.71 per diluted share) in Q3 2025.

Adjusted EBITDA⁽ⁱ⁾ of $26.6 million for Q3 2026 increased $0.8 million, or 3%, from Adjusted EBITDA of $25.8 million for Q3 2025, due to the increase in revenue discussed above, partially offset by higher operating costs and general and administrative expenses. Adjusted EBITDA Margin⁽ⁱ⁾ decreased from 36.2% in Q3 2025 to 33.6% in Q3 2026, as the increase in equipment and turnkey revenue, which has a lower margin relative to other revenue streams, had a dilutive effect on Adjusted EBITDA Margin.

YTD 2026 Results Compared to YTD 2025

Total revenue of $209.5 million for YTD 2026 increased $8.4 million, or 4%, from YTD 2025's total revenue of $201.1 million. The increase was due to an $8.7 million increase in franchising revenue, driven by 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, as well as the continued migration of A&W restaurants to the 3.5% service fee rate. Equipment and turnkey revenue also increased due to the opening of seven additional franchised A&W restaurants and two additional franchised Pret shops in YTD 2026 relative to YTD 2025.

System Sales⁽ⁱ⁾ for YTD 2026 were $1,370.2 million, up 3.1% from YTD 2025 System Sales of $1,328.8 million, due to an increase in the number of A&W restaurants and Same Store Sales Growth⁽ⁱ⁾ of 1.3%. 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 positive performance driven by the smash-style burger promotion, which ran nationally for 8 of the 36 weeks in YTD 2026, was offset by the impact of severe weather events in Eastern Canada in Q1 2026, general consumer and economic uncertainty in Ontario and the non-recurrence of the 2025 GST/HST holiday.

Revenue from corporate restaurants was $16.6 million for YTD 2026, down 2% from $16.9 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, the non-recurrence of the 2025 GST/HST holiday 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 $56.0 million for YTD 2026 increased $2.8 million, or 5%, from $53.3 million for YTD 2025, largely due to a $3.3 million unrealized gain on the interest rate swap, compared to a $2.2 million unrealized loss in YTD 2025, and a $1.7 million decrease in net finance expense resulting from a lower average debt balance and a reduction in the interest rate on the operating loan. The increase in revenue was offset by higher operating costs and general and administrative expenses. Operating costs of $110.9 million increased $9.2 million, including a $7.3 million increase in marketing costs incurred by the advertising funds due to the timing of expenses. General and administrative expenses of $36.1 million for YTD 2026 increased $3.4 million, or 10%, driven by higher employee compensation, employee-related expenses and professional fees, resulting from inflation and added resources to support the expansion of the Pret brand, as well as the cost of the biennial A&W National Convention, which was held in Q2 2026 but not held in 2025.

Food Services reported net income of $41.1 million for YTD 2026, compared to $39.3 million for YTD 2025. Net income per share was $1.66 ($1.65 per diluted share) for YTD 2026, versus $1.59 ($1.59 per diluted share) for YTD 2025.

Adjusted EBITDA⁽ⁱ⁾ of $70.6 million for YTD 2026 was consistent with Adjusted EBITDA of $70.7 million for YTD 2025, as the increase in revenue was offset by increases in operating costs and general and administrative expenses. Adjusted EBITDA Margin⁽ⁱ⁾ decreased from 35.2% in YTD 2025 to 33.7% in YTD 2026. The impact of hosting the A&W National Convention reduced YTD 2026 Adjusted EBITDA Margin by approximately 50 bps.

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).

CONFERENCE CALL

A&W will host a conference call to discuss its Q3 2026 results on Friday, October 16, 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/898393156

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/898393156?pwd=Xbd71QuX

For those unable to attend the live call, a replay will be made available for one year at: https://events.q4inc.com/attendee/898393156

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' Q3 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' Q3 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)

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' new Mission and Corporate Strategy, including its strategic directions and the desired outcomes of the Corporate Strategy; Food Services' plan to grow market share and enhance success for A&W franchisees; Food Services' plans to develop new restaurant formats and business models; Food Services' plan to grow the Pret brand by opening additional shops in airports, city streets and other captive pedestrian locations across Canada and to evaluate other complementary brands that offer growth opportunities; Food Services' intention to report on the execution of its Corporate Strategy; 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;
• Food Services is able to secure suitable locations and qualified franchisees for Pret shops in Canada and its arrangements for the development of the Pret brand in Canada remain in effect;
• Consumer demand for the menu innovation, restaurant formats and business models contemplated by the Corporate Strategy develops as anticipated; 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' Q3 2026 MD&A and Food Services' annual information form for the period ended December 28, 2025 ("AIF") under the heading "Risk Factors". The Q3 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.