(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 “Non-IFRS Measures”, and “How We
Assess the Performance of Our Business” sections of Food Services’ Q4 2025 MD&A for further details.
2025 HIGHLIGHTS
FROM SUSAN SENECAL, PRESIDENT & CHIEF EXECUTIVE OFFICER
2025 was a year of both transformation and steady progress for A&W. We spent this past year being
strategically focused on growing the A&W footprint across Canada, innovating, enhancing the guest
experience, and delivering incremental value to our guests and franchisees. I am proud of how our teams
and franchisees have moved forward our strategic initiatives, allowing us to achieve both top and bottom
line growth in a competitive Canadian QSR landscape.
Financial Performance and Growth
Our financial results for Fiscal 2025 reflect the strength of the A&W brand. System Sales(i) grew by 2.8%
to reach $1.92 billion. We achieved a Same Store Sales Growth(i) of 1.2%, following the successful
execution of our marketing campaigns that revitalized guest counts throughout the year.
As a result of A&W’s top line growth and our disciplined approach to cost management, Adjusted
EBITDA(i) was up 7% year over year and reached $100 million in 2025 and expanded our Adjusted
EBITDA Margin(i) by 180 basis points.
We continued to expand our footprint in 2025, opening 26 new A&W restaurants across Canada, with a
strategic focus on Ontario, Quebec, and our ongoing partnership with Suncor. As of December 28, 2025,
our network has grown to 1,094 A&W restaurants.
Innovation and the Guest Experience
We remain committed to our mission of exciting Canada’s most avid burger lovers. This year, we achieved
several milestones in our digital and menu strategies:
● A&W Rewards: On April 22, 2025, we officially launched our new loyalty program. By year-end,
we reached approximately 500,000 active app users—more than double our count of active users prior
to launching A&W Rewards.
● Value Strategy: In response to evolving economic conditions, we introduced a dedicated "Value
Deals" menu in Q3, featuring a variety of items under $4.00 to ensure A&W remains accessible to all
guests.
● Menu Successes: Due to their popularity after being launched in 2024, the Veggie Masala Burger and
Spicy Piri-Piri lineup became permanent menu items in certain regions in June 2025.
● The 5-Star Operating System: We completed the system-wide rollout of our proprietary ‘5-Star’
operating system in 2025, which has led to notable improvements in speed of service and guest
experience and positive feedback.
Expanding our Partnership with Pret A Manger
Our master franchisor rights for Pret A Manger (“Pret”) continue to provide a unique growth lever. In 2024
we opened our first standalone Pret restaurant and successfully integrated Pret coffee into all A&W
1 | A&W Food Services of Canada Inc.
Note on Forward-Looking Information: This letter contains forward-looking information, including statements
regarding our franchisee profitability targets, plans for new A&W and Pret A Manger restaurant openings, and our
strategic focus for 2026. These statements are based on management’s current expectations and various material
assumptions, including stable economic conditions, the successful execution of our digital and menu strategies, and
our ability to secure suitable restaurant sites. Actual results may differ materially due to risks such as changes in
consumer demand, increased competition, supply chain disruptions, or evolving economic conditions. For a detailed
discussion of these and other risk factors, please refer to our most recent Annual Information Form (AIF) and
Management’s Discussion and Analysis (MD&A) filed on SEDAR+.
restaurants. In 2025, we started actively pursuing sites for new Pret restaurants in the major urban hubs in
Vancouver, Calgary, Toronto, and Montreal to bring this beloved international brand to more Canadians.
In January 2026 we opened our second corporate Pret restaurant in downtown Toronto with plans to open
more, under the franchise model, in 2026 and beyond.
Commitment to Franchisee Financial Health and Sustainability
Food Services is strategically focused on enhancing the financial health of our restaurant network. In the
Fall of 2023, we set a goal to improve franchisee profitability by 30% by 2028. We are pleased to report
that we achieved a 7% improvement in restaurant-level profitability this year, stacking on top of the 5% we
achieved in 2024 and keeping us on track to reach our target of a 30% improvement by 2028. In 2025 we
were also able to reduce the cost of building a new freestanding A&W restaurant by nearly $500,000 and
lower the cost of modernizing an existing A&W restaurant by $40,000.
Simultaneously, we remain focused on “Doing What’s Right”, which is at the core of the A&W brand. We
were honoured to receive the 2025 Environmental Stewardship Award from Restaurants Canada,
recognizing our longstanding leadership in leading the industry in sustainability.
Looking Ahead
As we enter 2026, we do so with a solid pipeline of new restaurants and a strategic focus on restaurant
growth, loyalty program expansion and operational excellence. We are committed to continuing to build
long-term value for our guests, franchisees and shareholders.
I want to thank our franchisees, employees, and suppliers for their unwavering dedication and commitment
to the business, and our guests for their continued loyalty.
Sincerely,
Susan Senecal
Susan Senecal
President and Chief Executive Officer
2 | A&W Food Services of Canada Inc.
A & W Food Services of Canada Inc.
Management’s Discussion and Analysis
The following Management’s Discussion and Analysis (“MD&A”) is dated March 4, 2026 and is intended to
assist readers in understanding the business environment, strategies, performance and risk factors of A & W
Food Services of Canada Inc. (“A&W”, “Food Services” or the “Company”). This MD&A provides readers
with management’s view and analysis of A&W’s financial results for the 16-week and 52-week periods ended
December 28, 2025. This MD&A should be read in conjunction with the Company’s audited annual
consolidated financial statements and accompanying notes for the 52-week period ended December 28, 2025.
Such financial statements and additional information about A&W, including its annual information form for
the period ended December 28, 2025 (“AIF”), are available on Food Services’ SEDAR+ profile at
www.sedarplus.ca or at www.awinvestors.ca.
FORWARD-LOOKING INFORMATION
Certain statements in this MD&A 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 MD&A includes, but is not limited to; estimates regarding annual
sales; expectations regarding sales trends at A&W restaurants; having sufficient cash on hand to meet future
obligations; the expectations that Food Services will continue to pay dividends at the current level; statements
regarding the potential impact of international conflicts and the impact of tariffs; Food Services’ objectives
with respect to the A&W restaurants and its planned strategies to achieve those objectives, which includes
improving restaurant-level profitability by an average of 30% by 2028; the expected use of and timing for the
maturity of the operating loan facility; Food Services’ expectation that future restaurant growth will be funded
by franchisees; Food Services’ expectation that it may incur capital expenditures to open new corporate
restaurants and will continue to invest in its digital platforms and that it will have sufficient capital resources
to fund these capital requirements; A&W’s ability to continue to grow and better position itself to withstand
the risks associated with the current economic conditions; delivering results and improved market share;
expectations for increased loyalty and enhancing performance over the long term; the expansion of Pret
restaurants under the franchise model; successfully securing sites for new Pret premises; expectations to be
able to franchise any future A&W or Pret expansion; expectations relating to the implementation of A&W’s
proprietary ‘5-Star’ operating system; Food Services’ beliefs relating to CLIMATE; expectations that
seasonality will continue to be a factor in the quarterly variation of financial results; the belief that A&W
delivers a strong value proposition that will position it well for continued future growth; our financial outlook
and Food Services remaining committed to the long-term health and success of its franchise network.
3 | A&W Food Services of Canada Inc.
The forward-looking information is based on various assumptions that include, but are not limited to:
• no material impact to supply chain availability, cost of inputs or franchisee ability to operate because
of 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
4 | A&W Food Services of Canada Inc.
information. The forward-looking information in this report is subject to risks, uncertainties and other factors
including, among others, the risks identified in the AIF under the heading “Risk Factors”. The “Risk Factors”
section of the AIF is incorporated by reference into this MD&A and is 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 report 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.
BASIS OF PREPARATION
The financial results reported in this MD&A are derived from the audited annual consolidated financial
statements of Food Services (formerly A&W of Canada Inc., as discussed below), which were prepared in
accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (“IFRS Accounting Standards”) and the unaudited condensed interim consolidated financial
statements of Food Services which were prepared in accordance with International Accounting Standard
(“IAS”) 34 - Interim Financial Reporting. The accounting policies applied in the audited annual consolidated
financial statements for the 52-week period ended December 28, 2025 and this MD&A have been consistently
applied to all periods presented.
To align its financial reporting with the business cycle of its operations, Food Services uses a fiscal year
comprising a 52 or 53-week period ending on the Sunday nearest December 31. The fiscal 2025 year was 52
weeks and ended December 28, 2025 (“Fiscal 2025”), fiscal 2024 year was 52 weeks and ended December 29,
2024 (“Fiscal 2024”) and fiscal 2023 was 52 weeks and ended December 31, 2023 (“Fiscal 2023”). All
references to “Q4 2025” are to Food Services’ 16-week period ended December 28, 2025; and to “Q4 2024”
are to Food Services’ 16-week period ended December 29, 2024.
Food Services manages the business on the basis of one reportable segment. The functional and reporting
currency of the Company is the Canadian dollar.
The audited annual consolidated financial statements and accompanying notes for Fiscal 2025 and this MD&A
were authorized for issue by Food Services’ Board of Directors (the "Board") on March 4, 2026.
Overview
Established in 1956, A&W is recognized as Canada’s first national burger quick service restaurant (“QSR”).
Over its 69-year history, A&W established a strong brand name and a reputation as a leader in the burger
segment of the QSR market. With System Sales(i) of $1.92 billion in Fiscal 2025 ($1.87 billion in Fiscal 2024)
A&W is the second largest burger QSR chain(ii) in the $13.3 billion Canadian QSR burger market(ii). A&W has
a loyal customer base, with hundreds of millions of guests visiting its restaurants across Canada annually.
(i)
System Sales is a non-IFRS measure. Please see “Non-IFRS Measures”, “Selected Financial Information” and “How We
Assess the Performance of Our Business” sections of this MD&A for additional details.
(ii) Based on trailing 12-month data as of December 31, 2025 per Circana, CREST®, Canada.
Food Services is the franchisor of A&W restaurants in Canada and is in the business of developing and
franchising quick service restaurants. The Company has a proven history of growing the number of A&W
restaurants across Canada, in a variety of formats, including freestanding restaurants with drive–thru facilities,
shopping centre locations, urban street front restaurants that are in densely populated areas and convenience
5 | A&W Food Services of Canada Inc.
locations which are shared sites with gas/convenience store operators. Many of the gas/convenience locations
were established in partnership with Suncor Energy Products Partnership, through their Petro-Canada retail
network (“Suncor” or “Petro-Canada”).
The A&W product line includes beef burgers (The Burger Family®), the Chubby Chicken® line of products,
russet thick–cut fries, sweet potato fries, A&W Root Beer®, fresh handcrafted onion rings, breakfast items,
soft drinks, coffee, as well as a variety of frozen and espresso-based beverages that are offered through the
A&W Brew Bar®.
As at December 28, 2025, the total number of A&W restaurants in Canada was 1,094 of which 1,084 are
franchised and 10 are corporately owned and are located in Ottawa, Ontario. As at December 28, 2025, Food
Services also operated one corporately owned Pret a Manger (“Pret”) restaurant in Toronto, Ontario.
Subsequent to the Fiscal 2025 year end, on January 5, 2026, Food Services opened a second corporately owned
Pret location in Toronto.
Food Services’ subsidiary, A&W Root Beer Beverages of Canada Inc. (“A&W Beverages”) is in the business
of buying and selling concentrate used in the production of canned and bottled regular and diet A&W Root
Beer. A&W holds a 60% interest in A&W Beverages and the 40% non-controlling interest is held by an outside
party.
Food Services’ revenue consists of service fees from franchised restaurants, revenue from the sale of food and
supplies to franchisees and distributors, revenue from the opening of new franchised restaurants, revenue from
company-owned A&W and Pret restaurants, revenue from other services sold to franchisees, contributions to
the national and regional advertising funds and revenue from sales of A&W Root Beer concentrate to a licenced
bottler who produces and distributes A&W Root Beer for sale in retail grocery stores and other retail outlets.
The National Advertising Fund (“NAF”) is funded by all franchised and corporate A&W restaurants and
governed by the National Advertising Advisory Counsel (the “NAAC”). Contributions to the NAF are based
on a percentage of sales and are recorded as franchising revenue in Food Services’ consolidated statement of
income, with a corresponding offset in operating costs for NAAC approved marketing related costs.
Operating costs are generally variable with revenue and include the cost of materials, supplies and equipment
sold either directly to franchisees or to distributors that service the restaurants or that are sold to the licenced
bottler, costs of providing other services to franchisees, marketing related expenses incurred by the advertising
funds and the costs of sales and other expenses of the Pret and A&W restaurants operated corporately by Food
Services. Operating costs also includes depreciation of plant, equipment, intangible assets and right-of-use
assets. General and administrative expenses are primarily fixed and include costs associated with providing
general support to the franchised A&W restaurants and establishing new A&W restaurants.
Strategic Combination in 2024
During Fiscal 2024, there were important changes to A&W’s corporate legal entity structure. On October 18,
2024, Food Services completed a transaction (the “Transaction”) in which it acquired all of the issued and
outstanding units (“Trust Units”) of A&W Revenue Royalties Income Fund (the “Fund”) that it did not already
own in exchange for $175,623,000 in cash and 9,839,091 common shares of Food Services less $18,275,000
in cash and intercompany receivables assumed upon A&W Trade Marks Inc. (“Trade Marks”) and the Fund
becoming wholly owned subsidiaries of Food Services. The Transaction was a strategic combination and was
completed as a statutory plan of arrangement under the Canada Business Corporations Act.
6 | A&W Food Services of Canada Inc.
Prior to the completion of the Transaction, A & W of Canada Inc. (“A&W Canada”) held a 65.48% interest in
AWFS Holdings Inc. (“AWFS Holdings”) and, as a result, controlled AWFS Holdings, and AWFS Holdings
controlled a predecessor of the Company, also named A & W Food Services of Canada Inc. (“predecessor
A&W Food Services”). An equity interest of 34.52% in AWFS Holdings was owned by an outside party and
was recorded as a non-controlling interest in the consolidated financial statements of A&W Canada.
The Transaction also involved the amalgamation of predecessor A&W Food Services, the operating company,
with the following holding companies that directly or indirectly owned shares of predecessor A&W Food
Services prior to the Transaction, some of which were created solely to facilitate the amalgamation and in
preparation for the acquisition of the Trust Units: Buddy Holdings Inc., A&W Canada, AWFS Holdings, A&W
Holdings I Inc. and A&W Holdings II Inc. (collectively referred to as the “Holding Companies”). The
amalgamated entity retained the legal name A & W Food Services of Canada Inc.
Prior to the Transaction, predecessor A&W Food Services owned (i) 9.4% of the outstanding Trust Units on a
fully-diluted basis through its ownership of limited voting units of the Fund, with the remaining Trust Units
being publicly traded, and (ii) 21.9% of the issued and outstanding common shares of Trade Marks, which
were exchangeable for Trust Units, with the remaining common shares being owned by the Fund. Food
Services accounted for its investments in Trade Marks and the Fund as investments in associates. Upon
completion of the Transaction, Trade Marks and the Fund became wholly owned subsidiaries of Food Services
and therefore Food Services derecognized its investments in associates. On January 3, 2025, the Fund and
Trade Marks were dissolved and Food Services directly acquired the A&W trademarks.
In connection with the Transaction, the Trust Units were de-listed from the Toronto Stock Exchange (“TSX”)
and the common shares of Food Services were listed on the TSX under the symbol AW.TO on October 18,
2024.
The acquisition of the Trust Units was accounted for as an asset acquisition in Food Services’ Fiscal 2024
consolidated financial statements and was funded by debt of $265,000,000 from a revolving Loan Facility (the
“Loan Facility”) with a syndicate of banks that was entered into in conjunction with the completion of the
Transaction. The Loan Facility has a maximum borrowing capacity of $325,000,000. Proceeds from the Loan
Facility were also used to repay Trade Marks’ outstanding borrowings balance, totaling $60,167,000 and to
repay non-interest bearing promissory notes payable on demand with an aggregate principal amount of
$12,522,000.
Prior to completion of the Transaction, predecessor A&W Food Services paid A&W Trade Marks Limited
Partnership (“the Partnership”), a subsidiary of the Fund, a royalty for use of the A&W trademarks in Canada.
Food Services acquired the A&W trademarks upon completion of the Transaction and ceased recognizing the
royalty expense in its consolidated statement of income.
For further information regarding the Transaction, please refer to Food Services Fiscal 2024 MD&A, available
on Food Services’ SEDAR+ profile at www.sedarplus.ca, and the Fund’s management information circular
dated August 29, 2024 available on the Fund’s SEDAR+ profile at www.sedarplus.ca.
Pret A Manger
On June 2, 2022, we announced that we had signed a Country Agreement (the "Country Agreement") with
UK-based Pret A Manger (Europe) Limited, which sets forth the general terms and conditions granting Food
Services master franchisor rights to Canada for Pret A Manger. Pursuant to the Country Agreement, Food
Services has an exclusive right to expand the Pret brand across Canada. After trialling and testing the Pret
7 | A&W Food Services of Canada Inc.
products and concept in eight pop up locations over a two-year period beginning in 2022, Food Services
finalized a development agreement (the “Development Plan”) with Pret in 2024.
The Development Plan contemplates Food Services continuing to increase the number of physical locations
offering Pret products across Canada over an initial 10-year development term. In January 2024, we opened a
standalone Pret location in Toronto, Ontario and on January 5, 2026, Food Services opened a second
corporately owned location in Toronto that shares the back of house operations of the other standalone Pret
location. Pret drip coffee has also been served in A&W restaurants nationwide since September 2024 and Pret
espresso is served in all A&W restaurants equipped with the A&W Brew Bar. Select A&W restaurants also
started serving Pret pastries on a trial basis at the end of 2023 and as at the date of this MD&A, there were 21
A&W locations offering Pret pastries as part of the trial. Food Services is currently pursuing additional
opportunities to open Pret locations in accordance with the Development Plan and as at the date of this MD&A
is actively pursuing sites in Vancouver, Calgary, Toronto and Montreal.
FINANCIAL HIGHLIGHTS
Q4 2025
(as compared to Q4 2024)
• System Sales(i) of $591.4 million increased by $14.6 million (2.5%)
• Revenue of $93.0 million was consistent with Q4 2024 revenue of $93.2 million
• Income before income taxes increased by $2.5 million (12%) to $23.4 million
• Adjusted EBITDA(i) increased by $1.4 million (5%) to $29.3 million and Adjusted EBITDA
Margin(i) increased 150 bps to 31.5% from 30.0%
• General and administrative expenses increased by $1.9 million (12%) to $16.9 million, primarily
due to differences in the timing of when expenses were incurred
• Cash Dividend of $0.480 per share was declared on December 1, 2025
• Opened 12 new A&W restaurants
Fiscal 2025
(as compared to Fiscal 2024)
• System Sales(i) increased by $51.8 million (2.8%) to $1.92 billion
• Revenue increased by $1.8 million (1%) to $294.1 million
• Income before income taxes increased by $26.7 million (53%) to $76.7 million
• Adjusted EBITDA(i) increased by $6.6 million (7%) to $100.0 million and Adjusted EBITDA
Margin(i) increased 200 bps to 34.0% from 32.0%
• General and administrative expenses increased by $1.1 million (2%) to $49.7 million, in line with
the increase in Canada’s Consumer Price Index in 2025 of 2.1%(ii)
• Cash Dividends totalling $1.92 per share were declared
• Opened 26 new A&W restaurants and achieved net annual restaurant unit growth of 2.0%,
compared to 1.8% in Fiscal 2024
(i)
System Sales and Adjusted EBITDA are non-IFRS financial measures and Adjusted EBITDA Margin is a non-IFRS ratio. Please
see “Non-IFRS Measures”, “Selected Financial Information” and “How We Assess the Performance of Our Business” sections
of this MD&A for further details.
(ii) Obtained from Statistics Canada publication titled “Consumer Price Index: Annual Review, 2025”
8 | A&W Food Services of Canada Inc.
Fiscal 2025 Performance Compared to Outlook
A summary of how A&W performed against the Fiscal 2025 Outlook is contained in its press release, dated
March 5, 2026, “A&W Food Services of Canada Inc. Announces Fourth Quarter and Fiscal 2025 Results",
under the heading “2026 Outlook”. This press release is available on available on Food Services’ SEDAR+
profile at www.sedarplus.ca or at www.awinvestors.ca.
9 | A&W Food Services of Canada Inc.
SELECTED FINANCIAL INFORMATION
The following tables summarize Food Services’ results for the periods indicated. The selected consolidated
financial information set out below for Q4 2024 has been derived from the audited annual consolidated
financial statements of Food Services for the year ended December 29, 2024 less the year to date information
per the unaudited interim condensed consolidated financial statements of predecessor A&W Food Services for
Q3 2024 with adjustments made by management to reflect consolidation and presentation at the A&W Canada
level so that the periods presented are comparable. The selected financial information set out below for Q4
2025 and Q4 2024 is unaudited.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
Quarterly Results
Annual Results
(in thousands of Canadian $)
Q4
2025
Q4
2024
Fiscal
2025
Fiscal
2024
Fiscal
2023
Financial Summary
Revenue from franchising
85,465
85,633
269,680
267,619
276,121
Revenue from corporate restaurants
7,515
7,563
24,415
24,680
23,193
Total revenue
92,980
93,196
294,095
292,299
299,314
Operating costs
(48,798)
(49,015)
(150,538)
(157,095)
(163,948)
General and administrative expenses
(16,935)
(15,054)
(49,731)
(48,632)
(47,108)
Royalty expense
-
(5,776)
-
(44,036)
(54,863)
Recovery of impairment (impairment) of
leases receivable
34
(192)
34
(192)
(43)
Net finance expense
(4,725)
(3,837)
(15,874)
(4,904)
(1,387)
Gain (loss) on interest rate swap
859
-
(1,318)
-
-
Amortization of deferred gain
-
398
-
3,039
3,703
Share of income from associates
-
1,242
-
9,472
11,415
Income before income taxes
23,415
20,962
76,668
49,951
47,083
Income tax expense(i)
(5,922)
(22,075)
(19,834)
(28,273)
(9,071)
Net income (loss)(i)
17,493
(1,113)
56,834
21,678
38,012
Net cash generated from operating activities
34,495
8,479
56,997
61,228
18,953
Other Metrics
System Sales(ii)
591,421
576,796
1,920,243
1,868,478
1,853,119
System Sales Growth(ii)
2.5%
-0.1%
2.8%
0.8%
4.3%
Same Store Sales Growth(ii)
0.9%
-1.9%
1.2%
-0.6%
2.7%
New A&W restaurants opened
12
9
26
28
19
A&W restaurants permanently closed
2
5
5
9
11
Number of A&W restaurants
1,094
1,073
1,094
1,073
1,054
Net annual restaurant unit growth(iii)
2.0%
1.8%
2.0%
1.8%
0.8%
Adjusted EBITDA(ii)
29,325
27,927
100,037
93,469
92,300
Adjusted EBITDA Margin(ii)
31.5%
30.0%
34.0%
32.0%
30.8%
Free Cash Flow(ii)
33,533
7,002
54,648
58,322
12,950
Net Debt to Adjusted EBITDA(ii)
2.3
2.5
2.3
2.5
0.1
Capex/Revenue Ratio(ii)
1.0%
1.6%
0.8%
1.0%
2.0%
(i)
The income tax expense and net income (loss) for Q4 2024 and Fiscal 2024 includes a non-recurring, non-cash deferred tax
expense of $16,943,000 as a result of the Transaction. Please see the “Income taxes” sections of this MD&A under the heading
“Results of Operations” for additional details.
(ii) System Sales, System Sales Growth, Same Store Sales Growth, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow,
Net Debt to Adjusted EBITDA and Capex/Revenue Ratio are non-IFRS financial measures, non-IFRS ratios and supplementary
10 | A&W Food Services of Canada Inc.
financial measures. Please see “Non-IFRS Measures”, and “How We Assess the Performance of Our Business” sections of this
MD&A and the reconciliations of each non-IFRS measure to the relevant reported IFRS financial measure set out below for
further details.
(iii) 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.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
Annual Results
(in thousands of Canadian $, except per share amounts)
Fiscal
2025
Fiscal
2024
Fiscal
2023
Total revenue
294,095
292,299
299,314
Net income attributable to shareholders of Food Services
55,196
11,878
24,106
Weighted average number of common shares outstanding (in
thousands)
23,998
12,444
9,495
Net income per share(i)
2.30
0.95
2.54
Dividends declared per common share of A&W Canada(ii)
-
2.0270
1.9906
Dividends declared per common share of Food Services(iii)
1.9200
0.3748
-
(i)
Net income per share is calculated by dividing the net income attributable to Food Services shareholders by the weighted average
number of common shares outstanding during the period. In order to ensure comparability of net income per share, the number
of shares used to calculate the net income per share up to October 17, 2024 (the date of the Transaction), has been adjusted to
reflect the equivalent number of common shares of Food Services that were outstanding after the reorganization steps described
in the section titled “Strategic Combination with the Fund” were undertaken, excluding the common shares issued to the outside
party holding a non-controlling interest in Food Services prior to the completion of the Transaction and those issued to
unitholders of the Fund (“Unitholders”) as consideration for the Transaction which were incorporated into the weighted average
number of shares from the date of the Transaction onwards.
(ii) Represents dividends declared to shareholders of A&W Canada prior to completion of the Transaction. In order to ensure
comparability of dividends declared per share, the number of shares used to calculate the dividend per share up to October 17,
2024 (the date of the Transaction), has been adjusted to reflect the equivalent number of common shares of Food Services that
were outstanding after the reorganization steps described the section titled “Strategic Combination with the Fund” were
undertaken, excluding the common shares issued to the outside party holding a non-controlling interest in Food Services prior
to the completion of the Transaction and those issued to Unitholders as consideration for the Transaction which were
incorporated into the weighted average number of shares from the date of the Transaction onwards.
(iii) Represents dividends declared to shareholders of Food Services after completion of the Transaction.
SELECTED STATEMENT OF FINANCIAL POSITION DATA
As at
(in thousands of Canadian $)
December
28, 2025
December
29, 2024
December
31, 2023
Total Assets
1,237,892
1,254,837
924,586
Total non-current financial liabilities
863,837
879,751
609,476
11 | A&W Food Services of Canada Inc.
Reconciliation to Non-IFRS Financial Measures
(in thousands of Canadian Dollars)
Reconciliation of System Sales to
Revenue from Corporate Restaurants:
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Fiscal 2023
Revenue from corporate restaurants
7,515
7,563
24,415
24,680
23,193
Sales reported by franchised restaurants(i)
583,906
569,233
1,895,828
1,843,798
1,829,926
System Sales(ii)
591,421
576,796
1,920,243
1,868,478
1,853,119
(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. Please see “Non-IFRS Measures” and “How We Assess the Performance of Our
Business” sections of this MD&A for further details.
Reconciliation of EBITDA and
Adjusted EBITDA to Income before
income taxes:
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Fiscal 2023
Income before income taxes
23,415
20,962
76,668
49,951
47,083
Depreciation of plant, equipment,
intangible assets and right-of-use assets
2,054
2,034
6,678
6,225
5,010
Amortization of deferred gain
-
(398)
-
(3,039)
(3,703)
Net finance expense
4,725
3,837
15,874
4,904
1,387
EBITDA(iii)
30,194
26,435
99,220
58,041
49,777
Adjustments to EBITDA:
Income before taxes attributable to non-
controlling interest in A&W Beverages
(641)
(498)
(2,250)
(1,782)
(1,648)
Royalty expense
-
5,776
-
44,036
54,863
Share of income from associates
-
(1,242)
-
(9,472)
(11,415)
(Recovery of impairment) impairment of
leases receivable
(34)
192
(34)
192
43
Net loss on disposal of plant and
equipment
1
-
24
636
675
Unrealized loss (gain) on foreign
exchange
3
18
(4)
55
12
(Gain) loss on interest rate swap
(859)
-
1,318
-
-
Stock-based compensation
689
-
1,746
-
-
Net income impacts created by
advertising fund deficits(iv)
(610)
(2,437)
(729)
888
-
Recovery of capitalized costs
-
(944)
(758)
(1,390)
(1,286)
Start up net losses on Pret
582
627
1,504
1,985
1,279
Transaction costs
-
-
-
280
-
Adjusted EBITDA(iii)
29,325
27,927
100,037
93,469
92,300
(iii) EBITDA and Adjusted EBITDA are non-IFRS financial measures. Please see “Non-IFRS Measures” and “How We Assess the
Performance of Our Business” sections of this MD&A for further details.
(iv) 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.
12 | A&W Food Services of Canada Inc.
Reconciliation of Free Cash Flow to Net
cash generated from operating activities:
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Fiscal 2023
Net cash flows generated from operating
activities
34,495
8,479
56,997
61,228
18,953
Cash purchase of plant and equipment
(713)
(188)
(1,075)
(979)
(2,992)
Cash purchase of intangible assets
(249)
(1,289)
(1,274)
(1,927)
(3,011)
Free Cash Flow(v)
33,533
7,002
54,648
58,322
12,950
(v) Free Cash Flow is a non-IFRS financial measure. Please see “Non-IFRS Measures” and “How We Assess the Performance of
Our Business” sections of this MD&A for further details.
Reconciliation of Net Debt to Operating
loan facility:
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Fiscal 2023
Operating loan facility
232,874
257,149
232,874
257,149
15,726
Less: Cash and cash equivalents
(982)
(22,534)
(982)
(22,534)
(3,855)
Net Debt(vi)
231,892
234,615
231,892
234,615
11,871
(vi) Net Debt is a non-IFRS financial measure. Please see “Non-IFRS Measures” and “How We Assess the Performance of Our
Business” sections of this MD&A for further details.
SUMMARY OF FACTORS AFFECTING PERFORMANCE
Food Services generally believes that our performance and future success will be attributable to our internal
strengths and differentiated products, factors that present significant opportunities for us. These factors are
also subject to a number of inherent risks and challenges, some of which are discussed below. See also the
“Risks and Uncertainties” section of this MD&A and the “Risk Factors” section of the AIF, which is available
on Food Services’ SEDAR+ profile at www.sedarplus.ca or at www.awinvestors.ca.
A&W’s continued growth is driven by our mission: “Together, to excite Canada’s most avid burger lovers,
wherever they are, with the best tasting burgers they crave, earning even more of their visits and making A&W
restaurants even more successful.” We have built brand loyalty and strength with both A&W’s guests and
franchisees over many years through our strategic initiatives. Our strategic initiatives include creating the
“can’t wait to come back” guest experience and being highly convenient for our guests which is being achieved
through new restaurant growth and growth of our mobile app business. Our initiatives also include making it
easier for franchisees and their teams to operate successful restaurants. These strategic initiatives and the
strengths they have created will be key to delivering results and growth of market share.
A&W’s brand positioning is strong. Growth of new locations, our strengths in innovation, a safe and stable
supply chain, and continued efforts and improvements to ensure we consistently deliver great food and a better
guest experience are all expected to contribute to building loyalty and enhancing performance over the long
term. Food Services remains committed to the long-term health and success of its franchise network and its
shareholders. The Company believes its strategic initiatives build on its inherent strengths by harnessing its
competitive advantages and by leveraging our positioning in the market. Our strategy is supported by a strong
and experienced senior leadership team with long term tenure and a demonstrated history of success.
13 | A&W Food Services of Canada Inc.
Our Brand and Menu Strategy
We are proud to be a Canadian company and a leader in sourcing simple, great-tasting ingredients, farmed with
care. A&W offers a well-known lineup of products --The Burger Family® -- including the much-loved Teen
Burger® and Buddy Burger®, as well as the popular Chubby Chicken® offerings. A&W Root Beer® is the
market dominant brand of root beer sold in Canada, and the Great A&W Root Bear®, “Rooty”, is an iconic
Canadian mascot.
Food Services launched an initiative in 2013 to prioritize natural ingredients. This made A&W the first and
only national burger chain in Canada to offer beef raised without artificial hormones or steroids. We continued
to source other natural ingredients, and in 2020, announced that all A&W’s beef is grass-fed and grass-finished,
from cattle that graze on grass and other forage like hay. Independent market research indicates that A&W has
the best-tasting burgers among the six major QSR burger chains in Canada(i).
In 2021, Food Services announced that we were expanding the beverage offerings at A&W restaurants with
the phased rollout of the A&W Brew Bar. The A&W Brew Bar offers a variety of frozen beverages as well as
hot and cold espresso-based beverages, using organic Pret coffee. After reaching critical mass in 2024, the
A&W Brew Bar is now operating in over 740 A&W restaurants across the country. A&W restaurants continue
to offer our iconic Root Beer, crafted with natural cane sugar and all-natural flavors, served in traditional
frosted mugs for a memorable guest experience.
A&W's 2024 menu introductions, the Spicy Piri-Piri Buddy Burger lineup and the Veggie Masala Burger,
proved exceptionally popular with guests. The Veggie Masala Burger, a unique spicy recipe developed in
collaboration with Nanak® Foods, Canada's leading producer of South Asian-inspired ingredients, achieved
new sales records in numerous communities across Canada. Due to their success, A&W made the Masala
Veggie Burger, Crispy Veggie Burger, and the Spicy Piri-Piri Potato Buddy™ Burger permanent menu items
in June 2025.
In 2025, A&W introduced the new A&W Plant-Based Burger. Developed in A&W’s in-house innovation
kitchen, the new proprietary vegetarian patty allows us to take full ownership of the recipe and flavour profile,
ensuring it meets the specific taste expectations of A&W guests, while continuing to expand our plant-based
offerings.
A&W expanded its value offerings through the introduction of a dedicated "Value Deals" menu in Q3 2025.
The Value Deals menu was designed to provide guests with a variety of items with a price point under $4.00
to make A&W's offerings more accessible and appealing to a broader customer base, particularly those seeking
budget-friendly meal options featuring A&W’s signature taste or quality. The introduction of the expanded
Value Deals menu solidified A&W's position as a brand that understands and responds to the evolving needs
and economic considerations of its guests. We believe that A&W delivers a strong value proposition to its
guests that combines an attractive price point with high quality of ingredients and an excellent guest experience,
and that our value proposition positions us well for continued future growth.
(i) Rating is with respect to the six major QSR burger chains in Canada and is based on market consumer research of Synqrinus
(conducted in 2023 and commissioned by Food Services).
Proven Franchise System
Food Services is committed to growth through franchising and being an exceptional franchisor. A&W
franchisees operate under a franchising program that has been refined over many decades and the personal
investment by A&W franchisees helps to ensure committed operators. We intend to continue our growth
14 | A&W Food Services of Canada Inc.
through franchising by attracting and retaining experienced operators who have the skills to be able to
successfully manage restaurants in a franchise system as well as expanding the chain with our current
franchisees. Our approach to our development strategy permits us to grow in a controlled manner and enables
us to ensure that each A&W franchise strictly adheres to high standards of quality and service.
We devote significant resources to providing our franchisees with assistance in site selection, restaurant design
and build, marketing, restaurant initiation and launch, ongoing support of operations and business management
and employee training programs.
We are focused on keeping the cost of becoming an A&W franchisee affordable relative to other competing
franchises in the burger QSR industry, which facilitates growth in the number of A&W restaurants. In light of
rising interest rates and costs of construction over the past few years, we have been focused on our strategy to
reduce the cost of the initial capital investment to open an A&W restaurant and focused on reducing the cost
of modernizations for franchisees as well as pursuing a franchisee capital light program associated with other
parts of our strategic initiatives.
Food Services is also strategically focused on improving franchisee profitability and in 2023 set a target to
improve restaurant-level profitability by an average of 30% by 2028. We achieved an average of 5%
improvement in 2024, an additional average of 7% improvement in 2025 and are on track to achieving the 30%
improvement by 2028, as measured against actual restaurant profitability for 2023. The franchisee business
model was further strengthened in 2025 by Food Services' successful efforts to reduce construction and
modernization costs. Specifically, the cost of building a new freestanding A&W restaurant was reduced by
nearly $500,000, and the cost to modernize an existing one was lowered by about $40,000. The first
freestanding restaurant built with the new, lower-cost design opened on December 31, 2025.
Net Annual Restaurant Unit Growth
Each A&W restaurant is clearly identifiable, with a strong brand image and through a history rooted in
innovation, Food Services has been able to adapt its concepts, layouts and designs to continue to grow with
successful new restaurants. We have demonstrated a long history and ability to continue to add new A&W
restaurants through innovation and we have the platform and the skill of an experienced team to be able to
identify real estate opportunities across Canada. Strategically, we are focused on growing restaurant counts
across Canada with a particular focus on Ontario and Quebec, and in partnership with Suncor. We have
increased the total A&W restaurant count by 21 in Fiscal 2025 (26 openings and 5 permanent closures) with
15 of the 26 openings in the important markets of Ontario and Quebec and 12 in partnership with Suncor. There
are an additional 18 restaurants under construction as at December 28, 2025. We believe each restaurant is
highly valuable and respect the significant investment franchisees have made into the A&W business and strive
to ensure all restaurants are successful and viable for the long term.
Digital and Delivery Growth
A&W benefits from a well-established and growing delivery business. We have built strong relationships and
channels with Uber Eats, Skip and DoorDash and other local delivery partners to be able to offer guests
convenient delivery options across the country. We launched a new proprietary A&W mobile app in June 2023
to enable A&W restaurants to serve guests even more conveniently. The mobile app provides guests with the
option to choose between pick-up, delivery or dine-in and gives them access to exclusive offers and
promotions.
Our new loyalty program, A&W Rewards, officially launched on April 22, 2025. The program was utilized in
approximately 5% of all post-launch Fiscal 2025 orders and we saw the number of active users on the A&W
15 | A&W Food Services of Canada Inc.
app increase to approximately 500,000 by the end of Fiscal 2025, which is more than double the number of
active users on the app prior to the launch. This initiative is a major step in our strategy to improve the guest
experience and solidify our standing in the burger QSR market.
A Proprietary Operating System Delivering High Quality and Quick Service
Food Services has a sophisticated proprietary restaurant operating system designed to deliver high quality food
and fast. A&W’s restaurant operating system is continually being refined and improved to enhance food
quality, guest service, and adherence to standards. Delivering an industry-leading guest experience is a very
important element of A&W’s success and the operating system includes processes and systems which allow
restaurants to offer a superior guest and employee experience. A significant renewal of the restaurant operating
system was designed, tested, and approved in 2024, which we call ‘the 5-star Operating System’ or ‘5-star’.
System-wide implementation began in January 2025 and as of the date of this MD&A, substantially all A&W
restaurants have completed the first phase of the 5-Star training and onboarding program. The second phase
will commence in 2026. Results from the 5-Star system are positive, demonstrating a more consistent system
that enables restaurant teams to deliver an enhanced guest experience. This has resulted in notable
improvements in average speed of service and guest feedback. Food Services has also received positive
feedback from restaurant operators.
CLIMATE
“CLIMATE” at A&W can be described as the set of goals and behaviours that align the organization on the
way in which we work together and is one of A&W’s greatest strengths. The first A&W CLIMATE Goals
were developed in 1975 to identify the behaviours critical for the management team to embrace in order for
the business to be successful. Today, the CLIMATE Goals identify the key behaviours that the Company
believes will enable it to be successful in achieving its mission and strategy. Across the country, with
important partners, and in all A&W restaurants, our team members learn about CLIMATE and are enabled
with training, tools and support to leverage a more cohesive and effective work environment to create greater
success. As a result of the commitment to CLIMATE, Food Services believes our culture provides A&W a
competitive advantage.
Environment, Social and Governance (“ESG”)
At A&W, “Doing What’s Right” is a strategically driven, organization-wide commitment with positive impact
that reaches far beyond the walls of our restaurants and is embedded in our brand. The leadership and combined
efforts of our entire ecosystem – franchisees, supplier partners, team members, and our guests – give us a
unique opportunity to make a truly significant difference, building sustainability in our supply chain, in our
restaurants and in communities throughout Canada. We focus on areas where we believe we can lead the most
meaningful change: the environment, animal welfare, our people, our community, and our food.
On August 7, 2025, Restaurants Canada announced the 2025 recipients of their Awards of Excellence and
awarded A&W with the Environmental Stewardship Award of Recognition for the various initiatives that have
emerged from our “Doing What’s Right” strategy.
For more information on our “Doing What’s Right” strategy please see the “General Development of the
Business – Description of the Business - Environmental, Social and Governance” section of the AIF, which is
available on Food Services SEDAR+ profile at www.sedarplus.ca or at www.awinvestors.ca.
16 | A&W Food Services of Canada Inc.
Consumer Trends
The quick service industry, and food service more generally, is subject to shifts in consumer trends, preferences
and consumer spending and our sales and operating results depend, in part, on our ability to respond quickly
and well to such changes. A&W’s differentiated ingredient strategy and strengths in strategy development and
menu innovation provide us with the flexibility to optimize the appeal of our menu, and this has been a critical
driver of our growth. We believe that our track record demonstrates the success of A&W’s menu and brand
strategy at responding to changes in demand and consumer preferences, including effective response through
all stages of economic cycles.
Seasonality and Weather
Results of operations for any one quarter are not necessarily indicative of results of operations for the full fiscal
year. We expect that seasonality will continue to be a factor in the quarterly variation of results.
System Sales tend to fluctuate seasonally. For A&W restaurants in shopping centres, sales typically tend to
fluctuate due to higher traffic during the back-to-school, “Black Friday” and Christmas shopping seasons. In
the freestanding and other concepts of A&W restaurants, weather and summer travel, among other things,
typically impact sales.
Extreme weather conditions in the areas in which A&W restaurants are located could adversely affect A&W’s
business and financial results. For example, frequent or unusually heavy snowfall, ice storms, rainstorms or
other extreme weather conditions over a prolonged period could make it difficult for guests to travel to A&W
restaurants and thereby reduce A&W’s revenue and profitability.
Average quarterly System Sales over the last three completed fiscal years is as follows:
First fiscal quarter
20.7%
Second fiscal quarter
23.4%
Third fiscal quarter
25.0%
Fourth fiscal quarter(i)
30.9%
Yearly total
100.0%
(i)
Food Services’ fourth fiscal quarter is 112 days, whereas the first, second and third fiscal quarters are 84 days.
NON-IFRS MEASURES
This MD&A 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 MD&A 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”, “Adjusted EBITDA”, “Free Cash Flow” and “Net Debt”; non-IFRS ratios including “System Sales
Growth”, “Adjusted EBITDA margin” and "Net Debt to Adjusted EBITDA”; and non-IFRS supplementary
financial measures such as “Same Store Sales Growth” and “Capex/Revenue ratio”.
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
17 | A&W Food Services of Canada Inc.
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.
For definitions of these non-IFRS measures and industry metrics and reconciliations of these non-IFRS
financial measures to the relevant reported measures, please see the “How We Assess the Performance of Our
Business” and “Selected Financial Information” sections of this MD&A. 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.
HOW WE ASSESS THE PERFORMANCE OF OUR BUSINESS
In assessing the performance of our business, we consider a variety of financial and operating measures that
affect our operating results.
System Sales is calculated in respect of all A&W and Pret restaurants in Canada as the sum of (1) gross sales
reported to Food Services by franchisees of such restaurants without audit, verification or other form of
independent assurance, and (2) revenue from corporate restaurants. System Sales reflect sales after deducting
amounts for discounts for coupons and other promotional offerings and applicable sales taxes. Management
believes System Sales is a key performance indicator as it is the main driver of Food Services’ revenues and
provides an indication of the growth of sales of the overall network of restaurants. Refer to the “Selected
Financial Information” section for a reconciliation of System Sales to revenue from corporate restaurants, the
most comparable IFRS measure, for the current and comparable reporting periods.
System Sales Growth is calculated as the percentage change in System Sales for the current reporting period
as compared to the comparable reporting period in the prior year. Management believes that System Sales
Growth is a key performance indicator as it provides an indication of the growth of sales of the overall network
of restaurants. See “System Sales”.
Same Store Sales Growth reflects the change in gross sales of franchised A&W restaurants that have been
open for at least two full fiscal years relative to the same period in the prior fiscal year and is based on an equal
number of days in each period. This measure is a key performance indicator for A&W as it highlights the
performance of existing franchised restaurants.
Net Annual Restaurant Unit Growth reflects the percent increase in A&W restaurants at the ending of the
reporting period as compared to the end of the prior year comparable reporting period on a trailing 4 quarter
basis. This measure is a key performance indicator for A&W as it highlights the growth in restaurant store
count.
EBITDA is calculated by taking income before income taxes and adding back the net finance expense,
amortization of deferred gain and the depreciation on plant, equipment, intangible assets and right-of-use
assets. Management believes that is useful as it is used by A&W as a component of reconciliations to other
non-IFRS measures. Refer to the “Selected Financial Information” section for a reconciliation of EBITDA to
income before income taxes, the most comparable IFRS measure, for the current and comparable reporting
periods.
18 | A&W Food Services of Canada Inc.
Adjusted EBITDA is calculated by taking EBITDA and adding back the income before taxes attributable to
the non-controlling interest in A&W Beverages and adjusting for certain items, including non-cash items
and/or items management considers non-recurring or not representative of Food Services’ ongoing
performance such as royalty expense, share of income from associates, impairment of leases receivable and
plant and equipment, net gains/losses on disposal of plant and equipment, start up net losses on Pret, unrealized
gains/losses on foreign exchange, unrealized gains/losses on interest rate swaps, recovery of capitalized costs,
income/loss recognized related to advertising funds which is a timing difference between reporting periods,
stock-based compensation and transaction costs. Start up net losses on Pret are comprised of the net loss arising
from operating the stand-alone corporate Pret location plus the investments in the trial phase pop-up locations
including costs for supply chain start up, equipment, general administration and overhead and marketing costs.
Management believes that Adjusted EBITDA represents a useful supplement metric to assess profitability and
measures Food Services underlying ability to generate liquidity through operating cash flows by excluding the
effects of financing and investing activities through the removal of depreciation, amortization, interest, tax and
other non-recurring and/or non-cash income and expenses. Refer to the “Selected Financial Information”
section for a reconciliation of Adjusted EBITDA to income before income taxes, the most comparable IFRS
measure, for the current and comparable reporting periods.
Free Cash Flow is calculated by taking net cash flows generated from operating activities and deducting for
cash purchases of plant, equipment and intangible assets. Management believes that Free Cash Flow is a useful
metric because it is an indicator of how much cash is available for dividends, debt repayment and other
investing and financing activities. Refer to the “Selected Financial Information” section for reconciliations of
Free Cash Flow to net cash generated from operating activities, the most comparable IFRS measure, for the
current and comparable reporting periods.
Net Debt can be calculated by taking the current and non-current balance of the operating loan facility and
deducting the cash and cash equivalents balance. Management believes that Net Debt represents a useful
additional measure to assess A&W’s financial position by looking at total bank debt, net of cash and cash
equivalents. Refer to the “Selected Financial Information” section for reconciliations of Net Debt to operating
loan facility, the most comparable IFRS measure, for the current and comparable reporting periods.
Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenue. Management believes
that Adjusted EBITDA Margin is useful in assessing the performance of ongoing operations and efficiency of
operations relative to its revenue.
Net Debt to Adjusted EBITDA is calculated as Net Debt divided by Adjusted EBITDA for the trailing four
quarters. Management believes that Net Debt to Adjusted EBITDA is a useful measure of A&W’s leverage
and its financial condition. An increasing ratio would indicate that A&W is utilizing more debt per dollar of
EBITDA generated. Refer to the “Selected Financial Information” section for reconciliations of Adjusted
EBITDA and Net Debt to their most comparable IFRS measures, and for the calculation of Net Debt to
Adjusted EBITDA for the current and comparable reporting periods.
Capex/Revenue Ratio is calculated as the total cash purchases of plant, equipment and intangible assets divided
by total revenue. Management believes that Capex/Revenue Ratio is a useful evaluation of Food Service’s
investment activities and how much the Company is required to invest to generate revenues and execute its
strategy.
19 | A&W Food Services of Canada Inc.
RESULTS OF OPERATIONS
Analysis of Q4 2025 Results
The following section provides an overview of the Company’s Q4 2025 financial performance, as compared
to Q4 2024.
Revenue
In Q4 2025, Food Services generated $92,980,000 in total revenue, consistent with Q4 2024's total revenue of
$93,196,000. Contributions to advertising funds were $1,958,000 lower in Q4 2025 as compared to Q4 2024.
This decrease reflects a lower contribution rate to certain regional advertising funds, as these rates are
determined annually by the regional associations, as well as timing differences related to the sale of coupons
and other promotional materials that are administered by the National Advertising Fund. Offsetting the
decrease from advertising fund contributions were increases to franchising revenue resulting from the increase
in System Sales and the increase in the number of new A&W restaurant openings. There were three more new
A&W restaurants opened in Q4 2025 compared to Q4 2024, as the timing of restaurant openings is subject to
various factors and fluctuates each quarter. New restaurant openings impact the revenue generated from the
sale of equipment and the revenue associated with turnkey restaurants and as such the higher number of
openings in Q4 2025 led to an increase to those streams of revenue, when compared to Q4 2024.
System Sales(i) for Q4 2025 was $591,421,000 and increased 2.5% from Q4 2024 System Sales(i) of
$576,796,000 due to an increase in the number of A&W restaurants and the 0.9% Same Store Sales Growth(i)
achieved in Q4 2025. Revenue from service fees and revenue generated from the distribution of food and
supplies fluctuate with the movement in System Sales and as such, increased quarter over quarter. 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 and margin expansion in Q4 2025. The increases
were partially offset by the $1,958,000 decrease in contributions to advertising funds discussed above.
Same Store Sales Growth(i) for Q4 2025 was 0.9%, due to an increase in both average cheque size and guest
counts. The growth in guest counts demonstrates the ongoing success of our marketing campaigns, which we
began to see positive impacts from in Q1 2025 and reflects the attractiveness of our value offerings in the
current consumer market, including our Value Deals menu, which was introduced in Q3 2025 and features a
variety of menu items priced under $4.00. The increase in average cheque size is partially attributed to industry-
wide inflation affecting goods, services, and labour.
Revenue from corporate restaurants includes the revenue from the ten A&W restaurants and one Pret restaurant
that are located in Ontario and owned and operated corporately. Revenue from corporate restaurants was
$7,515,000 for Q4 2025, in line with revenue from corporate restaurants of $7,563,000 for Q4 2024.
(i)
System Sales and Same Store Sales Growth are non-IFRS financial measures and supplementary financial measures. Please
see “Non-IFRS Measures”, “Selected Financial Information” and “How We Assess the Performance of Our Business” sections
of this MD&A for further details.
Operating costs
Food Services’ operating costs for Q4 2025 were $48,798,000 and were consistent with operating costs for Q4
2024 of $49,015,000. Operating costs are primarily driven by franchising revenue which, as discussed above,
was flat quarter over quarter.
20 | A&W Food Services of Canada Inc.
General and administrative expenses
Food Services’ general and administration expenses represent costs of providing services to franchised
restaurants and establishing new restaurants. General and administration expenses for Q4 2025 were
$16,935,000 and were $1,881,000 or 12% higher than general and administration expenses for Q4 2024 of
$15,054,000. The increase in general and administration expenses is driven by timing differences between
when certain costs were incurred in Fiscal 2025 versus Fiscal 2024, an increase in professional fees as well as
the introduction of stock-based compensation in Fiscal 2025, which accounted for $689,000 of the quarter over
quarter increase.
Royalty expense
The royalty expense recognized in Q4 2024 is the royalty that Food Services paid to the Partnership for use of
the A&W Trademarks prior to closing of the Transaction. A&W ceased recognition of the royalty expense
from October 18, 2024 onwards. See “Strategic Combination in 2024”.
Net finance expense
The net finance expense for Q4 2025 increased by $888,000 from Q4 2024 due primarily to the increase in the
average debt balance as Food Service increased its net borrowings by $265,000,000 on October 17, 2024, part
way through Q4 2024, in order to finance the Transaction. See “Operating Loan Facility and Interest Rate
Swap”.
Gain on interest rate swap
Food Services uses interest rate swap agreements to manage risks from fluctuations in interest rates. To manage
the interest rate risk associated with the Loan Facility, Food Services entered into an interest rate swap
arrangement (the “Swap”) in Q2 2025. The $859,000 gain on interest rate swap for Q4 2025 represents the
change in the fair value of the Swap. The gain is unrealized and did not impact cash. See “Operating Loan
Facility and Interest Rate Swap”.
Amortization of deferred gain
The amortization of deferred gain recognized in Q4 2024 relates to the gain that was realized on the sale of the
A&W trademarks in 2002 on first establishing the Fund and was deferred and amortized over the term of the
royalty agreement. The annual adjustments to the royalty pool increased the deferred gain and the additions
were amortized over the remaining term of the royalty agreement from the date of addition. The deferred gain
was derecognized from Food Services’ consolidated balance sheet and the corresponding amortization of the
deferred gain was eliminated from Food Services’ consolidated statement of income upon completion of the
Transaction. See “Strategic Combination in 2024”.
Share of income from associates
Prior to completion of the Transaction, A&W equity accounted for its investments in Trade Marks and the
Fund. Following completion of the Transaction, both Trade Marks and the Fund became wholly owned
subsidiaries of Food Services, and were then dissolved, therefore A&W ceased recognizing income from
associates from October 18, 2024 onwards. See “Strategic Combination in 2024”.
Income taxes
Income tax is recognized based on management’s best estimate of the weighted average annual income
tax rate expected for the full fiscal year. To the extent that forecasts differ from actual results, adjustments are
recognized in subsequent periods. The statutory income tax rate for Q4 2025 and Q4 2024 was 26.9%.
21 | A&W Food Services of Canada Inc.
Income tax expense for Q4 2025 was $5,922,000, compared to $22,075,000 in Q4 2024 and the effective tax
rates for Q4 2025 and Q4 2024 were 25.3% and 105.3%, respectively. The income tax expense and effective
tax rate for Q4 2024 were impacted by $16,943,000 in deferred tax expense recognized upon completion of
the Transaction. The $16,943,000 in deferred tax expense was a non-cash, non-recurring expense and
corresponds to the deferred tax assets and liabilities associated with the investment in associates and deferred
gain balances that were derecognized from Food Services’ consolidated balance sheet upon completion of the
Transaction. The effective tax rate of Q4 2024, excluding the $16,943,000 in deferred tax recognized in Q4
2024 related the Transaction, was 24.5%.
Net income and Net income per share
Food Services reported net income of $17,493,000 in Q4 2025 compared to a net loss of $1,113,000 in Q4
2024 due to the factors discussed above. The net loss in Q4 2024 is not comparable to the net income in Q4
2025 due to the impact of the Transaction on the Q4 2024 results, particularly the non-cash, non-recurring
deferred tax expense of $16,943,000 that was recognized upon completion of the Transaction as discussed
above in the income taxes section.
Food Services reported net income per share of $0.71 ($0.71 per diluted share) in Q4 2025 versus a net loss
per share of $0.13 ($0.13 per diluted share) in Q4 2024 due to the increase in income attributable to
shareholders of Food Services, partially offset by the weighted average number of shares outstanding
increasing as a result of the Transaction and the issuance of stock-based compensation.
In order to improve comparability of net income per share, the number of shares used to calculate the net
income per share for Q4 2024, has been adjusted to reflect the equivalent number of common shares of Food
Services that were outstanding after the reorganization steps described in the section titled “Strategic
Combination in 2024” were undertaken, excluding the common shares issued to the outside party holding a
non-controlling interest in Food Services prior to the completion of the Transaction and those issued to
Unitholders as consideration for the Transaction which were incorporated into the weighted average number
of shares from the date of the Transaction onwards.
Net income attributable to non-controlling interest
The net income attributable to non-controlling interest for Q4 2025 represents an outside party’s 40% interest
in A&W Beverages. The net income attributable to non-controlling interest for Q4 2024 represents an outside
party’s share of A&W’s net income prior to completion of the Transaction and an outside party’s 40% interest
in A&W Beverages. Following completion of the Transaction, the outside party with an ownership in A&W
owns publicly traded shares of A&W and therefore their share of A&W’s income is no longer reported as non-
controlling interest.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA(i) increased by $1,398,000 to $29,325,000 for Q4 2025 ($27,927,000 for Q4 2024). The
increase in Adjusted EBITDA is primarily attributable to the increase in revenue, excluding the revenue related
to the advertising fund contributions that are excluded for the purposes of calculating Adjusted EBITDA,
partially offset by an increase in operating costs and general and administrative expenses, excluding items such
as depreciation, stock-based compensation and expenses associated with the advertising funds which are added
back for the purposes of calculating Adjusted EBITDA. Adjusted EBITDA Margin(i) increased from 30.0% in
Q4 2024 to 31.5% in Q4 2025. See “Operating costs” and “Revenue”.
22 | A&W Food Services of Canada Inc.
Free Cash Flow and Capex/Revenue Ratio
Free Cash Flow(i) increased by $26,531,000 to $33,533,000 for Q4 2025 ($7,002,000 for Q4 2024). The
increase in Free Cash Flow is due to the $26,016,000 increase in net cash generated from operating activities.
The increase in net cash generated from operating activities is primarily due the elimination of the royalty
expense, a reduced use of working capital and an increase in the amount of deposits on franchise and equipment
sales received in the quarter. The amount of deposits on franchise and equipment sales is impacted by the
timing of projects completing and therefore fluctuates from quarter to quarter. Due to the nature of A&W’s
business and the variability in the timing of operating cash inflows and outflows, large fluctuations in working
capital are expected and normal.
The Capex/Revenue Ratio(i) remained stable at 1.0% for Q4 2025 (1.6% for Q4 2024) and reflects Food
Services’ franchisor, capital light business model.
(i)
Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Capex/Revenue Ratio are non-IFRS financial measures,
non-IFRS ratios and supplementary financial measures. Please see “Non-IFRS Measures”, “Selected Financial Information”
and “How We Assess the Performance of Our Business” sections of this MD&A for further details.
Analysis of Fiscal 2025 Results
The following section provides an overview of the Company’s Fiscal 2025 financial performance, as
compared to Fiscal 2024.
Revenue
In Fiscal 2025, Food Services generated $294,095,000 in total revenue, a $1,796,000 increase from Fiscal
2024's total revenue of $292,299,000. This growth was attributable to a $2,061,000 year-over-year increase in
franchising revenue. This increase in franchising revenue is mainly attributed to a year-over-year increase in
System Sales. System Sales(i) for Fiscal 2025 were $1,920,243,000 and increased 2.8% from Fiscal 2024
System Sales(i) of $1,868,478,000 due an increase in the number of A&W restaurants and the 1.2% Same Store
Sales Growth(i) achieved for the year. Revenue from service fees and revenue generated from the distribution
of food and supplies fluctuate with the movement in System Sales and as such, increased year over year. The
increase in service fee revenue also reflects the continued 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 and margin expansion.
Approximately 100 A&W restaurants migrated from the 2.5% to 3.5% service fee rate in Fiscal 2025 and as at
December 28, 2025, there were approximately 140 franchised A&W restaurants still at the 2.5% service fee
rate. The increases were partially offset by a decrease in revenue related to new A&W restaurants as Food
Services opened two fewer new A&W restaurants in Fiscal 2025 as compared to Fiscal 2024. The timing of
restaurant openings is subject to various factors and fluctuates from quarter to quarter and year to year and on
a net basis the net annual restaurant growth for Fiscal 2025 was 2.0% versus 1.8% in Fiscal 2024 due to
permanently closing four fewer A&W restaurants in Fiscal 2025 than in Fiscal 2024.
Same Store Sales Growth(i) for Fiscal 2025 was 1.2%, due to an increase in average cheque size and no change,
on an annual basis, in same store guest counts. The increase in average cheque size is partly attributed to
industry-wide inflation affecting goods, services, and labour. Same store guest counts are flat to Fiscal 2024
on an annual basis due to a slight decline in same store guest counts in Q1 2025, which was attributed to severe
weather in certain geographical regions, being offset by positive guest count growth in the subsequent three
quarters of 2025 due to the success of our marketing campaigns, particularly around value offerings. Same
Store Sales Growth is impacted by shifts in guest counts, cheque size (including party size, menu prices, and
23 | A&W Food Services of Canada Inc.
menu mix), and changes in consumer discretionary spending.
Revenue from corporate restaurants includes the revenue from the ten A&W restaurants and one Pret restaurant
that are located in Ontario and owned and operated corporately. Revenue from corporate restaurants was
$24,415,000 for Fiscal 2025, in line with revenue from corporate restaurants for Fiscal 2024 of $24,680,000.
(i) System Sales and Same Store Sales Growth are non-IFRS financial measures and supplementary financial measures. Please
see “Non-IFRS Measures”, “Selected Financial Information” and “How We Assess the Performance of Our Business” sections
of this MD&A for further details.
Operating costs
Food Services’ operating costs for Fiscal 2025 were $150,538,000 compared to operating costs for Fiscal 2024
of $157,095,000, a decrease of $6,557,000. The decrease is primarily due to opening two fewer new A&W
restaurants in Fiscal 2025 as compared to Fiscal 2024 which also led to a decrease in revenue related to new
restaurant openings, as discussed above.
General and administrative expenses
Food Services’ general and administration expenses represent costs of providing services to franchised
restaurants and establishing new restaurants. General and administration expenses for Fiscal 2025 were
$49,731,000 compared to general and administration expenses for Fiscal 2024 of $48,632,000 an increase of
$1,099,000. In Fiscal 2025 the Company granted 8,464 deferred share units (“DSUs”) to the directors of the
Company and granted 96,896 restricted share units (“RSUs”) to executive officers and recognized $1,746,000
in stock-based compensation expense (Fiscal 2024 - $nil), which was the driver of the year over year increase
in general and administration expenses.
Royalty expense
The royalty expense recognized in Fiscal 2024 is the royalty that Food Services paid to the Partnership for use
of the A&W trademarks prior to closing of the Transaction. A&W ceased recognition of the royalty expense
from October 18, 2024 onwards. See “Strategic Combination in 2024”.
Net finance expense
The net finance expense for Fiscal 2025 increased by $10,970,000 due primarily to the increase in the average
debt balance as Food Services increased its net borrowings by $265,000,000 on October 17, 2024 in order to
finance the Transaction. See “Operating Loan Facility and Interest Rate Swap”.
Loss on interest rate swap
The $1,318,000 loss on interest rate swap for Fiscal 2025 represents the change in the fair value of the Swap.
The loss is unrealized and is a non-cash expense. See “Operating Loan Facility and Interest Rate Swap”.
Amortization of deferred gain
The amortization of deferred gain recognized in Fiscal 2024 relates to the gain that was realized on the sale of
the A&W trademarks in 2002 on first establishing the Fund and was deferred and amortized over the term of
the royalty agreement. The annual adjustments to the royalty pool increased the deferred gain and the additions
were amortized over the remaining term of the royalty agreement from the date of addition. The deferred gain
was derecognized from Food Services’ consolidated balance sheet and the corresponding amortization of the
deferred gain was eliminated from Food Services’ consolidated statement of income upon completion of the
Transaction. See “Strategic Combination in 2024”.
24 | A&W Food Services of Canada Inc.
Share of income from associates
Prior to completion of the Transaction, A&W equity accounted for its investments in Trade Marks and the
Fund. Following completion of the Transaction, both Trade Marks and the Fund became wholly owned
subsidiaries of Food Services, and were then dissolved, therefore A&W ceased recognizing income from
associates from October 18, 2024 onwards. See “Strategic Combination in 2024”.
Income taxes
Income tax is recognized based on management’s best estimate of the weighted average annual income
tax rate expected for the full fiscal year. To the extent that forecasts differ from actual results, adjustments are
recognized in subsequent periods. The statutory income tax rate for Fiscal 2025 and Fiscal 2024 was 26.9%.
Income tax expense for Fiscal 2025 was $19,834,000, compared to $28,273,000 in Fiscal 2024 and the effective
tax rates for Fiscal 2025 and Fiscal 2024 were 25.9% and 56.6%, respectively. The income tax expense and
effective tax rate for Fiscal 2024 were impacted by the $14,941,000 in deferred tax expense of which
$16,943,000 was recognized upon completion of the Transaction. The $16,943,000 in deferred tax expense
attributable to the Transaction is a non-cash, non-recurring expense and corresponds to the deferred tax assets
and liabilities associated with the investment in associates and deferred gain balances that were derecognized
from Food Services’ consolidated balance sheet upon completion of the Transaction. The effective tax rate of
Fiscal 2024, excluding the $16,943,000 in deferred tax recognized in 2024 related the Transaction, is 22.7%.
Net income and Net income per share
Food Services reported net income of $56,834,000 in Fiscal 2025 compared to net income of $21,678,000 in
Fiscal 2024 due to the factors discussed above.
Food Services reported net income per share of $2.30 ($2.29 per diluted share) in Fiscal 2025 versus net income
per share of $0.95 ($0.95 per diluted share) in Fiscal 2024 due to the increase in income attributable to
shareholders of Food Services, partially offset by the weighted average number of shares outstanding
increasing as a result of the Transaction and the issuance of stock-based compensation.
In order to improve comparability of net income per share, the number of shares used to calculate the net
income per share for Fiscal 2024, has been adjusted to reflect the equivalent number of common shares of Food
Services that were outstanding after the reorganization steps described in the section titled “Strategic
Combination in 2024” were undertaken, excluding the common shares issued to the outside party holding a
non-controlling interest in Food Services prior to the completion of the Transaction and those issued to
Unitholders as consideration for the Transaction which were incorporated into the weighted average number
of shares from the date of the Transaction onwards.
Net income attributable to non-controlling interest
The net income attributable to non-controlling interest for Fiscal 2025 represents an outside party’s 40%
interest in A&W Beverages. The net income attributable to non-controlling interest for Fiscal 2024 represents
an outside party’s share of A&W’s net income prior to completion of the Transaction and an outside party’s
40% interest in A&W Beverages. Following completion of the Transaction, the outside party owns publicly
traded shares of A&W and therefore their share of A&W’s income is no longer reported as non-controlling
interest.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA(i) increased by $6,568,000 to $100,037,000 for Fiscal 2025 ($93,469,000 for Fiscal 2024).
The increase in Adjusted EBITDA is primarily attributable to the increase in revenue and decrease in operating
25 | A&W Food Services of Canada Inc.
costs. Adjusted EBITDA Margin(i) increased from 32.0% in Fiscal 2024 to 34.0% in Fisal 2025. See “Revenue”
and “Operating costs”.
Free Cash Flow and Capex/Revenue Ratio
Free Cash Flow(i) decreased by $3,674,000 to $54,648,000 for Fiscal 2025 ($58,322,000 for Fiscal 2024). The
decrease in Free Cash Flow is primarily attributable to the $4,231,000 decrease in net cash generated from
operating activities (from $61,228,000 for Fiscal 2024 to $56,997,000 for Fiscal 2025). The decrease in net
cash generated from operating activities is primarily due to Food Services paying higher tax instalments, as a
result of having higher taxable income in Fiscal 2025 largely due to cessation of the royalty expense, and
paying more interest due to the increase in the operating loan facility following the Transaction, and a higher
use of working capital in Fiscal 2025 as compared to Fiscal 2024. Due to the nature of A&W’s business and
the variability in the timing of operating cash inflows and outflows, large fluctuations in working capital are
expected and normal. These impacts were partially offset by the cessation of the royalty expense which
reduced Free Cash Flow by $44,036,000 in 2024.
The Capex/Revenue Ratio for Fiscal 2025 was 0.8% and in line with Fiscal 2024’s Capex/Revenue Ratio of
1.0%. Food Services invested proportionally more capital in A&W’s new loyalty program, A&W RewardsTM,
which launched in Q2 2025, in Fiscal 2024 than in Fiscal 2025 leading to a higher capital investment in
intangibles in Fiscal 2024 versus Fiscal 2025.
(i)
Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Capex/Revenue Ratio are non-IFRS financial measures,
non-IFRS ratios and supplementary financial measures. Please see “Non-IFRS Measures”, “Selected Financial Information”
and “How We Assess the Performance of Our Business” sections of this MD&A for further details.
DIVIDENDS
Food Services declared and paid the following cash dividends in Fiscal 2025:
Declaration Date
Record Date
Payment Date
Dividend per Share
March 5, 2025
March 14, 2025
March 28, 2025
$0.480
June 2, 2025
June 13, 2025
June 30, 2025
$0.480
September 2, 2025
September 15, 2025
September 29, 2025
$0.480
December 1, 2025
December 15, 2025
December 24, 2025
$0.480
The dividends declared in Fiscal 2025 will be taxed as eligible dividends. Food Services remains committed
to maintaining the current level of quarterly dividends for the foreseeable future.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Food Services is primarily a franchise business with 1,084 of its 1,094 A&W restaurants (as at December 28,
2025) being franchised locations. Food Services’ capital requirements are related to its ten corporate A&W
restaurants, two corporately operated Pret restaurants and head office and investments in technology and its
digital platforms including the A&W mobile app.
26 | A&W Food Services of Canada Inc.
Future restaurant growth is expected to continue to be funded by franchisees although from time to time, Food
Services may incur capital expenditures to open new corporate restaurants and will continue development of
the A&W mobile app. Food Services expects to have sufficient capital resources to fund these capital
requirements and have sufficient cash on hand to meet its obligations. Food Services opened its first
corporately owned and operated Pret stand-alone location in Toronto in January 2024 and in January 2026
opened a second corporately owned location in Toronto, however, future expansion of Pret restaurants is
expected to be primarily accomplished under the franchise model where the capital obligations are taken on by
the franchisee awarded the location.
Operating Loan Facility and Interest Rate Swap
Prior to October 17, 2024, predecessor Food Services had a $40,000,000 demand operating loan facility
(“Former Loan Facility”) with a Canadian chartered bank (the “Bank”). The facility was used to fund working
capital requirements and for general corporate purposes. On May 15, 2024, predecessor A&W Food Services
extended the maturity date on the Former Loan Facility by one year to May 31, 2025. Under the Former Loan
Facility account overdrafts bear interest at the Bank’s prime rate plus 0.75% (at the Bank’s prime rate plus 1%
prior to the amendment). As part of the amendment, and in response to the cessation of Canadian Dollar Offered
Rate which is the benchmark interest rate on bankers acceptances (“BAs”), the Former Loan Facility was also
amended to transition from BAs to CORRA (as defined below) loans, in which the interest rate benchmark is
Canadian Overnight Repo Rate Average (“CORRA”). The remaining terms and conditions were consistent
with those of the Former Loan Facility that was in place prior to the May 15, 2024 amendment.
Amounts under the Former Loan Facility could be advanced in the form of an account overdraft or in the form
of CORRA loans and were repayable on demand. The Former Loan Facility contained covenants including the
requirement to meet certain debt to earnings before interest, taxes, depreciation, amortization and non-cash
charges/income (“EBITDA”) ratios and debt to Food Services’ investment in Trade Marks ratios during each
trailing four quarter period. Food Services was also required to pledge 5,000,000 Trade Marks common shares.
On October 17, 2024, Food Services replaced the Former Loan Facility with the Loan Facility. The Loan
Facility is revolving and allows for Food Services to borrow up to $325,000,000 Canadian dollar equivalent,
with a $10,000,000 sublimit for letters of credit and letters of guarantee and a $20,000,000 sublimit for a
swingline.
The Loan Facility matures on October 17, 2029 and is available on a revolving basis by way of prime rate
loans, term CORRA loans and daily compounded CORRA Loans in Canadian dollars, and U.S. base rate and
term Secured Overnight Financing Rate (“SOFR”) loans in U.S. dollars, and letters of credit in Canadian and
U.S. dollars. The marginal rate payable on the prime rate loans and U.S. base rate loans ranges from 0.75% to
2.0%, based on Food Services’ ratio of Total Debt to EBITDA, as defined in the credit agreement. The marginal
rate payable on the term CORRA loans, daily compounded CORRA loans, term SOFR loans and letters of
credit ranges from 1.75% to 3.0%, based on Food Services’ ratio of Total Debt to EBITDA, as defined in the
credit agreement. The Loan Facility is secured by a first priority lien over all of the present and future
undertakings and property of Food Services.
On October 17, 2024 Food Services drew down $265,000,000 on the Loan Facility and used the proceeds to
repay Trade Marks’ $60,000,000 term loan and the accrued interest, which totaled $60,167,000, finance the
$175,623,000 purchase of 4,746,582 Trust Units and pay $3,500,000 in financing fees associated with the Loan
Facility. The Loan Facility will be used to fund working capital requirements and for general corporate
purposes on an ongoing basis. During the Fiscal 2025 period $14,386,000 was repaid on the Loan Facility.
27 | A&W Food Services of Canada Inc.
The Loan Facility contains covenants including the requirement to meet certain debt to EBITDA and interest
coverage ratios, as defined in the credit agreement, during each trailing four quarter period. Food Services was
in compliance with all of its financial covenants as at December 28, 2025 and December 29, 2024.
Financing fees of $3,523,000 related to the Loan Facility are presented as a reduction to the carrying amount
of the operating loan facility. The financing fees are being amortized over the remainder of the five-year term
of the Loan Facility.
Food Services periodically uses interest rate swap agreements to manage risks from fluctuations in interest
rates. To manage the interest rate risk associated with the Loan Facility, Food Services entered into the Swap
on May 20, 2025. The Swap has a notional value of $210,000,000 and a maturity of October 17, 2029. Under
the Swap, as at December 28, 2025, the effective interest rate is 5.33% per annum (December 29, 2024 – n/a),
comprising 3.08% per annum which is fixed under the Swap agreement until October 17, 2029 plus a 2.25%
per annum marginal rate. The marginal rate ranges from 1.75% to 3.00%, depending on Food Services’ ratio
of Total Debt to EBITDA. The fair value of the Swap as at December 28, 2025 was $1,318,000 unfavourable
(December 29, 2024 - $n/a). The $859,000 gain on the Swap in the Q4 2025 results and the $1,318,000 loss
on the Swap in the Fiscal 2025 results (2024 – n/a), represent the change in the fair value of the Swap, and are
recorded in the consolidated statements of income and comprehensive income.
The following table presents the operating loan facility for the Company:
December 28,
2025
December 29,
2024
December 31,
2023
Amount of Former Facility
-
-
40,000
Amount of Loan Facility
325,000
325,000
-
Amounts drawn on Former Facility
-
-
15,726
Amounts drawn on Loan Facility
235,614
260,509
-
Less: Unamortized balance on financing fees
(2,683)
(3,360)
-
232,931
257,149
15,726
Letters of guarantee issued under Former Facility
-
-
198
Letters of guarantee issued under Loan Facility
198
198
-
198
198
198
Amount available on Former Facility
-
-
24,076
Amount available on Loan Facility
89,188
64,293
-
28 | A&W Food Services of Canada Inc.
Cash Flows
The following table presents cash flows for the periods indicated:
(in thousands of Canadian $)
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Net cash generated from operating
activities
34,495
8,479
56,997
61,228
Net cash used in investing activities
(946)
(176,387)
(2,485)
(168,377)
Net cash (used in) generated from
financing activities
(39,872)
170,800
(76,064)
125,828
Decrease increase in cash and cash
equivalents
(6,323)
2,892
(21,552)
18,679
Analysis of Q4 2025 cash flows
Net Cash Generated from Operating Activities
Net cash generated from operating activities totaled $34,495,000 in Q4 2025 compared to net cash generated
from operating activities of $8,479,000 in Q4 2024. The increase is primarily due to the increase in Adjusted
EBITDA, the elimination of the royalty expense, an increase in the liability balance related to deposits for
franchise and equipment sales which fluctuate based on the timing of projects and a lower use of working
capital. These sources of cash were partially offset by the increase in interest paid.
Net Cash Used in Investing Activities
Net cash used in investing activities totaled $946,000 in Q4 2025 compared to net cash used in investing
activities of $176,387,000 in Q4 2024. This change was driven by the cash outflows in Q4 2024 related to the
Transaction, particularly the $175,623,000 cash paid to acquire the Trust Units and a reduction in the amount
of dividends received from the Fund and Trade Marks. See “Strategic Combination in 2024”.
Net Cash (Used in) Generated from Financing Activities
Net cash used in financing activities totaled $39,872,000 in Q4 2025 compared to net cash generated from
financing activities of $170,800,000 in Q4 2024. This change was driven by the $265,509,000 draw on the
operating loan facility in Q4 2024 to fund the cash outlays required to complete the Transaction discussed
above, partially offset by the $60,167,000 paid to settle Trade Marks bank debt, the repayment of non-interest
bearing promissory notes payable on demand totalling $12,522,000, $4,225,000 increase in the net repayments
of the operating loan, the $3,500,000 payment of financing fees in Q4 2024 and an $11,816,000 increase in the
total dividends paid in Q4 2025 versus Q4 2024. See “Strategic Combination in 2024” and “Operating Loan
Facility”.
Analysis of Fiscal 2025 cash flows
Net Cash Generated from Operating Activities
Net cash generated from operating activities totaled $56,997,000 in Fiscal 2025 compared to net cash generated
from operating activities of $61,228,000 in Fiscal 2024. The decrease is primarily due to Food Services paying
higher tax instalments as a result of the increase in taxable income, higher interest payments due to the increase
in net debt and having a higher use of working capital, partially offset by an increase in net income. Due to the
nature of A&W’s business and the variability in the timing of operating cash inflows and outflows, large
29 | A&W Food Services of Canada Inc.
fluctuations in working capital are expected and normal. These increases in uses of cash were partially offset
by the increase in net income. See “Operating Loan Facility and Interest Rate Swap”.
Net Cash Used in Investing Activities
Net cash used in investing activities totaled $2,485,000 in Fiscal 2025 compared to net cash used in investing
activities of $168,377,000 in Fiscal 2024. This change was driven by the cash outflows in Fiscal 2024 related
to the Transaction, particularly the $175,623,000 cash paid to acquire the Trust Units and a reduction in the
amount of dividends received from the Fund and Trade Marks. See “Strategic Combination in 2024”. Proceeds
from the disposal of plant and equipment of $1,125,000 and transaction costs capitalized of $18,784,000 are
also included in the Fiscal 2024 net cash used in investing activities, both of which were non-recurring in Fiscal
2025.
Net Cash (Used in) Generated from Financing Activities
Net cash used in financing activities totaled $76,064,000 in Fiscal 2025 compared to net cash generated from
financing activities of $125,828,000 in Fiscal 2024. This change was driven by the $265,509,000 draw on the
operating loan facility in Fiscal 2024 to fund the cash outlays required to complete the Transaction discussed
above, partially offset by the $60,167,000 paid to settle Trade Marks bank debt, the repayment of non-interest
bearing promissory notes totalling $12,522,000, repayments of the operating loan, the $3,500,000 payment of
financing fees in Fiscal 2024 and an $8,037,000 increase in the total dividends paid in Fiscal 2025 versus Fiscal
2024. See “Strategic Combination in 2024” and “Operating Loan Facility”.
Contractual obligations and commitments
The following table summarizes the undiscounted contractual payments of the Company’s financial liabilities
as at December 28, 2025:
(in thousands of Canadian dollars)
Total
Less than 1
year
1 – 3 years
4 – 5 years
After 5 years
Accounts payable and accrued liabilities
45,889,000
45,889,000
-
-
-
Lease liabilities
1,002,461,000
69,796,000
179,475,000
110,238,000
642,952,000
Operating loan facility
283,149,000
12,524,000
270,625,000
-
-
Derivative financial liabilities
1,318,000
-
1,318,000
-
-
Purchase obligations(i)
111,763,000
111,763,000
-
-
-
1,444,580,000
239,972,000
451,418,000
110,238,000
642,952,000
(i) Purchase obligations for supply to franchisees for food, supplies, packaging and equipment of $111,763,000 are not recognized
on Food Services consolidated balance sheet as at December 28, 2025.
OFF-BALANCE SHEET ARRANGEMENTS
As at December 28, 2025, Food Services had $198,000 in letters of guarantee outstanding that had been issued
to banks to assist two franchisees in securing financing. Other than the letters of guarantee, A&W does not
have any other off-balance sheet arrangements.
FINANCIAL INSTRUMENTS
Food Services’ financial instruments consist of cash and cash equivalents, accounts receivable, leases
receivable, other receivables, accounts payable and accrued liabilities, the operating loan facility and the
interest rate swap. These financial instruments are used in the normal course of business which by their nature
involve risk, including market risk and the credit risk of non-performance by counterparties. These financial
30 | A&W Food Services of Canada Inc.
instruments are subject to normal credit standards, financial controls, risk management and monitoring
procedures. See “Risks and Uncertainties”.
Management estimates that the fair values of cash and cash equivalents, accounts receivable, other receivables,
and accounts payable and accrued liabilities and operating loan facility approximate their carrying values given
the short term to maturity of these instruments. Any income or expense associated with these financial
instruments is recognized in net income.
Management classifies derivative financial assets/liabilities at fair value through profit or loss. Food
Services’ derivative is an interest rate swap with changes in fair value recorded in the consolidated
statements of income.
CURRENT SHARE INFORMATION
Food Services’ authorized share capital is comprised of an unlimited number of common shares. As at the date
of this MD&A, Food Services had 24,007,011 common shares issued and outstanding.
In Fiscal 2025, the Company issued 8,464 (Fiscal 2024 - nil) DSUs to certain directors of the Company for
services performed in Fiscal 2025. The DSUs vest immediately at the time of grant and are not redeemable
until the director ceases to be a member of the Board. The DSUs can be settled in cash, shares of the Company,
or a combination thereof at the sole discretion of the Board. The Company determined that the 8,464 DSUs
granted in Fiscal 2025 are equity-settled transactions whereby an expense is recognized on the grant date equal
to the fair value of the DSUs at the grant date and, with a corresponding increase in contributed surplus. The
Company recognized stock-based compensation expense of $87,000 and $305,000 in Q4 2025 and Fiscal 2025,
respectively (Q4 2024 and Fiscal 2024 - $nil), in relation to the issuance of the DSUs.
In Fiscal 2025, the Company issued 96,896 (Fiscal 2024 - nil) RSUs to certain executive officers and employees
of the Company. The RSUs vest over a period of one to five years and are settled in shares of the Company.
The RSUs are accounted for as equity-settled transactions whereby an expense is recognized equal to the fair
value of the RSUs at the grant date over the vesting period, with a corresponding increase in contributed
surplus. The Company recognized stock-based compensation expense of $602,000 and $1,441,000 in Q4 2025
and Fiscal 2025, respectively (Q4 2024 and Fiscal 2024 - $nil), in relation to the issuance of the RSUs.
On December 31, 2025, subsequent to the fiscal year ended December 28, 2025, 19,242 RSUs vested. The
settlement of the 19,242 RSUs resulted in the Company issuing 9,230 common shares from treasury to
employees. In connection with the vesting the Company elected to net settle and withhold 10,012 of the vested
RSUs to satisfy statutory tax obligations.
Assuming the 96,896 RSUs and the 8,464 DSUs outstanding as at December 28, 2025 were exchanged for
common shares there would have been a total of 24,103,141 common shares outstanding as at December 28,
2025.
RELATED PARTY TRANSACTIONS AND BALANCES
During Fiscal 2025, the directors of the Company earned director’s fees payable in cash totaling $388,000
(Fiscal 2024 - $165,00), of which $55,000 was in accounts payable and accrued liabilities as at December 28,
2025 (December 29, 2024 - $165,000). The Company also granted 8,464 DSUs to the directors of the Company
and granted 96,896 RSUs to executive officers and employees of the Company. See “Current Share
Information”.
31 | A&W Food Services of Canada Inc.
During Fiscal 2025, Food Services received lease payments totaling $46,000 (Fiscal 2024 - $43,000) from a
significant shareholder of Food Services. Food Services acts as an intermediate lessor, subleasing office space
to the shareholder that is held under a head lease with an external third-party landlord.
Following completion of the Transaction, there are no longer related party transactions with the Fund or its
subsidiaries as the Fund and all of its subsidiaries were acquired by Food Services on October 17, 2024 and
then subsequently wound up.
In Fiscal 2024, Food Services recognized a royalty expense of $44,036,000. The royalty expense ceased upon
the completion of the Transaction on October 17, 2024.
During Fiscal 2024, Trade Marks declared and paid dividends of $6,966,000 to Food Services. Trade Marks
did not declare any dividends subsequent to the completion of the Transaction.
During Fiscal 2024, the Fund declared distributions of $2,329,000 payable to Food Services as a result of its
ownership of limited voting units of the Fund. The Fund did not declare any distributions subsequent to the
completion of the Transaction.
During Fiscal 2024, Food Services recognized $152,000 as an offset to general and administrative expenses as
a result of administrative services provided to Trade Marks and the Fund. Following the completion of the
Transaction, Food Services did not receive any further payments from Trade Marks for administrative services.
Prior to completion of the Transaction there was an expense sharing agreement (the “Expense Agreement’) in
place that outlined an arrangement amongst Food Services, the Fund and Trade Marks in respect of the payment
of certain costs, fees, expenses and disbursements incurred or to be incurred by the Fund and Trade Marks in
connection with their consideration, evaluation and negotiation of the Transaction incurred at or prior to the
public announcement of the Transaction. Pursuant to the Expense Agreement, Food Services agreed to (a)
reimburse the Fund and Trade Marks for certain expenses paid by the Fund or Trade Marks, (b) advance funds
to the Fund and/or Trade Marks to permit the Fund and/or Trade Marks, as applicable, to pay such expenses
or (c) pay such expenses directly, in each case, subject to certain caps as set forth therein. In Fiscal 2024, Food
Services paid a total of $3,998,000 in costs incurred by the Fund related to the Transaction under the terms of
the Expense Agreement.
Other related party transactions and balances are referred to elsewhere in this MD&A, including, without
limitation, under the headings “Strategic Combination in 2024”.
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of financial statements in conformity with IFRS Accounting Standards requires management
to make estimates and assumptions that affect the amounts reported in the consolidated financial statements
and accompanying notes. It is reasonably possible that circumstances may arise that would cause actual results
to differ from management estimates; however, management does not believe it is likely that such differences
will materially affect A&W’s financial position. Significant areas requiring the use of management estimates
and judgements during the preparation of the Fiscal 2025 consolidated financial statements are: impairment of
indefinite life intangible assets, the interest rate swap, lease receivables, supplementary retirement benefit plan
and deferred income taxes. The interest rate swap, supplementary retirement benefit plan and deferred income
taxes are not “critical accounting estimates” as (i) they do not require Food Services to make assumptions about
matters that are highly uncertain at the time the estimate is made, and (ii) different estimates that could have
been used, or changes in the accounting estimates that are reasonably likely to occur from period to period,
32 | A&W Food Services of Canada Inc.
would not have had a material impact on Food Services’ financial condition, changes in financial condition or
financial performance.
The following discusses the most significant accounting judgements made by management in the preparation
of A&W’s consolidated financial statements.
• Lease terms- whether the Company is reasonably certain, at the lease commencement date, it will exercise
available renewal or termination options and include such options in the lease term.
The following discusses the most significant accounting estimates made by management in the preparation of
A&W’s consolidated financial statements.
• Impairment of indefinite life intangible assets - estimates in the impairment testing model, which include
estimates of future cash flows, growth rates and discounts rates.
CHANGES IN ACCOUNTING POLICIES
In April 2024, the International Accounting Standards Board issued IFRS 18 - Presentation and Disclosure in
the Financial Statements (“IFRS 18”) replacing IAS 1 – Presentation of Financial Statements. IFRS 18
introduces a specified structure for the income statement by requiring income and expenses to be presented in
three categories, operating, investing and financing, and by specifying certain defined totals and subtotals.
Where company-specific measures related to the income statement are provided (“management-defined
performance measures”), IFRS 18 requires disclosure of the explanations around those measures. IFRS 18
provides additional guidance on principles of aggregation and disaggregation which apply to the primary
financial statements and the notes. The standard is effective for reporting periods beginning on or after January
1, 2027. Management is currently assessing the impact of future adoption of IFRS 18.
In May 2024, the International Accounting Standards Board published amendments to IFRS 9 - Financial
Instruments (“IFRS 9”) and IFRS 7 - Financial Instruments: Disclosures (“IFRS 7”). The amendments to IFRS
9 clarify de-recognition and classification of specific financial assets and liabilities respectively while the
amendments to IFRS 7 clarify the disclosure requirements for investments in equity instruments designated at
fair value through other comprehensive income and contractual terms that could change the timing or amount
of contractual cash flows on the occurrence or non-occurrence of a contingent event. The amendments to IFRS
9 and IFRS 7 are effective for reporting periods beginning on or after January 1, 2026. Management is currently
assessing the impact of future adoption of the amendments to IFRS 9 and IFRS 7.
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER
FINANCIAL REPORTING
Management is responsible for establishing and maintaining a system of disclosure controls and procedures
over the public disclosure of financial and non-financial information regarding the Company. Such controls
and procedures are designed to provide reasonable assurance that all relevant information is gathered and
reported to senior management on a timely basis, including the Chief Executive Officer (“CEO”) and the Chief
Financial Officer (“CFO”), so that they can make appropriate and timely decisions regarding public disclosure.
As required by CSA National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim
Filings (“NI 52-109”), an evaluation of the adequacy of the design and effective operation of the Company’s
disclosure controls and procedures was conducted under the supervision of management, including the CEO
and CFO. They concluded that, as at December 28, 2025 the design and operation of its disclosure controls
and procedures was effective in providing reasonable assurance that material information regarding this
MD&A, the consolidated financial statements and other disclosures was made known to them on a timely basis.
33 | A&W Food Services of Canada Inc.
Management is also responsible for establishing and maintaining adequate internal controls over financial
reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial reports for external purposes in accordance with IFRS Accounting Standards. The Company’s internal
controls over financial reporting include, but are not limited to, detailed policies and procedures relating to
financial accounting and reporting, and controls over systems that process and summarize transactions. The
Company’s procedures for financial reporting also include the active involvement of qualified financial
professionals, senior management and its Audit, Finance and Risk Committee.
As also required by NI 52-109, management, including the CEO and CFO, evaluated the adequacy of the
design and the effective operation of the Company’s internal control over financial reporting as defined in NI
52-109. In making this assessment, management, including the CEO and CFO, used the framework set forth
in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission. Based on that evaluation, the CEO and the CFO have concluded that the design
and operation of the Company’s internal control over financial reporting, as defined by NI 52-109, were
effective as at December 28, 2025. In designing such controls, it should be recognized that due to inherent
limitations, any control, no matter how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives and may not prevent or detect misstatements. Additionally,
management is required to use judgment in evaluating controls and procedures. Therefore, even when
determined to be designed effectively, disclosure controls and internal controls over financial reporting can
provide only reasonable assurance with respect to financial statement preparation and presentation.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There has been no change in A&W’s internal controls over financial reporting during Q4 2025 that has
materially affected, or is reasonably likely to materially affect, A&W’s internal control over financial reporting.
RISKS AND UNCERTAINTIES
For a detailed description of risk factors associated with A&W, refer to the “Risk Factors” section of the AIF,
which is available under Food Services’ SEDAR+ profile at www.sedarplus.ca or at www.awinvestors.ca.
In addition, we are exposed to a variety of financial risks in the normal course of operations including credit,
interest rate, liquidity and equity price risk.
Credit risk
Food Services’ exposure to credit risk is as indicated by the carrying amount of its accounts receivable, other
receivables and leases receivables. Receivables are due from franchisees and distributors. Management does
not believe Food Services has a significant exposure to any individual franchisee. As at December 28, 2025,
$6,168,000 is receivable from one distributor of which $6,033,000 was not past due as at December 28, 2025
and all of which has been repaid as at the date of this MD&A.
Interest Rate Risk
Food Services manages the risks associated with fluctuating interest rates on its operating loan facility, which
bears a floating rate of interest, through the use of interest rate swap agreements. The Swap has a notional value
of $210,000,000, leaving $25,614,000 of the balance on the operating loan facility as at December 28, 2025
exposed to market risks related to interest rate changes. Cash and cash equivalents earn interest at market rates.
All of Food Services’ other financial instruments are non-interest bearing.
34 | A&W Food Services of Canada Inc.
Liquidity risk
Liquidity risk refers to the risk that the Company is unable to fund obligations and dividend payments. The
primary sources of funds are the fees and deposits received from franchised restaurants and revenues and
deposits from the development of franchised restaurants, the sale of food and supplies to franchisees and
distributors, revenue from A&W-owned restaurants and the sale of A&W Root Beer concentrate. The liquidity
risk is assessed as low due to the nature and stability of the income Food Services receives from the franchisees
and distributors and the requirement for franchisees to pay Food Services deposits for equipment purchases
and turnkey construction costs. Furthermore, the operating loan facility that Food Services has in place can be
used to manage liquidity and Food Services’ ability to reduce future dividends if necessary.
Equity Price Risk
Food Services is exposed to risk arising from the settlement of its DSUs and RSUs, under Food Services’
omnibus long term incentive plan (“LTIP”). If the Board were to decide not to settle the RSUs and/or the DSUs
through treasury shares and instead elect to cash-settle the DSUs and settle the RSUs by purchasing shares on
the secondary market, an appreciating share price increases the potential cash outflow. In the event that cash-
settled instruments are issued, Food Services will record a liability for their potential future settlement by
reference to the fair value of the liability.
Economic Environment Risk
A&W’s profitability is indirectly impacted by consumer discretionary spending which is influenced by general
economic conditions. These economic conditions could include economic recession or changes in the rate of
inflation or deflation, unemployment rates and household debt, political uncertainty, interest rates currency
exchange rates or derivative or commodity prices, such as fuel and energy costs or the impact of tariffs
threatened or imposed by global trade partners, including the United States of America (the “U.S.”). A number
of these conditions could impact consumer spending and, as a result, payment patterns could deteriorate or
remain unpredictable due to global, national, regional or local economic volatility. Uncertain economic
conditions may adversely impact demand for A&W’s products and services which could adversely affect Food
Services’ financial performance.
Ongoing changes, deferrals, and announcement of tariffs by the U.S. administration and other foreign
governments, alongside retaliatory actions by the Canadian government, continue to generate economic
uncertainty. These measures could adversely affect the Canadian economy, potentially leading to increased
costs, disrupted supply chains, a weakening of the Canadian and/or U.S. dollar, and other negative
consequences. The Company is continuously evaluating the direct and indirect impacts of such tariffs,
retaliatory tariffs, or other trade protectionist measures on its business as the situation evolves, and these
impacts could be material.
35 | A&W Food Services of Canada Inc.
SUMMARY OF QUARTERLY RESULTS AND CERTAIN PERFORMANCE MEASURES
The table below summarizes the financial results for the eight most recently completed quarters and is
unaudited. The financial results for Q4 2024 were derived from the audited annual consolidated financial
statements for the year ended December 29, 2024 less the year-to-date information per the unaudited interim
condensed consolidated financial statements of predecessor A&W Food Services for Q3 2024 after giving
effect to the consolidation and presentation adjustments at the A&W Canada level. The selected consolidated
financial information set out below for Q1 2024 through Q3 2024 was derived from the unaudited interim
condensed consolidated financial statements of predecessor A&W Food Services with adjustments made by
management to reflect consolidation and presentation at the A&W Canada level so that the periods are
comparable. See “Strategic Combination in 2024”. Due to seasonality, the results of operations for any quarter
are not necessarily indicative of the results of operations for the fiscal year.
(in thousands of Canadian $ except per share amounts)
Q4
2025
Q3
2025
Q2
2025
Q1
2025
Financial Summary
Total revenue
92,980
71,205
68,777
61,133
Net income
17,493
17,558
12,526
9,257
Net income attributable to shareholders of Food
Services
17,030
17,122
12,149
8,895
Net income per share
0.71
0.71
0.51
0.37
Net income per diluted share
0.71
0.71
0.50
0.37
Other Data
System Sales(i)
591,421
479,607
452,291
396,924
System Sales Growth(i)
2.5%
3.1%
3.4%
2.0%
Same Store Sales Growth(i)
0.9%
1.4%
1.6%
0.4%
Number of A&W restaurants
1,094
1,084
1,082
1,079
Adjusted EBITDA(i)
29,325
25,793
25,485
19,436
Adjusted EBITDA Margin(i)
31.5%
36.2%
37.1%
31.8%
Number of days in the quarter
112
84
84
84
(in thousands of Canadian $ except per share amounts)
Q4
2024
Q3
2024
Q2
2024
Q1
2024
Financial Summary
Total revenue
93,196
76,001
64,321
58,781
Net income (loss)(ii)
(1,113)
6,486
8,795
7,510
Net income (loss) attributable to shareholders of
Food Services(ii)
(2,432)
4,009
5,539
4,763
Net income (loss) per share(ii) (iii)
(0.13)
0.42
0.58
0.50
Net income (loss) per diluted share(ii) (iii)
(0.13)
0.42
0.58
0.50
Other Data
System Sales(i)
576,796
465,104
437,309
389,269
System Sales Growth(i)
-0.1%
0.4%
1.6%
2.0%
Same Store Sales Growth (i)
-1.9%
-1.0%
0.3%
0.6%
Number of A&W restaurants
1,073
1,069
1,062
1,060
Adjusted EBITDA(i)
27,927
24,677
21,513
19,352
Adjusted EBITDA Margin(i)
30.0%
32.5%
33.4%
32.9%
Number of days in the quarter
112
84
84
84
36 | A&W Food Services of Canada Inc.
(i)
System Sales, System Sales Growth, Same Store Sales Growth, Adjusted EBITDA and Adjusted EBTIDA Margin are non-
IFRS financial measures, non-IFRS ratios and supplementary financial measures. Please see “Non-IFRS Measures”, “Selected
Financial Information” and “How We Assess the Performance of Our Business” sections of this MD&A for further details.
(ii) The net loss, net loss attributable to shareholders of Food Services, the net loss per share and the net loss per diluted share for
Q4 2024 includes a non-recurring, non-cash deferred tax expense of $16,943,000 as a result of the Transaction. Please see the
“Income taxes” section of the Fiscal 2024 MD&A under the heading “Results of Operations” for additional details.
(iii) In order to improve comparability of net income per share and net income per diluted share, the number of shares used to
calculate the net income per share and net income per diluted share up to October 17, 2024 (the date of the Transaction), has
been adjusted to reflect the equivalent number of common shares of Food Services that were outstanding after the
reorganization steps described in the section titled “Strategic Combination in 2024” were undertaken, excluding the common
shares issued to the outside party holding a non-controlling interest in Food Services prior to the completion of the Transaction
and those issued to Unitholders as consideration for the Transaction which were incorporated into the weighted average
number of shares from the date of the Transaction onwards.
The following table provides a reconciliation of System Sales to Revenue from Corporate Restaurants, the
most comparable IFRS measure, for the quarterly periods indicated.
(in thousands of Canadian $)
Q4 2025
Q3 2025
Q2 2025
Q1 2025
Revenue from corporate restaurants
7,515
5,904
5,789
5,207
Sales reported by franchises restaurants
583,906
473,703
446,502
391,717
System Sales(i)
591,421
479,607
452,291
396,924
(in thousands of Canadian $)
Q4 2024
Q3 2024
Q2 2024
Q1 2024
Revenue from corporate restaurants
7,563
6,061
5,701
5,355
Sales reported by franchises restaurants
569,233
459,043
431,608
383,914
System Sales(i)
576,796
465,104
437,309
389,269
(i) System Sales is a non-IFRS financial measure. Please see “Non-IFRS Measures”, “Selected Financial Information” and “How
We Assess the Performance of Our Business” sections of this MD&A for further details.
37 | A&W Food Services of Canada Inc.
The following table provides a reconciliation of EBITDA and Adjusted EBITDA to Income before income
taxes, the most comparable IFRS measure, for the quarterly periods indicated.
(in thousands of Canadian $)
Q4 2025
Q3 2025
Q2 2025
Q1 2025
Income before income taxes
23,415
23,611
17,198
12,444
Depreciation of plant, equipment, intangible
assets and right-of-use assets
2,054
1,442
1,624
1,558
Net finance expense
4,725
3,615
3,665
3,869
EBITDA(i)
30,194
28,668
22,487
17,871
Adjustments to EBITDA:
Income before taxes attributable to non-
controlling interest in A&W Beverages
(641)
(597)
(516)
(496)
Recovery of impairment of leases
receivable
(34)
-
-
-
Net loss on disposal of plant and equipment
1
-
-
23
Unrealized loss (gain) on foreign exchange
3
2
1
(8)
(Gain) loss on interest rate swap
(859)
1,420
757
-
Stock-based compensation
689
459
528
70
Net income impacts created by advertising
fund deficits(ii)
(610)
(4,463)
2,373
1,971
Recovery of capitalized costs
-
-
(448)
(310)
Start up net losses on Pret
582
304
303
315
Adjusted EBITDA(i)
29,325
25,793
25,485
19,436
(i) EBITDA and Adjusted EBITDA are non-IFRS financial measures. Please see “Non-IFRS Measures”, “Selected Financial
Information” and “How We Assess the Performance of Our Business” sections of this MD&A for further details.
(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.
38 | A&W Food Services of Canada Inc.
(i)
EBITDA and Adjusted EBITDA are non-IFRS financial measures. Please see “Non-IFRS Measures”, “Selected Financial
Information” and “How We Assess the Performance of Our Business” sections of this MD&A for further details.
(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.
(in thousands of Canadian $)
Q4 2024
Q3 2024
Q2 2024
Q1 2024
Income before income taxes
20,962
8,968
10,553
9,468
Depreciation of plant, equipment, intangible
assets and right-of-use assets
2,034
1,440
1,411
1,340
Amortization of deferred gain
(398)
(880)
(881)
(880)
Net finance expense
3,837
233
349
485
EBITDA(i)
26,435
9,761
11,432
10,413
Adjustments to EBITDA:
Income before taxes attributable to non-
controlling interest in A&W Beverages
(498)
(499)
(462)
(323)
Royalty expense
5,776
13,742
12,965
11,553
Share of income from associates
(1,242)
(2,786)
(2,869)
(2,575)
Impairment of leases receivable
192
-
-
-
Net loss on disposal of plant and equipment
-
636
-
-
Impairment loss on plant and equipment
18
-
-
-
Unrealized loss on foreign exchange
-
18
11
8
Net income impacts created by advertising
fund deficits(ii)
-
3,325
-
-
Recovery of capitalized costs
(2,437)
(335)
-
(111)
Start up net losses on Pret
(944)
535
436
387
Transaction costs
627
280
-
-
Adjusted EBITDA(i)
27,927
24,677
21,513
19,352
39 | A&W Food Services of Canada Inc.
A & W Food Services of
Canada Inc.
Consolidated Financial Statements
December 28, 2025 and December 29,
2024
(in thousands of dollars)
40 | A&W Food Services of Canada Inc.
PricewaterhouseCoopers LLP
PwC Place, 250 Howe Street, Suite 1400
Vancouver, British Columbia, Canada V6C 3S7
T.: +1 604 806 7000, F.: +1 604 806 7806
Fax to mail: ca_vancouver_main_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Independent auditor’s report
To the Shareholders of A & W Food Services of Canada Inc.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
financial position of A & W Food Services of Canada Inc. and its subsidiaries (together, the Company) as at
December 28, 2025 and December 29, 2024, and its financial performance and its cash flows for the 52-week
periods ended December 28, 2025 and December 29, 2024 in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).
What we have audited
The Company’s consolidated financial statements comprise:
•
the consolidated balance sheets as at December 28, 2025 and December 29, 2024;
•
the consolidated statements of income for the 52-week periods ended December 28, 2025 and December 29,
2024;
•
the consolidated statements of comprehensive income for the 52-week periods ended December 28, 2025 and
December 29, 2024;
•
the consolidated statements of changes in shareholders’ equity for the 52-week periods ended December 28,
2025 and December 29, 2024;
•
the consolidated statements of cash flows for the 52-week periods ended December 28, 2025 and
December 29, 2024; and
•
the notes to the consolidated financial statements, comprising material accounting policy information and
other explanatory information.
41 | A&W Food Services of Canada Inc.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit
of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in
accordance with these requirements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the consolidated financial statements for the 52-week period ended December 28, 2025. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Impairment assessment of indefinite life intangible
assets
Refer to note 3 – Material accounting policy information and
note 12 – Intangible assets to the consolidated financial
statements.
The Company had $493.3 million of intangible assets as at
December 28, 2025, of which $488.2 million was related to the
A & W trademarks, which have an indefinite life. An impairment
assessment is conducted annually at the balance sheet date or
earlier if events and circumstances dictate. An impairment loss
is recognized if the carrying amount of the indefinite life
intangible assets exceeds its recoverable amount. The
recoverable amount is the higher of the intangible assets’ fair
value less costs to sell and value in use. Management used a
value-in-use model to determine the recoverable amount of the
Our approach to addressing the matter included the following
procedures, among others:
Tested how management determined the recoverable
amount of the indefinite life intangible assets, which
included the following:
‒
Tested the reasonableness of the revenue growth
rates by comparing them to the current and past
performance of the A & W restaurants.
o
With the assistance of professionals with
specialized skill and knowledge in the field of
valuation, assessed the appropriateness of
42 | A&W Food Services of Canada Inc.
Key audit matter
How our audit addressed the key audit matter
indefinite life intangible assets. The significant assumptions
applied by management in estimating the recoverable amount
included the revenue growth rates and the discount rate. No
impairment loss was recorded during the year.
We considered this a key audit matter due to the significant
judgments made by management in developing assumptions to
determine the recoverable amount. This in turn resulted in
significant audit effort and subjectivity in performing audit
procedures to test the recoverable amount determined by
management. Professionals with specialized skill and
knowledge in the field of valuation assisted us in performing
our procedures.
management’s value-in-use model, as well as the
discount rate applied.
o
Tested the underlying data used in the value-in-
use model.
Examined the disclosures made in the consolidated
financial statements related to the significant assumptions
used to determine the recoverable amount of the indefinite
life intangible assets.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
43 | A&W Food Services of Canada Inc.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with IFRS Accounting Standards, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Canadian generally accepted auditing standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
44 | A&W Food Services of Canada Inc.
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
•
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Company to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
•
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business units within the Company as a basis for forming an opinion on the
consolidated financial statements. We are responsible for the direction, supervision and review of the audit
work performed for purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
45 | A&W Food Services of Canada Inc.
not be communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Paulina Prokop.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Vancouver, British Columbia
March 4, 2026
46 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Consolidated Balance Sheets
(in thousands of dollars)
The accompanying notes form an integral part of these consolidated financial statements.
On behalf of the Board of Directors
_________________________________ Director _________________________________ Director
Note
December 28,
2025
$
December 29,
2024
(Revised – Note 12)
$
Assets
Current assets
Cash and cash equivalents
982
22,534
Accounts receivable
6
36,051
41,934
Leases receivable
7
37,992
32,457
Inventories
8,370
12,170
Prepaid expenses
6,155
5,376
89,550
114,471
Non-current assets
Other receivables
2,061
3,374
Deferred tax assets
9
11,982
10,567
Right-of-use assets
10
19,355
22,490
Leases receivable
7
613,028
600,616
Plant and equipment
11
8,575
8,953
Intangible assets
12
493,341
494,366
Total assets
1,237,892
1,254,837
Liabilities
Current liabilities
Accounts payable and accrued liabilities
13
45,889
67,126
Lease liabilities
14
42,085
35,610
Deposits on franchise and equipment sales
19
17,790
14,861
Deferred revenue
19
2,626
2,584
Income taxes payable
892
2,866
109,282
123,047
Non-current liabilities
Deferred revenue
19
30,691
29,848
Operating loan facility
17
232,874
257,149
Derivative financial liabilities
17
1,318
-
Lease liabilities
14
630,963
622,602
Supplementary retirement benefit plan
16
10,478
10,974
Other long-term liabilities
-
11
1,015,606
1,043,631
Shareholders’ equity
Share capital
18
417,925
417,925
Contributed surplus
1,746
-
Accumulated deficit
(197,856)
(207,072)
221,815
210,853
Non-controlling interest
471
353
Total equity
222,286
211,206
Total liabilities and equity
1,237,892
1,254,837
Commitments and contingencies
23
Subsequent events
28
47 | A&W Food Services of Canada Inc.
Paul Hollands
Andrew W. Dunn
A&W Food Services of Canada Inc.
Consolidated Statements of Income
(in thousands of dollars)
The accompanying notes form an integral part of these consolidated financial statements.
Note
52-week
period ended
December 28,
2025
$
52-week
period ended
December 29,
2024
$
Revenue
Franchising
19
269,680
267,619
Corporate restaurants
24,415
24,680
294,095
292,299
Expenses (income)
Operating costs
150,538
157,095
General and administrative expenses
49,731
48,632
Royalty expense
27
-
44,036
(Recovery of) impairment of leases receivable
7
(34)
192
Finance income
21
(26,491)
(25,199)
Finance expense
21
42,365
30,103
Loss on interest rate swap
17
1,318
-
Amortization of deferred gain
15
-
(3,039)
Share of income from associates
8
-
(9,472)
217,427
242,348
Income before income taxes
76,668
49,951
Provision for (recovery of) income taxes
9
Current
20,369
13,332
Deferred
(535)
14,941
19,834
28,273
Net income for the period
56,834
21,678
Net income attributable to
Shareholders of A&W Food Services of Canada Inc.
55,196
11,878
Non-controlling interest
1,638
9,800
56,834
21,678
48 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Consolidated Statements of Comprehensive Income
(in thousands of dollars)
The accompanying notes form an integral part of these consolidated financial statements.
Note
52-week
period ended
December 28,
2025
$
52-week
period ended
December 29,
2024
$
Net income for the period
56,834
21,678
Other comprehensive gain (loss)
Actuarial gain (loss) on supplementary retirement benefit
plan – net of tax
16
96
(77)
Comprehensive income
56,930
21,601
Comprehensive income attributable to
Shareholders of A&W Food Services of Canada Inc.
55,292
11,801
Non-controlling interest
1,638
9,800
56,930
21,601
Net income per share
Basic
24
$ 2.30
$ 0.95
Diluted
24
$ 2.29
$ 0.95
Weighted average number of shares outstanding
(thousands)
Basic
24
23,998
12,444
Diluted
24
24,075
12,444
49 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Consolidated Statements of Changes in Shareholders’ Equity
For the 52-week period ended December 28, 2025 and the 52-week period ended December 29, 2024
(in thousands of dollars)
Note
Share
capital
$
Contributed
surplus
$
Accumulated
deficit
$
Total
$
Non-
controlling
interest
$
Total equity
(deficiency)
$
Balance – December 31, 2023
14,043
-
(225,970)
(211,927)
89,475
(122,452)
Net income for the period
-
-
11,878
11,878
9,800
21,678
Dividends on common shares
-
-
(28,241)
(28,241)
(11,318)
(39,559)
Share reorganization
1,12
984
-
(892)
92
-
92
Share reorganization with non-controlling
outside parties
1
51,374
-
36,230
87,604
(87,604)
-
Common share redemption to preferred
shares
1
(12,522)
-
-
(12,522)
-
(12,522)
Share issuance from the Transaction
1
364,046
-
-
364,046
-
364,046
Actuarial loss on supplementary retirement
benefit plan – net of tax
16
-
-
(77)
(77)
-
(77)
Balance – December 29, 2024
417,925
-
(207,072)
210,853
353
211,206
Net income for the period
-
-
55,196
55,196
1,638
56,834
Dividends on common shares
-
-
(46,076)
(46,076)
(1,520)
(47,596)
Stock-based compensation on equity-settled
plans
16
-
1,746
-
1,746
-
1,746
Actuarial gain on supplementary retirement
benefit plan – net of tax
16
-
-
96
96
-
96
Balance – December 28, 2025
417,925
1,746
(197,856)
221,815
471
222,286
50 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Consolidated Statements of Cash Flows
(in thousands of dollars)
The accompanying notes form an integral part of these consolidated financial statements.
Note
52-week
period ended
December 28,
2025
$
52-week
period ended
December 29,
2024
$
Cash provided by (used in)
Operating activities
Net income for the period
56,834
21,678
Adjustments for
Depreciation of plant and equipment
11
1,429
1,670
Amortization of intangibles
12
2,435
1,950
Depreciation of right-of-use assets
10
2,814
2,605
Deferred income taxes
(535)
14,941
Stock-based compensation
16
1,746
-
Net loss on disposal of plant and equipment
11
24
636
Increase in deposits on franchise and equipment sales
19
2,929
3,280
Decrease (increase) in other receivables
1,138
(1,323)
Supplementary retirement benefit plan
16
(888)
(879)
Increase in deferred revenue
19
885
1,441
Decrease in other long-term liabilities
(11)
(19)
Amortization of deferred gain
15
-
(3,039)
(Recovery of) impairment of leases receivable
7
(34)
192
Use of provision for impairment of leases receivable
7
(30)
(430)
Share of income from associates
8
-
(9,472)
Current income tax expense
20,369
13,332
Income tax paid
(23,261)
(4,793)
Loss on interest rate swap
17
1,318
-
Finance income
21
(26,491)
(25,199)
Finance expense
21
42,365
30,103
Finance interest received
152
425
Finance expense paid
(15,438)
(1,111)
Changes in items of non-cash working capital
22
(10,753)
15,240
56,997
61,228
Investing activities
Purchase of plant and equipment
11
(1,075)
(979)
Purchase of intangible assets
12
(1,274)
(1,927)
Transaction costs capitalized
12
(136)
(18,784)
Cash Consideration for the acquisition of units of A&W Revenue Royalties Income
Fund for the intangible assets, net of cash and intercompany receivables
assumed
17
-
(157,348)
Dividends and distributions received from associates
27
-
9,536
Proceeds from disposal of plant and equipment
11
-
1,125
(2,485)
(168,377)
Financing activities
Repayment of principal on lease liabilities
(3,494)
(3,207)
Draw on the Loan Facility
17
28,242
265,509
Repayment of the Loan Facility
17
(53,193)
(5,000)
Repayment of the Former Loan Facility
17
-
(15,726)
Repayment of A&W Trade Marks Inc’s. term debt
17
-
(60,167)
Financing fees paid on the Loan Facility
17
(23)
(3,500)
Repayment of interest bearing promissory notes
1
-
(12,522)
Dividends paid to shareholders
(46,076)
(28,241)
Dividends paid to non-controlling interest
(1,520)
(11,318)
(76,064)
125,828
(Decrease) increase in cash and cash equivalents during the period
(21,552)
18,679
Cash and cash equivalents – beginning of period
22,534
3,855
Cash and cash equivalents – end of period
982
22,534
51 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
1
General information
A & W Food Services of Canada Inc. (formerly “A&W of Canada Inc.”) (the “Company” or “Food Services”) is in
the business of developing and franchising quick service restaurants in Canada and owns the A&W trademarks
used in the A&W quick service restaurant business in Canada. During the 52-week period ended December 28,
2025, the Company opened 26 new A&W locations and permanently closed 5 A&W locations, bringing the total
number of A&W restaurants as at December 28, 2025 to 1,094, of which 1,084 are franchised and 10 are owned
and operated corporately. Food Services also holds the master franchise rights in Canada for the UK-based
restaurant chain Pret A Manger (“Pret”) and owned and operated one stand-alone Pret location as of December
28, 2025. Food Services’ registered offices are located at Suite 300 – 171 West Esplanade, North Vancouver,
British Columbia, Canada.
To align its financial reporting with the business cycle of its operations, the Company uses a fiscal year comprising
a 52- or 53-week period ending the Sunday nearest December 31. The fiscal 2025 year was 52 weeks and ended
December 28, 2025 (fiscal 2024 – 52 weeks ended December 29, 2024). Food Services’ subsidiary as at December
28, 2025, A&W Root Beer Beverages of Canada Inc. (“A&W Beverages”), uses a fiscal year ending December 31.
Fiscal 2024 Transaction
Prior to the completion of the Transaction (as defined and disclosed below), A&W of Canada Inc. (“A&W Canada”)
held a 65.48% interest in AWFS Holdings Inc. (“AWFS Holdings”) and as a result, controlled AWFS Holdings,
and AWFS Holdings controlled a predecessor of the Company, also named A & W Food Services of Canada Inc.
(“predecessor A&W Food Services”). An equity interest of 34.52% in AWFS Holdings was owned by outside
parties and was recorded as a non-controlling interest in the consolidated financial statements of A&W Canada.
Subsequent to the Transaction, the outside parties became direct shareholders of Food Services and as such their
respective ownership is presented within share capital and retained earnings on the consolidated balance sheet
as at December 29, 2024 and December 28, 2025.
Prior to completion of the Transaction, predecessor A&W Food Services paid A&W Trade Marks Limited
Partnership (“the Partnership”), a subsidiary of A&W Revenue Royalties Income Fund (the “Fund”) a royalty for
use of the A&W trademarks in Canada. As a result of the Transaction, Food Services indirectly acquired the A&W
trademarks by acquiring all of the outstanding units of the Fund (“Trust Units”) and since the Transaction, Food
Services ceased recognizing the royalty expense in its consolidated statement of income.
A combination agreement in respect of the Transaction was entered into on July 21, 2024, whereby predecessor
A&W Food Services agreed to amalgamate with certain of its direct and indirect holding companies to form a new
publicly-traded company and acquire all of the issued and outstanding Trust Units not already owned by
predecessor A&W Food Services (the “Transaction”).
Prior to the Transaction, predecessor A&W Food Services owned (i) 9.4% of the outstanding Trust Units on a
fully diluted basis through its ownership of limited voting units of the Fund, with the remaining Trust Units being
publicly traded, and (ii) 21.9% of the issued and outstanding common shares of A&W Trade Marks Inc. (“Trade
Marks”), which were exchangeable for Trust Units, with the remaining common shares being owned by the Fund.
Food Services accounted for its investments in the Fund and Trade Marks as investments in associates and
recognized its proportionate share of the associate’s income or loss based on the associate’s net income/loss for
the reporting period.
52 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
In preparation for the Transaction, a number of reorganization steps, including those set forth below, were
undertaken:
•
a shareholder of A&W Canada exchanged all of its shares of A&W Canada for (i) Class B Preferred Shares (the
“Preferred Shares”) and (ii) Class E Common Shares of A&W Canada. Through a series of steps, the Preferred
Shares were, directly or indirectly, later exchanged for non-interest bearing promissory notes of Buddy
Holdings Inc., payable on demand with an aggregate principal amount of $12,522,000; and
•
in order to simplify the existing organizational structure of A&W Food Services of Canada Inc and its, direct
and indirect, corporate shareholders, Buddy Holdings Inc., A&W Trademarks Holdings Inc. and AWFS Fund
Holdings Canada Ltd. were incorporated.
The Transaction closed on October 17, 2024 and on that day, Buddy Holdings Inc., A&W Canada, AWFS
Holdings, A&W Holdings I Inc., A&W Holdings II Inc. (collectively, the “Holding Companies”) and predecessor
A&W Food Services amalgamated. The amalgamated entity retained the legal name A & W Food Services of
Canada Inc.
On October 18, 2024, Food Services acquired all of the Trust Units that it did not already own in exchange for
consideration of $175,623,000 in cash and 9,839,091 common shares of Food Services less $18,275,000 in cash
and intercompany receivables assumed upon Trade Marks and the Fund becoming wholly owned subsidiaries of
Food Services. This was accounted for as an asset acquisition in fiscal 2024. Additional information is disclosed
in note 12. This was funded by way of a $265,000,000 drawn down on a revolving loan facility (the “Loan
Facility”) with a syndicate of banks that was entered into in conjunction with the completion of the Transaction.
Proceeds from the Loan Facility were also used to repay Trade Marks’ outstanding borrowings balance, totaling
$60,167,000. Food Services incurred $3,523,000 of borrowing costs which were capitalized against the operating
loan facility. Additional information is disclosed in note 17.
In connection with the Transaction, the Trust Units were de-listed from the Toronto Stock Exchange (“TSX”) and
the common shares of Food Services were listed on the TSX under the symbol AW.TO.
On October 18, 2024, Food Services repaid the non-interest bearing promissory notes payable on demand with
an aggregate principal amount of $12,522,000.
On January 3, 2025, the Fund and Trade Marks were dissolved and Food Services directly acquired the A&W
trademarks.
2
Basis of preparation
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”).
These financial statements present the results of Food Services following the amalgamation transactions
described in note 1.
The Board of Directors approved these consolidated financial statements on March 4, 2026.
53 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
Consolidation
The consolidated financial statements include the accounts of Food Services and its 60% controlling interest in
A&W Beverages.
Investment in associates
Investments over which Food Services exercises significant influence, and that are neither subsidiaries nor
interests in joint ventures, are associates. Investments in associates are accounted for using the equity method,
except when classified as held for sale. The equity method involves the recording of the initial investment at cost
and the subsequent adjusting of the carrying value of the investment for the proportionate share of the income
or loss and any other changes in the associate’s net assets such as dividends.
Food Services’ proportionate share of the associate’s income or loss is based on the associate’s net income/loss
for the reporting period. Adjustments are made to account for any impairment losses recognized by the associate.
If Food Services’ share of the associate’s losses equals or exceeds its investment in the associate, recognition of
further losses is discontinued. After Food Services’ interest is reduced to zero, additional losses will be provided
for and a liability recognized, only to the extent that Food Services has incurred legal or constructive obligations
or made payments on behalf of the associate. If the associate subsequently reports income, Food Services resumes
recognizing its share of that income only after Food Services’ share of the income equals the share of losses not
recognized. At each consolidated balance sheet date, Food Services assesses its investments in associates from
indicators of impairment. On obtaining control of an existing associate by way of asset acquisition, equity
accounting ceases and the interest in the associate is derecognized. The assets and liabilities acquired are initially
recognized by Food Services based on applying a cost accumulation approach.
Non-controlling interest
The non-controlling interest as at December 29, 2024 and December 28, 2025 represents an equity interest in
A&W Beverages owned by an outside party. The share of net assets of Food Services’ subsidiary attributable to
non-controlling interest is presented as a component of equity.
Functional and presentation currency
These consolidated financial statements are presented in Canadian dollars, which is the functional currency of
Food Services and its subsidiary.
3
Material accounting policy information
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, balances with banks and short-term investments with an
original maturity date of three months or less.
Accounts receivable
Accounts receivable are amounts due from franchisees, distributors and bottlers for the sale of goods and services
performed in the ordinary course of business. These amounts are classified as current because collection is
expected in one year or less. Accounts receivable are recognized initially at fair value and subsequently measured
54 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
at amortized cost using the effective interest method, less a provision for impairment.
The Company uses the simplified expected credit loss (“ECL”) model for its accounts receivable, as permitted by
IFRS 9 - Financial Instruments (“IFRS 9”). The simplified approach under IFRS 9 permits the use of the lifetime
expected loss provision for all accounts receivable and also incorporates forward looking information. Lifetime
ECL presents the ECL that will result from all probable default events over the expected life of a financial
instrument.
Leases receivable
Where the Company acts as an intermediate lessor, the Company assesses each sublease based on the right-of-
use asset and expected term of the headlease and where a sublease is for a substantial part of the expected life of
the lease, the Company classifies a sublease as a finance lease. The Company derecognizes the right-of-use asset
relating to the head lease that it transfers to the sublessee and recognizes a corresponding lease receivable, and
the lease liability relating to the head lease is retained. Additionally, the lease receivable is periodically reduced
by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
Inventories
Inventories consist of finished goods, assets available for resale to franchisees and work-in-progress relating to
new franchisee restaurant openings and advertising. They are valued at the lower of cost and estimated net
realizable value. The cost of finished goods includes all direct costs relating to the purchase of these items. Net
realizable value is the estimated selling price in the ordinary course of business.
Intangible assets
Intangible assets are recorded at cost and include the A&W trademarks and internally developed application
software. Costs incurred to acquire the A&W trademarks were capitalized and are included in the intangible asset
balance on the consolidated balance sheet. Costs include all expenditures that are directly attributable to the
acquisition of the asset. Costs incurred during the development stages of developing application software for
internal use are capitalized. All costs incurred during the preliminary research stage, including project scoping,
identification and testing of alternatives, are expensed as incurred and recorded in the consolidated statements
of income in operating costs.
The A&W trademarks have an indefinite useful life because they are expected to generate cashflows indefinitely
and as such are not amortized.
The cost for application software is amortized on a straight-line basis over its estimated useful life, ranging from
three to seven years. Estimates of useful lives, residual values and methods of amortization are reviewed annually.
Any changes are accounted for prospectively as a change in accounting estimate. Amortization expense is
recorded in the consolidated statements of income in operating costs.
Indefinite life intangible assets are subject to an impairment test annually or earlier if events and circumstances
dictate as required by International Accounting Standards (IAS) 36 - Impairment of Assets. An impairment loss
is recognized whenever the carrying amount of the intangible asset exceeds its recoverable amount. The
55 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Impairment losses are
recognized in the consolidated statements of income and comprehensive income.
Accounts payable and accrued liabilities
Accounts payable and accrued liabilities are obligations to pay for goods and services that have been acquired in
the normal course of business. These amounts are classified as current because payment is expected in one year
or less. Accounts payable and accrued liabilities are recognized initially at fair value and subsequently measured
at amortized cost using the effective interest method.
Deposits on franchise and equipment sales
Deposits are received from franchisees when a franchise or franchise opportunity agreement is signed for a new
restaurant and for those new restaurants constructed by the Company and then sold to franchisees. Deposits
related to initial fees are deferred when received and recognized as revenue over the term of the related franchise
agreement because franchisees consume franchising services as they are provided. Deposits are also received
from franchisees at the time they purchase equipment from the Company. The amounts for equipment and
turnkey fees are recorded as revenue when the restaurant is opened and commences operations.
Provisions
A provision is recognized if, as a result of a past event, Food Services has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are measured at management’s best estimate of the expenditure required to settle the
obligation at the end of the reporting period and are discounted to present value where the effect is material. The
rate used to discount provisions reflects current market assessments of the time value of money and the risks
specific to the liability. The unwinding of the discount, if any, is recognized in finance expense.
Income taxes
Income tax comprises current and deferred tax. Income tax is recognized in the consolidated statements of
income except to the extent that it relates to items recognized directly in equity, in which case the income tax is
recognized directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the consolidated balance sheets date, and any adjustment to tax payable in respect of previous years.
In general, deferred tax is recognized in respect of temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is
determined on a non-discounted basis using tax rates and laws that have been enacted or substantively enacted
at the consolidated balance sheets date and are expected to apply when the deferred tax asset or liability is settled.
Deferred tax assets are recognized to the extent that it is probable that the assets can be recovered. Deferred
income tax is provided on temporary differences arising on investments in subsidiaries and associates, except, in
the case of subsidiaries, where the timing of the reversal of the temporary difference is controlled by Food Services
and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax
assets and liabilities are presented as non-current.
56 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
Right-of-use assets
Right-of-use assets comprise the Company’s leases for corporate restaurant premises, head office space and
automobiles. The Company recognizes a right-of-use asset and a lease liability at the lease commencement date,
which is the possession date of the asset. The right-of-use asset is initially measured based on the initial
measurement of the lease liability adjusted for any lease payments made at or before the commencement date,
plus any initial direct costs incurred, less any lease incentives received, and excludes all sales taxes. Right-of-use
assets are depreciated to the earlier of the end of the useful life of the asset or the lease term using the straight-
line method. The lease term includes periods associated with options to extend or excludes periods associated
with options to terminate the lease when it is reasonably certain that management will exercise these options.
Additionally, right-of-use assets are periodically reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
Food Services has elected not to recognize a right-of-use asset and lease liability for short-term leases that have
a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments
associated with these leases as an expense on a straight-line basis over the lease term.
Plant and equipment
Plant and equipment comprise mainly leasehold improvements, equipment used in restaurants, office furniture
and fixtures and employee computers. Plant and equipment are stated at historical cost less depreciation.
Historical cost includes expenditures that are directly attributable to the acquisition of the assets. Subsequent
costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Company and the cost of the
item can be measured reliably. All other repairs and maintenance are charged to the consolidated statements of
income during the financial period in which they are incurred.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period. An asset’s carrying amount is written down to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognized within operating costs and general and administrative
expenses in the consolidated statements of income.
Depreciation is provided using the straight-line method. Machinery and equipment are amortized at rates from
7% to 50% per annum. Depreciation of leasehold improvements is charged over the term of the lease plus the first
renewal term.
The Company reviews its plant and equipment and tests for recoverability when events or changes in
circumstances indicate that their carrying value may not be recoverable. If the carrying value of an asset exceeds
the undiscounted estimated future cash flows related to the asset, an impairment loss is recognized to the extent
that the carrying value exceeds the fair value of the asset.
57 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
Other receivables
Other receivables are amounts due from franchisees with extended payment terms. Other receivables are
recognized initially at fair value and subsequently measured at amortized cost using the effective interest method,
less a provision for impairment and are presented as non-current as payment is due in more than one year.
Lease liabilities
Lease liabilities are initially measured at the present value of the lease payments over the lease term. The lease
term includes periods associated with options to extend or excludes periods associated with options to terminate
the lease when it is reasonably certain that management will exercise these options. The lease payments are
discounted using the interest rate implicit in the leases; if that cannot be readily determined, the Company uses
its incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.
The lease liabilities are measured at amortized cost using the effective interest method. Lease liabilities are
remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is
a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or if
the Company changes its assessment of whether it will exercise a purchase, extension or termination option.
Share capital
Common shares are classified as equity. Incremental costs directly relating to the issuance of new common shares
are shown as a deduction net of tax from the proceeds.
Net income per share
Net income per share is calculated by dividing the net income attributable to Food Services shareholders by the
weighted average number of common shares outstanding during the period.
Diluted net income per share is calculated by dividing the net income attributable to Food Services shareholders
by the weighted average number of common shares outstanding during the period, plus the dilutive impact of
equity-settled restricted share units and deferred share units granted.
In order to improve comparability of net income per share and diluted net income per share, the number of shares
used to calculate the net income per share and diluted net income per share up to October 17, 2024 (the date of
the Transaction), has been adjusted to reflect the equivalent number of common shares of Food Services that
were outstanding after the reorganization steps described in note 1 were undertaken, excluding the common
shares issued to the outside party holding a non-controlling interest in Food Services prior to the completion of
the Transaction and those issued to Unitholders as consideration for the Transaction which were incorporated
into the weighted average number of shares from the date of the Transaction onwards.
Revenue recognition
The Company’s revenue consists of fees from franchised restaurants, revenue from the sale of food and supplies
to franchisees and distributors, revenue from the opening of new franchised restaurants, revenue from Company-
owned restaurants and revenue from the sale of A&W Root Beer concentrate.
58 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
Fees from franchised restaurants include initial and renewal fees, distribution and service fees, advertising
contributions, equipment, turnkey, technology and other fees. Revenues related to initial and renewal fees are
recognized over the term of the related franchise agreement because franchisees consume franchising services as
they are provided. Service fees, in the amount of 2.5% to 3.5% of net sales of franchise operations, are recognized
at a point in time. Distribution fees are recognized at a point in time when control has transferred to the
distributors and are recorded net of related costs.
Equipment and turnkey fees are recognized at a point in time when control transfers to the franchisee. For new
restaurants, control transfers when the restaurant commences operations.
Advertising contributions and technology fees are recognized at a point in time. Revenue from corporate
restaurants, representing sales of food and beverages, is recognized at a point in time when food and beverages
are sold. Other revenues, including revenue from the sale of A&W Root Beer concentrate, are recognized at a
point in time, when control transfers, which is generally when it is shipped to bottlers.
Deferred gain
In 2002, Food Services sold the A&W trademarks used in the A&W quick service restaurant business in Canada
to Trade Marks, which subsequently transferred them to the Partnership. Food Services was granted a licence to
use the A&W trademarks in Canada for a term expiring December 30, 2100 pursuant to the terms of an amended
and restated license and royalty agreement (the “Amended and Restated Licence and Royalty Agreement”), for
which Food Services paid a royalty of 3% of sales reported to Food Services by specific A&W restaurants in Canada
(the “Royalty Pool”). The gain realized on the sale of the A&W trademarks was deferred and amortized over the
term of the Amended and Restated Licence and Royalty Agreement. Amortization of the gain was recognized on
the consolidated statements of income. The annual adjustments to the Royalty Pool increased the deferred gain
and the additions were amortized over the remaining term of the Amended and Restated Licence and Royalty
Agreement from the date of addition.
On October 18, 2024, upon completion of the Transaction, Food Services indirectly reacquired the A&W
trademarks through its acquisition of the remaining outstanding Trust Units. The fair value of the Fund’s assets,
which Food Services acquired, was largely concentrated in the A&W trademark intangible asset. The acquisition
was accounted for as an asset acquisition. Additional information on the Transaction is disclosed in note 1.
Concurrent with the asset acquisition on October 18, 2024, the deferred gain was derecognized from Food
Services’ consolidated balance sheet and the corresponding amortization of the deferred gain from that date
onwards was eliminated from Food Services’ consolidated statement of income as Trade Marks became a wholly
owned subsidiary of Food Services.
Royalty expense
Royalty expense under the Amended and Restated Licence and Royalty Agreement was recognized on an accrual
basis. The royalty expense ceased upon the completion of the Transaction on October 17, 2024.
59 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
Interest rate swaps
Food Services uses interest rate swap agreements to manage risks from fluctuations in interest rates. All such
instruments are used only for risk management purposes. Changes in the fair value of the interest rate swap
agreements are recognized in the consolidated statement of income.
Finance expense
Finance expense includes interest expense associated with the operating loan, the supplementary retirement
benefit plan, and lease liabilities and amortization of deferred financing fees.
Finance income
Finance income includes interest income associated with cash and cash equivalents and leases receivable.
Employee benefits
a)
Supplementary retirement benefit plan
In 1995, the Company entered into agreements with certain senior executives to provide an unfunded
supplementary retirement benefit plan. The actuarial determination of the accrued benefit obligation for the
plan uses the projected benefit method pro-rated on service and management’s best estimate of salary
escalation and retirement ages of officers. The discount rate used to determine the accrued benefit obligation
and related expense is determined by reference to market interest rates on the measurement date on high-
quality debt instruments with cash flows, which match the timing and amount of the expected benefit
payments. Actuarial gains (losses), which can arise from changes in actuarial assumptions used to determine
the accrued benefit obligation, are recognized immediately through other comprehensive income (loss) and
directly to accumulated deficit and will never subsequently be reclassified to the consolidated statements of
income.
b)
Defined contribution pension plan
The cost of providing benefits through the defined contribution pension plan is charged to the consolidated
statements of income as the obligation to contribute is incurred.
c)
Equity incentive plan
Food Services adopted an Omnibus Long-Term Incentive Plan (the “Equity Incentive Plan”) in 2024 to
allow for a variety of equity-based awards that provide different types of incentives to be granted to certain
directors, officers, employees and/or consultants providing ongoing services to Food Services and its
subsidiaries, being options (“Options”), performance share units (“PSUs”), restricted share units (“RSUs”)
and deferred share units (“DSUs”). Options, PSUs, RSUs and DSUs are collectively referred to herein as
“Awards”. Each Award represents the right to receive the Company’s shares or, in the case of PSUs, RSUs
and DSUs, shares or cash, or a combination of shares and cash, at the Board’s sole discretion.
The expense related to Options is initially recognized based on the fair value of the option at the grant date
using the Black-Scholes option-pricing model, with a corresponding increase in contributed surplus. When
Options are exercised, the exercise price proceeds together with the amount initially recorded in
contributed surplus are reclassified to share capital.
60 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
Compensation expense related to other equity-settled awards is measured based on an estimated fair value
at the grant date, with a corresponding increase in contributed surplus. Upon settlement, the amount
initially recognized in contributed surplus is reclassified to share capital.
For a share-based payment transaction in which the terms of the arrangement provide the Company with
the choice to settle in cash or by issuing equity instruments, the Company determines whether it has a
present obligation to settle in cash, including whether the Company has a past practice or stated policy of
settling in cash. If the Company concludes that equity settlement is probable, it accounts for the Awards as
equity-settled. If the Company concludes there is an obligation to cash-settle the Awards then the
Company recognizes compensation expense that is based on the market value of the Company’s shares at
grant date and a corresponding liability. The liability is subsequently remeasured at each reporting date
based on the market value of the Company’s shares, with changes in fair value recognized as stock-based
compensation expense over the vesting period. There is a cash or equity settlement option on part of the
Board for the RSUs. In the Company's judgment it expects to settle the RSU awards through equity and
accordingly the awards have been accounted for as equity-settled Awards.
The compensation expense related to the Awards is recognized in general and administration expenses in
the consolidated statement of income.
Segment information
Operating segments are components of the Company that engages in business activities from which they earn
revenues and incur expenses, the operations of which can be clearly distinguished, and the operating results of
which are regularly reviewed by the chief operating decision maker (“CODM”) for the purposes of resource
allocation and assessing its performance. The Company’s CODM has been identified as the Chief Executive
Officer (“CEO”). Management has determined that the Company operates in a single reportable segment, being
the business of developing and franchising quick service restaurants. The Company also has one geographic
segment as all assets and operations are in Canada.
Financial instruments
Financial assets and liabilities are recognized when Food Services becomes a party to the contractual provisions
of the instrument. Financial assets and liabilities are derecognized when the rights to receive or pay cash flows
from the assets or liabilities have expired or have been transferred and, in the case of financial assets, Food
Services has transferred substantially all risks and rewards of ownership.
At initial recognition, Food Services classifies its financial instruments in the following categories:
a)
Financial assets and liabilities at amortized cost. Food Services classifies its financial assets at amortized
cost only if both of the following criteria are met:
i)
the asset is held within a business model the objective of which is to collect the contractual cash flows,
and
ii)
the contractual terms give rise to cash flows that are solely payments of principal and interest.
61 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
Food Services’ financial assets at amortized cost comprise cash and cash equivalents, accounts receivable,
which are included in current assets due to their short-term nature, other receivables and leases receivable.
Accounts receivable are initially recognized at the amount expected to be received less, when material, a
discount to reduce the loans and receivables to fair value. Subsequently, financial assets at amortized cost
are measured at amortized cost using the effective interest method less a provision for impairment. Financial
liabilities at amortized cost include accounts payable and accrued liabilities, operating loan facility and lease
liabilities. Accounts payable and accrued liabilities, operating loan facility and lease liabilities are initially
recognized at the amount required to be paid less, when material, a discount to reduce the payables to fair
value. Subsequently, accounts payable and accrued liabilities, operating loan facility and lease liabilities are
measured at amortized cost using the effective interest method.
Financial liabilities are classified as current liabilities if payment is due in one year or less. Otherwise, they
are presented as non-current liabilities.
Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent
that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the
drawdown occurs at which point it is netted against proceeds as a transaction cost. To the extent there is no
evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a pre-
payment for liquidity services and amortized over the period of the facility to which it relates.
b)
Financial assets at fair value through other comprehensive income (FVOCI): Financial assets at FVOCI
comprise:
i)
Equity securities that are not held for trading and that Food Services has irrevocably elected at initial
recognition to recognize in this category, and
ii)
Debt securities where the contractual cash flows are solely principal and interest and the objective of
Food Services’ business model is achieved both by collecting contractual cash flows and selling financial
assets.
Food Services currently has not classified any of its financial instruments as FVOCI.
c)
Financial assets at fair value through profit or loss (FVPL): Food Services classifies the following financial
assets at FVPL:
i)
Debt instruments that do not qualify for measurement at either amortized cost or FVOCI,
ii)
Equity instruments that are held for trading, and
iii) Equity instruments for which Food Services has not elected to recognize fair value gains and losses
through other comprehensive income.
Food Services’ financial assets classified as FVPL include derivative financial instruments. Food Services
utilizes derivative financial instruments in the normal course of its operations as a means to manage risks
from fluctuations in interest rates. Food Services does not utilize derivative financial instruments for
62 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
trading or speculative purposes. Food Services’ derivatives are interest rate swaps with changes in fair
value recorded in the consolidated statements of income.
Financial assets and financial liabilities are measured at fair value using a valuation hierarchy for disclosure of
fair value measurements. The hierarchy is broken down into three levels based on the reliability of inputs as
follows:
•
Level 1 – Quoted prices in active markets for identical assets or liabilities;
•
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly derived from observable market data; and
•
Level 3 – Inputs from the asset or liability that are not based on observable market data.
4
Accounting policy developments
In April 2024, the International Accounting Standards Board issued IFRS 18 - Presentation and Disclosure in
the Financial Statements (“IFRS 18”) replacing IAS 1 – Presentation of Financial Statements. IFRS 18 introduces
a specified structure for the income statement by requiring income and expenses to be presented in three main
categories, operating, investing and financing, and by specifying certain defined totals and subtotals. Where
company-specific measures related to the income statement are provided (“management-defined performance
measures”) in a note to the financial statements, IFRS 18 requires a reconciliation to the closest IFRS Accounting
Standard subtotal and an accompanying explanation related to the use of the management-defined performance
measure. IFRS 18 provides additional guidance on principles of aggregation and disaggregation which apply to
the primary financial statements and the notes. The standard is effective for reporting periods beginning on or
after January 1, 2027. Management is currently assessing the impact of future adoption of IFRS 18.
In May 2024, the International Accounting Standards Board published amendments to IFRS 9 and IFRS 7 -
Financial Instruments: Disclosures (“IFRS 7”). The amendments to IFRS 9 clarify de-recognition and
classification of specific financial assets and liabilities respectively while the amendments to IFRS 7 clarify the
disclosure requirements for investments in equity instruments designated at fair value through other
comprehensive income and contractual terms that could change the timing or amount of contractual cash flows
on the occurrence or non-occurrence of a contingent event. The amendments to IFRS 9 and IFRS 7 are effective
for annual reporting beginning on or after January 1, 2026. Management is currently assessing the impact of
future adoption of these amendments to IFRS 9 and IFRS 7.
5
Critical accounting estimates and judgments
The preparation of consolidated financial statements in conformity with IFRS Accounting Standards requires
management to make estimates and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. It is reasonably possible that circumstances may arise that would cause
actual results to differ from management estimates; however, management does not believe it is likely that such
differences will materially affect Food Services’ financial position.
63 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
Judgments
-
In respect of the Transaction, the Company determined, by taking into account the consolidation provisions
within IFRS 10 - Consolidated Financial Statements, that the consolidating entity prior to the closing of the
Transaction is A&W Canada. The Company also determined that the reorganization steps undertaken
involving the Holding Companies in preparation of the acquisition of the Trust Units, represent a capital
reorganization accounted for at carrying values on the basis that the reorganization steps were performed at
no consideration and ensured equal ownership value for each ownership party - before and after the
reorganization. The Company also determined that the acquisition of the Trust Units meets the definition of
an asset purchase as opposed to a business combination as per IFRS 3 - Business Combinations.
-
Lease terms: whether the Company is reasonably certain, at the lease commencement date, it will exercise
available renewal or termination options and include such options in the lease term.
Estimates
-
Impairment of intangible assets: estimates in the impairment testing model, which include estimates of
future cash flows, growth rates and discounts rates.
6
Accounts receivable
December 28,
2025
$
December 29,
2024
$
Trade receivables
20,131
29,477
Accrued service fees and advertising fund contributions
8,558
8,501
Other receivables – current
8,725
5,157
Provision for impairment
(1,363)
(1,201)
36,051
41,934
As at December 28, 2025, trade receivables of $15,459,000 (December 29, 2024 – $20,193,000) were not past
due.
As at December 28, 2025, trade receivables of $3,485,000 (December 29, 2024 – $7,848,000) were past due but
not impaired. These relate to franchisees and distributors for whom there is no recent history of default. The
aging analysis of these trade receivables is as follows:
December 28,
2025
$
December 29,
2024
$
1 – 30 days past due
2,888
5,016
31 – 60 days past due
597
2,832
3,485
7,848
64 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
The movement in the provision for impairment is as follows:
$
Balance – December 31, 2023
1,368
Recovery of provision for impairment
(81)
Amounts written off
(86)
Balance – December 31, 2024
1,201
Provision for impairment
169
Amounts written off
(7)
Balance – December 28, 2025
1,363
The provision for impairment is recorded in operating costs on the consolidated statements of income.
7
Leases receivable
Food Services is considered an intermediate lessor on certain franchise locations. The following table presents
the leases receivable for the Company:
December 28,
2025
$
December 29,
2024
$
Current leases receivable
37,992
32,457
Non-current leases receivable
613,028
600,616
651,020
633,073
The following table outlines the annual contractual undiscounted payments for leases receivable as at
December 28, 2025:
$
Year 1
66,160
Year 2
60,614
Year 3
54,316
Year 4
57,188
Year 5
54,504
Thereafter
682,022
Total undiscounted leases receivable
974,804
Unearned interest income
(322,307)
Provision for impairment
(1,477)
651,020
Leases receivable are reviewed for impairment based on expected losses at each consolidated balance sheet date
in accordance with IFRS 9. An impairment loss is recorded using the simplified expected credit loss method. Food
Services has developed a risk matrix used to assess the credit risk of leases receivable where Food Services are
guarantors for head leases and has included the ongoing uncertainty in its credit risk assumptions. Factors taken
into consideration include restaurant concept, payment performance and future expectations for the restaurant
operations. Food Services recorded an ECL provision on leases receivable of $1,477,000 as at December 28, 2025
65 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
(December 29, 2024 – $1,541,000). The recovery of provision of impairment on leases receivable of $34,000 for
the period ended December 28, 2025 (December 29, 2024 – providing of $192,000) is recorded as a gain in the
consolidated statement of income. The current portion of the provision for impairment of $503,000 as at
December 28, 2025 (December 29, 2024 – $661,000) represents expected losses in the following fiscal period.
The non-current portion of the provision for impairment of $974,000 as at December 28, 2025 (December 29,
2024 – $880,000) relates to expected losses over the remaining term of the leases.
The movement in the ECL on lease receivables is as follows:
$
Balance – December 31, 2023
1,779
Provision for impairment
192
Amounts written off
(430)
Balance – December 29, 2024
1,541
Recovery of impairment
(34)
Amounts written off
(30)
Balance – December 28, 2025
1,477
8
Investments in associates
As a result of the annual adjustment to the Royalty Pool and the exchange rights granted under the Amended and
Restated Declaration of Trust of the Fund and the Amended and Restated Exchange Agreement dated December
22, 2010, among predecessor A&W Food Services, the Partnership and Trade Marks, predecessor A&W Food
Services owned common shares of Trade Marks and as a result of predecessor A&W Food Services exchanging
common shares of Trade Marks for Trust Units, Food Services also had direct ownership in the Fund. Prior to the
completion of the Transaction these investments were accounted for as investments in associates and were
recorded using the equity method.
As at December 28, 2025 and December 29, 2024, Food Services’ investments in associates was $nil. Food
Services’ share of income from associates for the period ended December 29, 2024 totalled $9,472,000 which
represents Food Services’ share of income prior to completion of the Transaction on October 17, 2024. Refer to
note 1 for additional details on the Transaction.
66 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
9
Income taxes
a)
The provision for income taxes shown in the consolidated statements of income differs from the amounts
obtained by applying statutory tax rates to income before income taxes for the following reasons:
52-week
period ended
December 28,
2025
52-week
period ended
December 29,
2024
Statutory combined federal and provincial income
tax rates
26.90%
26.90%
$
$
Expected provision for income taxes based on statutory
income tax rates
20,624
13,436
Deferred tax on investment in associates
-
(522)
Deferred tax on increase to deferred gain
-
659
Derecognition of deferred taxes upon completion of
Transaction (note 1)
-
16,943
Permanent differences
(555)
(3,055)
Capitalized Transaction costs
-
545
Other
(235)
267
Provision for income taxes
19,834
28,273
b)
Deferred income tax assets and liabilities comprise the following:
December 28,
2025
$
December 29,
2024
$
Current tax reserves
823
843
Deferred revenue
8,939
8,702
Long-term liabilities
3,633
2,947
Lease liabilities
5,590
6,331
Impairment of leases receivable
396
413
Intangible assets
(237)
(32)
Plant and equipment
(2,369)
(2,603)
Right-of-use assets
(5,193)
(6,034)
Share issuance costs
400
-
11,982
10,567
The deferred tax expense of $14,941,000 for the prior year period ended December 29, 2024 includes
$16,943,000 in deferred tax expense that was recognized upon completion of the Transaction. The
$16,943,000 in deferred tax expense attributable to the Transaction is a non-cash, non-recurring expense
and corresponds to the deferred tax assets and liabilities associated with the investment in associates and
deferred gain balances that were derecognized from Food Services’ consolidated balance sheet upon
completion of the Transaction. Refer to note 1 for additional details on the Transaction.
67 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
10 Right-of-use assets
The following table represents right-of-use assets for the Company:
Real estate
$
Automobiles
$
Total
$
Balance – December 31, 2023
18,006
2,079
20,085
Additions
4,249
884
5,133
Disposals
-
(139)
(139)
Remeasurement of lease liabilities
(11)
27
16
Depreciation
(1,579)
(1,026)
(2,605)
Balance – December 29, 2024
20,665
1,825
22,490
Additions
566
969
1,535
Disposals
(1,471)
(23)
(1,494)
Remeasurement of lease liabilities
(362)
-
(362)
Depreciation
(1,784)
(1,030)
(2,814)
Balance – December 28, 2025
17,614
1,741
19,355
11 Plant and equipment
Leasehold
improvements
$
Machinery and
equipment
$
Total
$
Balance – December 31, 2023
Cost
11,851
13,700
25,551
Accumulated depreciation
(5,270)
(8,876)
(14,146)
Net book value
6,581
4,824
11,405
Opening net book value
6,581
4,824
11,405
Additions
124
855
979
Disposals
(1,761)
-
(1,761)
Depreciation
(631)
(1,039)
(1,670)
Net book value
4,313
4,640
8,953
Balance – December 29, 2024
Cost
9,428
14,555
23,983
Accumulated depreciation
(5,115)
(9,915)
(15,030)
Net book value
4,313
4,640
8,953
Opening net book value
4,313
4,640
8,953
Additions
265
810
1,075
Disposals
-
(24)
(24)
Depreciation
(439)
(990)
(1,429)
Net book value
4,139
4,436
8,575
Balance – December 28, 2025
Cost
9,693
14,758
24,451
Accumulated depreciation
(5,554)
(10,322)
(15,876)
Net book value
4,139
4,436
8,575
68 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
12 Intangible assets
Internally
generated
application
software
$
A&W
trademarks
$
Total
$
Balance – December 31, 2023
Cost
7,085
-
7,085
Accumulated amortization
(763)
-
(763)
Net book value
6,322
-
6,322
Opening net book value
6,322
-
6,322
Additions
1,927
488,067
489,994
Amortization
(1,950)
-
(1,950)
Net book value
6,299
488,067
494,366
Balance – December 29, 2024
Cost
9,012
488,067
497,079
Accumulated amortization
(2,713)
-
(2,713)
Net book value
6,299
488,067
494,366
Opening net book value
6,299
488,067
494,366
Additions
1,274
136
1,410
Amortization
(2,435)
-
(2,435)
Net book value
5,138
488,203
493,341
Balance – December 28, 2025
Cost
10,286
488,203
498,489
Accumulated amortization
(5,148)
-
(5,148)
Net book value
5,138
488,203
493,341
On October 18, 2024, Food Services indirectly reacquired the A&W trademarks by acquiring all of the
outstanding Trust Units not already owned by predecessor A&W Food Services.
The Company has revised certain financial information related to intangible assets that was previously included
in the consolidated financial statements for the period ended December 29, 2024. The balance of the A&W
trademarks as at December 29, 2024, has been increased from $440,893,000 to $488,067,000 to reflect an
adjustment relating to the cost of the A&W trademarks acquisition which occurred on October 18, 2024.
69 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
The impact to the consolidated balance sheet as at December 29, 2024 is noted in the ‘Adjustment’ column in
the following table:
December 29,
2024
(previously
reported)
Adjustment
December 29,
2024
(revised)
$
$
$
Intangible assets
447,192
47,174
494,366
Total assets
1,207,663
47,174
1,254,837
Accumulated deficit
(254,246)
47,174
(207,072)
Total shareholders’ equity
163,679
47,174
210,853
Total equity
164,032
47,174
211,206
The adjustment had no impact on the consolidated statements of income, consolidated statements of
comprehensive income or consolidated statements of cash flows. Total assets, total shareholders equity and
total equity all as at December 29, 2024 have also been updated to reflect the adjustment.
Costs incurred to complete Food Services’ acquisition of the A&W trademarks totaling $18,784,000 were
capitalized during the period ended December 29, 2024, and are included in the intangible assets balance as at
December 29, 2024. Additional costs related to the acquisition of the A&W trademarks, totaling $136,000, were
capitalized in the period ended December 28, 2025, and are included in the intangible assets balance as at
December 28, 2025. Refer to note 1 for additional details on the Transaction.
Food Services performed its annual impairment test on the indefinite life intangible asset as at December 28,
2025, using a value-in-use model to determine the recoverable amount of the indefinite life intangible asset.
The calculations were based on Food Services’ internal forecasts and represent management’s best estimates at
a specific point in time, and, as a result, are subject to estimation uncertainty. In arriving at its estimated future
cash flows, Food Services considered past experience, economic trends and forecasted industry trends. Cash
flows are projected for a period of five years and then cash flows beyond that are extrapolated using an
estimated terminal growth rate of 2.0% (December 29, 2024 – 2.0%). Food Services assumed a pre-tax
discount rate of 11.0% (December 29, 2024 – 12.0%) in order to calculate the present value of its projected cash
flows. As a result of this test, it was concluded that no impairment was required.
Food Services performed a sensitivity analysis on the most sensitive assumptions, which were revenue growth
rates (2.0%) and the discount rate. A 1% increase in the pre-tax discount rate would have decreased the amount
by which the recoverable amount exceeded the carrying amount by approximately $89,230,000 (December 29,
2024 – $70,000,000) and would not have resulted in impairment. A 1% decrease in the estimated revenue growth
rate would have decreased the amount by which the recoverable amount exceeded the carrying amount by
approximately $40,804,000 (December 29, 2024 – $35,000,000) and would not have resulted in impairment.
70 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
13 Accounts payable and accrued liabilities
December 28,
2025
$
December 29,
2024
$
Trade payables
18,372
35,202
Employee benefits payable
4,257
4,822
Accrued liabilities and other payables
23,260
27,102
45,889
67,126
14 Lease liabilities
The Company’s leases include base rent for restaurant premises and office space and automobiles. The Company
is the head lessee for the majority of its franchised locations and enters into agreements whereby the Company
licences the premises to the franchisee, for which the Company receives a premises licence fee. Under the licence
agreement, the franchisee is responsible for the obligations under the lease. IFRS 16 requires Food Services,
where it acts as the intermediate lessor, to recognize a lease receivable (note 7). The Company has included
renewal options in the measurement of lease liability when it is reasonably certain to exercise the renewal option.
The following table presents the lease liabilities for the Company:
December 28,
2025
$
December 29,
2024
$
Current lease liabilities
42,085
35,610
Non-current lease liabilities
630,963
622,602
673,048
658,212
Costs not included in the measurement of the lease liabilities are as follows:
52-week
period ended
December 28,
2025
$
52-week
period ended
December 29,
2024
$
Low-value lease costs
7
34
Variable lease costs
1,174
1,091
1,181
1,125
15 Deferred gain
The gain realized on the sale of the A&W trademarks in 2002 was deferred and amortized over the term of the
Amended and Restated Licence and Royalty Agreement. Amortization of the gain was recognized on the
consolidated statements of income. The annual adjustments to the Royalty Pool increased the deferred gain and
the additions were amortized over the remaining term of the Amended and Restated Licence and Royalty
Agreement from the date of addition.
71 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
On October 18, 2024, upon completion of the Transaction, Food Services reacquired the A&W trademarks
through its acquisition of the remaining outstanding Trust Units.
Amortization of deferred gain, totaling $3,039,000, was recognized in the consolidated statement of income for
the prior year period ended December 29, 2024. Concurrent with the acquisition of the A&W trademarks on
October 18, 2024, the deferred gain was derecognized from Food Services’ consolidated balance sheet and the
corresponding amortization of the deferred gain from that date onwards was eliminated from Food Services’
consolidated statement of income. Refer to note 1 for additional details on the Transaction.
16 Employee benefits
a)
Supplementary retirement benefit plan
The most recent actuarial valuation of the unfunded liability was as at December 28, 2025 and the next
required valuation will be as at January 3, 2027.
The significant actuarial assumptions adopted in determining the accrued benefit obligation are as follows:
December 28,
2025
$
December 29,
2024
$
Discount rate
4.80
4.60
Inflation
2.00
2.00
The supplementary retirement benefit plan is as follows:
December 28,
2025
$
December 29,
2024
$
Unfunded liabilities under supplementary retirement
benefit plan
11,370
11,863
Less: Current portion included in accrued liabilities
(892)
(889)
Liabilities on the consolidated balance sheets
10,478
10,974
The sensitivity of the accrued benefit obligation to a change in the discount rate is as follows:
Discount rate
%
Liability
$
- 50 basis points
4.30
11,894
+ 50 basis points
5.30
10,884
72 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
The consolidated statements of income charge for the supplementary retirement benefit plan is as follows:
52-week
period ended
December 28,
2025
$
52-week
period ended
December 29,
2024
$
Actuarial gain (loss) recognized in other comprehensive
loss, net of income tax of $34,000 (December 29,
2024 – $28,000)
96
(77)
Total cumulative actuarial losses recognized in other
comprehensive income, net of income tax of
$1,633,000 (December 29, 2024 – $1,599,000)
2,191
2,287
The movement in the supplementary retirement benefit plan is as follows:
$
Balance – December 31, 2023
12,103
Interest cost (note 21)
534
Actuarial loss
105
Benefits paid
(879)
Balance – December 29, 2024
11,863
Interest cost (note 21)
525
Actuarial gain
(130)
Benefits paid
(888)
Balance – December 28, 2025
11,370
b)
Defined contribution pension plan
Pension expense for the period ended December 28, 2025 was $1,158,000 (December 29, 2024 –
$1,137,000). Total cash payments during the period ended December 28, 2025 were $1,154,000 (December
29, 2024 – $1,133,000).
c)
Equity incentive plan
DSUs
During the period ended December 28, 2025, the Company issued 8,464 (2024-nil) DSUs to certain
directors of the Company for services performed during the period ended December 28, 2025. The DSUs
vest immediately at the time of grant and are not redeemable until the director ceases to be a member of
the Board. The DSUs can be settled in cash, shares of the Company, or a combination thereof at the sole
discretion of the Board. The Company determined that the 8,464 DSUs granted during the period ended
December 28, 2025 are equity-settled transactions as the Company expects they will be fully settled in
shares of the Company. Accordingly, an expense was recognized on the grant date equal to the fair value of
73 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
the DSUs at the grant date and, with a corresponding increase in contributed surplus. During the period
ended December 28, 2025, the Company recognized a stock-based compensation expense of $305,000
(December 29, 2024 - $nil) in relation to the DSUs granted.
The following table presents the outstanding DSUs for the Company for the periods ended on the dates
indicated below:
52-week
period ended
December 28,
2025
52-week
period ended
December 29,
2024
Outstanding – beginning of period
-
-
Granted (1)
8,464
-
Outstanding – end of period
8,464
-
Vested and exercisable – end of period
8,464
-
(1) Includes additional units issued in lieu of cash dividends.
RSUs
During the period ended December 28, 2025, the Company issued 96,896 (2024-nil) RSUs to certain
employees of the Company. The RSUs vest over a period of one to five years and are settled in shares of the
Company. The RSUs are accounted for as equity-settled transactions whereby an expense is recognized
equal to the fair value of the RSUs at the grant date over the vesting period, with a corresponding increase
in contributed surplus. During the period ended December 28, 2025, the Company recognized a stock-
based compensation expense of $1,441,000 (December 29, 2024 - $nil) in relation to the RSUs issued. The
fair value of the 96,896 RSUs issued was $3,689,000 as at December 28, 2025 (December 29, 2024 - $nil).
The following table presents the outstanding RSUs for the Company for the periods ended on the dates
indicated below:
52-week
period ended
December 28,
2025
52-week
period ended
December 29,
2024
Outstanding – beginning of period
-
-
Granted (1)
96,896
-
Outstanding – end of period
96,896
-
Vested and exercisable – end of period
-
-
(1) Includes additional units issued in lieu of cash dividends.
74 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
Subsequent to the period ended December 28, 2025, the Company settled 19,242 RSUs that vested on
December 31, 2025. The settlement of the 19,242 RSUs resulted in the Company issuing 9,230 common
shares from treasury to employees. In connection with the vesting the Company elected to net settle and
withhold 10,012 of the vested RSUs to satisfy statutory tax obligations.
17 Operating loan facility and interest rate swap
Prior to October 17, 2024, predecessor A&W Food Services had a $40,000,000 demand operating loan facility
(“Former Loan Facility”) with a Canadian chartered bank (the “Bank”). The facility was used to fund working
capital requirements and for general corporate purposes. On May 15, 2024, predecessor A&W Food Services
extended the maturity date on the Former Loan Facility by one year to May 31, 2025. Under the Former Loan
Facility account overdrafts bear interest at the Bank’s prime rate plus 0.75% (at the Bank’s prime rate plus 1%
prior to the amendment). As part of the amendment, and in response to the cessation of Canadian Dollar
Offered Rate which is the benchmark interest rate on bankers acceptances (“BAs”), the Former Loan Facility
was also amended to transition from BAs to CORRA (as defined below) loans, in which the interest rate
benchmark is Canadian Overnight Repo Rate Average (“CORRA”). The remaining terms and conditions were
consistent with those of the Former Loan Facility that was in place prior to the May 15, 2024 amendment.
Amounts under the Former Loan Facility could be advanced in the form of an account overdraft or in the form
of CORRA loans and were repayable on demand. The Former Loan Facility contained covenants including the
requirement to meet certain debt to earnings before interest, taxes, depreciation, amortization and non-cash
charges/income (“EBITDA”) ratios and debt to Food Services’ investment in Trade Marks ratios during each
trailing four quarter period. Food Services was also required to pledge 5,000,000 Trade Marks common shares.
On October 17, 2024, Food Services replaced the Former Loan Facility with a new loan facility (the “Loan
Facility”). The Loan Facility is revolving and allows for Food Services to borrow up to $325,000,000 Canadian
dollar equivalent, with a $10,000,000 sublimit for letters of credit and letters of guarantee and a $20,000,000
sublimit for a swingline (the “Swingline”).
The Loan Facility, including the Swingline, matures on October 17, 2029 and is available on a revolving basis by
way of prime rate loans, term CORRA loans and daily compounded CORRA Loans in Canadian dollars, and U.S.
base rate and term Secured Overnight Financing Rate (“SOFR”) loans in U.S. dollars, and letters of credit in
Canadian and U.S. dollars. The marginal rate payable on the prime rate loans and U.S. base rate loans ranges
from 0.75% to 2.0%, based on Food Services’ ratio of Total Debt to EBITDA, as defined in the credit agreement.
The marginal rate payable on the term CORRA loans, daily compounded CORRA loans, term SOFR loans and
letters of credit ranges from 1.75% to 3.0%, based on Food Services’ ratio of Total Debt to EBITDA. The Loan
Facility is secured by a first priority lien over all of the present and future undertakings and property of Food
Services.
On October 17, 2024, Food Services drew down $265,000,000 on the Loan Facility and used the proceeds to
repay Trade Marks’ $60,000,000 term loan and the accrued interest, which totaled $60,167,000, finance the
$175,623,000 purchase of 4,746,582 Trust Units and pay the financing fees associated with the Loan Facility. The
Loan Facility will be used to fund working capital requirements and for general corporate purposes on an ongoing
basis. Refer to note 1 for additional details on the Transaction.
75 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
The Loan Facility contains covenants including the requirement to meet certain debt to EBITDA and interest
coverage ratios during each trailing four quarter period. Food Services was in compliance with all of its financial
covenants as at December 28, 2025 and December 29, 2024.
Financing fees, with an initial total cost of $3,523,000, related to the Loan Facility are presented as a reduction
to the carrying amount of the operating loan facility and are being amortized over the remainder of the five-year
term of the Loan Facility.
Food Services uses interest rate swap agreements to manage risks from fluctuations in interest rates. To
manage the interest rate risk associated with the Loan Facility, Food Services entered into an interest rate swap
arrangement (the “Swap”) on May 20, 2025. The Swap has a notional value of $210,000,000 and a maturity of
October 17, 2029. Under the Swap, as at December 28, 2025, the effective interest rate is 5.33% per annum
(December 29, 2024 – n/a), comprising 3.08% per annum which is fixed under the Swap agreement until
October 17, 2029 plus a 2.25% per annum marginal rate. The marginal rate ranges from 1.75% to 3.00%,
depending on Food Services’ ratio of Total Debt to EBITDA. The fair value of the Swap as at December 28, 2025
was $1,318,000 unfavourable (December 29, 2024 - $n/a). The $1,318,000 loss on the Swap recognized in the
period ended December 28, 2025 (December 29, 2024 - $n/a), represents the change in the fair value of the
Swap, is recorded in the consolidated statements of income.
The following table presents the operating loan facility for the Company:
December 28,
2025
$
December 29,
2024
$
Amount of Loan Facility
325,000,000
325,000,000
Amounts drawn on Loan Facility
235,557,000
260,509,000
Less: Unamortized balance on financing
fees
(2,683,000)
(3,360,000)
232,874,000
257,149,000
Letters of guarantee issued under Loan
Facility
198,000
198,000
Amount available on Loan Facility
89,245,000
64,293,000
18 Share capital
Authorized
Unlimited number of common shares
Issued
Number of
Common
Shares
Share
Capital
$
Balance as at December 28, 2025
23,997,781
417,925
Balance as at December 29, 2024
23,997,781
417,925
76 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
19 Franchising revenue
Franchising revenues disaggregated by revenue source are outlined below. The table also shows the basis on
which franchising revenues are recognized.
52-week
period ended
December 28,
2025
$
52-week
period ended
December 29,
2024
$
At a point in time
Advertising fund contributions
59,260
59,934
Distribution revenue and service fees
138,582
134,517
Equipment and turnkey fees
52,665
56,647
Other revenue
15,522
12,932
Over time
Initial franchise fees and renewal fees
3,651
3,589
269,680
267,619
The Company has recorded $33,317,000 (December 29, 2024 – $32,432,000) of deferred revenue related to
initial franchise fees and renewal fees. The Company expects to recognize as revenue $2,626,000 (December 29,
2024 – $2,584,000) in the following fiscal period, which represents the current portion of deferred revenue. The
non-current portion of deferred revenue of $30,691,000 (December 29, 2024 – $29,848,000) is expected to be
recognized over the remaining term of the franchise agreement.
The Company has recorded $17,790,000 (December 29, 2024 – $14,861,000) of deposits on franchise and
equipment sales of which $17,337,000 (December 29, 2024 – $13,962,000) is expected to be recognized as
revenue in the following fiscal period when control transfers, which is when the related restaurants commence
operations. During the period, $13,027,000 (December 29, 2024 – $10,019,000) of revenue was recognized
related to deposits deferred at the end of the prior period.
77 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
20 Expenses by nature
Included in operating costs and general and administrative expenses are the following expenses by nature:
52-week
period ended
December 28,
2025
$
52-week
period ended
December 29,
2024
$
Depreciation of plant and equipment
1,429
1,670
Amortization of intangible assets
2,435
1,950
Depreciation of right-of-use assets
2,814
2,605
Employee benefit costs
Wages, salaries, bonuses and other termination benefits
39,193
38,494
Pension costs – defined contribution plan
1,158
1,137
Total employee benefit costs
40,351
39,631
21 Finance income and expense
52-week
period ended
December 28,
2025
$
52-week
period ended
December 29,
2024
$
Interest on cash and cash equivalents
152
425
Interest on leases receivable
26,339
24,774
Finance income
26,491
25,199
52-week
period ended
December 28,
2025
$
52-week
period ended
December 29,
2024
$
Interest on operating loan facility
13,569
3,761
Standby fees
289
89
Interest on supplementary retirement benefit plan
525
534
Interest on lease liabilities
27,282
25,579
Amortization of deferred financing fees
700
140
Finance expense
42,365
30,103
78 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
52-week
period ended
December 28,
2025
$
52-week
period ended
December 29,
2024
$
Finance income
(26,491)
(25,199)
Finance expense
42,365
30,103
Net finance expense
15,874
4,904
22 Working capital
Changes in items of non-cash working capital are as follows:
52-week
period ended
December 28,
2025
$
52-week
period ended
December 29,
2024
$
Accounts receivable
5,883
(1,812)
Inventories
3,800
2,269
Prepaid expenses
(779)
(1,100)
Accounts payable and accrued liabilities
(19,657)
19,977
Royalties payable
-
(4,094)
(10,753)
15,240
23 Commitments and contingencies
Purchase obligations
The Company has purchase obligations for supply to franchisees for food supplies, packaging and equipment of
$111,763,000 (December 29, 2024 – $113,172,000).
24 Net income per share
Net income per share is calculated by dividing the net income attributable to Food Services shareholders by the
weighted average number of common shares outstanding during the period. In order to improve comparability
of net income per share, the number of shares used to calculate the net income per share up to October 17, 2024
(the date of the Transaction), has been adjusted to reflect the equivalent number of common shares of Food
Services that were outstanding after the reorganization steps described in note 1 were undertaken, excluding the
common shares issued to the outside party holding a non-controlling interest in Food Services prior to the
completion of the Transaction and those issued to Unitholders as consideration for the Transaction which were
incorporated into the weighted average number of shares from the date of the Transaction onwards. Refer to note
1 for additional details on the Transaction.
79 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
52-week
period ended
December 28,
2025
52-week
period ended
December 29,
2024
Net income attributable to shareholders of the Company and
used to determine net income per share
$55,196
$11,878
Weighted average number of shares outstanding (thousands)
23,998
12,444
Net income per share
$2.30
$0.95
Diluted net income per share for the periods indicated below were calculated by adjusting the weighted average
number of shares outstanding to assume conversion of all dilutive potential shares as follows:
52-week
period ended
December 28,
2025
52-week
period ended
December 29,
2024
Net income attributable to shareholders of the Company and
used to determine net income per share
$55,196
$11,878
Weighted average number of shares outstanding (thousands)
23,998
12,444
Dilutive effect of RSUs and DSUs (note 16)
77
-
Weighted average number of shares for diluted net income
per share (thousands)
24,075
12,444
Diluted net income per share
$2.29
$0.95
25 Financial instruments and financial risk management
Food Services’ financial instruments consist of cash and cash equivalents, accounts receivable, leases receivable,
other receivables, accounts payable and accrued liabilities and operating loan facility.
Fair values
The following tables indicates the carrying amounts and fair values of the Company’s financial assets and
liabilities, including their accounting classification and level in the fair value hierarchy:
December 28, 2025
December 29, 2024
Financial assets
Classification
Fair Value
Level
Carrying
Value
$
Fair
Value
$
Carrying
Value
$
Fair
Value
$
Cash and cash equivalents
Amortized cost
1
982
982
22,534
22,534
Accounts receivable
Amortized cost
2
36,051
36,051
41,934
41,934
Leases receivable
Amortized cost
2
651,020
651,020
633,073
633,073
Other receivables
Amortized cost
2
2,061
2,061
3,374
3,374
80 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
December 28, 2025
December 29, 2024
Financial liabilities
Classification
Fair Value
Level
Carrying
Value
$
Fair
Value
$
Carrying
Value
$
Fair
Value
$
Accounts payable and
accrued liabilities
Amortized cost
2
45,889
45,889
67,126
67,126
Operating loan facility
Amortized cost
2
232,874
232,874
257,149
257,149
Derivative financial
liabilities
FVTPL
2
1,318
1,318
-
-
There were no transfers between the levels of the fair value hierarchy for the periods ended December 28, 2025
and December 29, 2024.
Management estimates that the fair values of cash and cash equivalents, accounts receivable, and accounts
payable and accrued liabilities approximate their carrying values given the short term maturity of these
instruments. The fair value of leases receivable approximates their carrying value as the implicit interest used to
discount the base value is considered to be based on an appropriate credit and risk rate pertaining to Food
Services. The Loan Facility is based on the floating CORRA and Prime rates which reprice regularly. There has
not been a significant change in the Company's credit standing in the period between October 17, 2024 and
December 28, 2025. Accordingly, it is estimated there is not a material change in fair value of the drawn portion
of the Loan Facility. The Swap is measured at fair value as a Level 2 financial instrument and is measured using
market prices and other observable inputs.
Credit risk
The Company’s exposure to credit risk is as indicated by the carrying amount of its accounts receivable, other
receivables and leases receivable. Receivables are due from franchisees, distributors and bottlers. The Company
does not believe it has a significant exposure to any individual franchisee. As at December 28, 2025, $6,168,000
(December 29, 2024 – $11,419,000) is receivable from one distributor of which $6,033,000 was not past due as
at December 28, 2025 and all of which was paid subsequent to the period end.
Liquidity risk
Liquidity risk refers to the risk that the Company is unable to fund obligations and dividend payments. The
primary sources of funds are the fees received from franchised restaurants and revenues from the development
of franchised restaurants, the sale of food and supplies to franchisees and distributors, revenue from Company-
owned restaurants and the sale of A&W Root Beer concentrate. The liquidity risk is assessed as low due to the
nature of the income Food Services receives from the franchisees, the Loan Facility that the Company has in place
to manage liquidity and the Company’s ability to reduce future dividends if necessary.
81 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
The following table summarizes the undiscounted contractual payments of the Company’s financial liabilities as
at the dates indicated:
As at December 28, 2025
Total
Less than
1 year
1 – 3
years
4 – 5
years
After 5
years
Accounts payable and accrued
liabilities
45,889
45,889
-
-
-
Lease liabilities
1,002,461
69,796
179,475
110,238
642,952
Operating loan facility
283,149
12,524
270,625
-
-
Derivative financial liabilities
1,318
-
1,318
-
-
1,332,817
128,209
451,418
110,238
642,952
As at December 29, 2024
Total
Less than
1 year
1 – 3
years
4 – 5
years
After 5
years
Accounts payable and accrued
liabilities
67,126
67,126
-
-
-
Lease liabilities
956,378
60,714
174,156
105,129
616,379
Operating loan facility
333,907
15,881
47,643
270,383
-
1,357,411
143,721
221,799
375,512
616,379
Interest rate risk
The Loan Facility bears a floating rate of interest as disclosed in note 17 and therefore Food Services is exposed
to market risks relating to changes in interest rates on outstanding balances. Food Services uses interest rate
swaps to manage the risk associated with the interest rate on the Loan Facility. A 100 basis point increase in the
bank’s prime rate and the floating CORRA rare would result in additional interest of $256,000 per annum based
on the unhedged balance on the Loan Facility as at December 28, 2025 (December 29, 2024 - $2,605,000). Cash
and cash equivalents earn interest at market rates. All of the Company’s other financial instruments are non-
interest bearing.
26 Capital disclosures
Food Services’ capital currently consists of shareholders’ equity and the operating loan facility. Food Services’
capital management objectives have not changed, which are to have sufficient cash and cash equivalents to ensure
the growth of the business, fund its investing activities, repay debt and pay dividends to its shareholders after
satisfaction of its debt service and income tax obligations, provisions for operating costs and general and
administrative expenses, and retention of reasonable working capital reserves. Food Services manages its capital
structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of
the underlying assets. In order to maintain or adjust the capital structure, Food Services may adjust the amount
of dividends paid to its shareholders.
27 Related party transactions and balances
During the period, Food Services received lease payments totaling $46,000 (December 29, 2024 - $43,000) from
a major shareholder of Food Services. Food Services acts as an intermediate lessor, subleasing office space to the
shareholder that is held under a head lease with an external third-party landlord.
82 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
During the period ended December 29, 2024, Food Services recognized a royalty expense of $44,036,000. The
royalty expense ceased upon the completion of the Transaction on October 17, 2024.
During the period ended December 29, 2024, Trade Marks declared and paid dividends payable to Food Services
totaling $6,966,000 as a result of Food Services’ ownership of Trade Marks’ common shares. Trade Marks did
not declare any dividends subsequent to the completion of the Transaction.
During the period ended December 29, 2024, the Fund declared and paid distributions totalling $2,329,000
payable to Food Services as a result of Food Services’ ownership of limited voting units of the Fund. The Fund
did not declare any distributions subsequent to the completion of the Transaction.
During the period ended December 29, 2024 Food Services recognized $152,000 as an offset to general and
administrative expenses as a result of administrative services provided to Trade Marks and the Fund. Following
the completion of the Transaction, Food Services did not receive any further payments from Trade Marks for
administrative services.
Prior to completion of the Transaction there was an expense sharing agreement (the “Expense Agreement’) in
place that outlined an arrangement amongst Food Services, the Fund and Trade Marks in respect of the payment
of certain costs, fees, expenses and disbursements incurred or to be incurred by the Fund and Trade Marks in
connection with their consideration, evaluation and negotiation of the Transaction incurred at or prior to the
public announcement of the Transaction. Pursuant to the Expense Agreement, Food Services agreed to (a)
reimburse the Fund and Trade Marks for certain expenses paid by the Fund or Trade Marks, (b) advance funds
to the Fund and/or Trade Marks to permit the Fund and/or Trade Marks, as applicable, to pay such expenses or
(c) pay such expenses directly, in each case, subject to certain caps as set forth therein. During the period ended
December 29, 2024, Food Services paid a total of $3,998,000 in costs incurred by the Fund related to the
Transaction under the terms of the Expense Agreement.
Key management compensation
Key management includes the Company’s directors and executive team. Compensation awarded to key
management includes:
52-week
period ended
December 28,
2025
$
52-week
period ended
December 29,
2024
$
Salaries, bonuses and other short-term employee benefits
4,099
4,108
Pension costs – defined contribution plan
169
172
Pension costs – supplementary retirement benefit plan
525
534
Stock-based compensation
1,746
-
6,539
4,814
During the period ended December 28, 2025, the directors of the Company earned director’s fees payable in cash
totaling $388,000 (December 29, 2024 - $165,000), of which $55,000 was in accounts payable and accrued
liabilities as at December 28, 2025 (December 29, 2024 - $165,000). The Company also granted 8,464 DSUs to
83 | A&W Food Services of Canada Inc.
A&W Food Services of Canada Inc.
Notes to Consolidated Financial Statements
December 28, 2025 and December 29, 2024
(figures in tables expressed in thousands of dollars)
the directors of the Company and granted 96,896 RSUs to executive officers and recognized $1,746,000 in stock-
based compensation expense in the period (December 29, 2024 - $nil). The director fees payable in cash are
reflected in salaries, bonuses and other short-term employee benefits in the table above and the stock-based
compensation expense related to the RSUs and DSUs granted is included in stock-based compensation in the
table above. See note 16 for further details on the RSUs and DSUs granted.
28 Subsequent events
On March 4, 2026, the Board of Directors approved a dividend of $0.480 per share with a declaration date of
March 5, 2026. The dividend is payable in cash on March 31, 2026 to holders of common shares of record on
March 16, 2026. The dividend will be taxed as an eligible dividend.
Other subsequent events are disclosed in note 16.
84 | A&W Food Services of Canada Inc.
BOARD OF DIRECTORS AND OFFICERS
Paul Hollands
Director and Chair of the Board
Eric Berke
Director
Andrew W. Dunn
Director and Chair of the Audit,
Finance and Risk Committee
Fern Glowinsky
Director
Michael Hollend
Director
Kevin Mahoney
Director and Chair of the Governance and
Compensation Committee
Andrew Mindell
Director
Susan Senecal
Director, President & Chief Executive Officer
Darin Harris
Director
OFFICERS
Susan Senecal
Director, President & Chief Executive Officer
Kelly Blankstein
Chief Financial Officer
Brent Todd
Chief Operating Officer
Catherine Anderson
Vice President, Development
Nancy Wuttunee
Vice President, People Potential
Robert Fussey
Vice President, Innovation
Tom Newitt
Vice President, Marketing
Angela Griffiths
Vice President, Food Safety and Brand Integrity
Mike Atkinson
Executive Vice President
Lori Massini
General Counsel and Corporate Secretary
SHAREHOLDER INFORMATION
Home Office & Mailing Address
A&W Food Services of Canada Inc.
300-171 West Esplanade
North Vancouver, BC, V7M 3K9
Investor Enquiries
Kelly Blankstein, Chief Financial Officer
Lisa Marzocco, Director of Finance
Email: investorrelations@aw.ca
Phone: (604) 988 2141
Website: awinvestors.ca
Transfer Agent
Computershare Investor Services Inc.
Email: service@computershare.com
Toll Free: (1) 800 564 6253
Independent Auditors
PricewaterhouseCoopers LLP
Stock Exchange Listing
A&W’s common shares are traded on the
Toronto Stock Exchange under the
Symbol: AW.TO
86 | A&W Food Services of Canada Inc.