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Pizza Pizza Royalty Corp.
Royalty income (2024) $39.8 million
Three-year share price gain 25.5%
P/E ratio (trailing) 16.9
For baby boomers who came of age in Toronto in the 1970s and ’80s, the Pizza Pizza PZA-T chain, its iconic central phone number (967-11-11) and the jingle based on it are hard wired into their brains. The chain was founded as one store at the city’s Wellesley and Parliament streets on New Year’s Eve, Dec. 31, 1967, by Michael Overs—and that location endures today.
There are now more than 800 outlets across Canada, including more than 100 Pizza 73 locations in the West (a chain Pizza Pizza has owned since 2007). As Pizza Pizza CEO Paul Goddard says, “We are one of the few large, national quick-service restaurant brands that is actually Canadian owned and operated.”
Goddard, 57, is Overs’s son-in-law, and he was named CEO of the chain (Pizza Pizza Ltd.) and of the restaurant royalty company after Overs died in 2010. Born in Alberta, Goddard is an engineer and an MBA with extensive energy sector experience. And he’s proud of Pizza Pizza’s history. The one-number ordering system was revolutionary. “It involved a lot of work and technology,” he says.
Another early Pizza Pizza innovation: insulated delivery bags. “Pizzas can get pretty cold if you don’t insulate them,” Goddard says.
Pizza Pizza went public in 2005, near the height of Canada’s income trust era, as a royalty company. The structure is common among franchise restaurant chains. In 2024, it had $620 million in sales. Pizza Pizza outlets pay a 6% royalty, and Pizza 73 stores pay 9%. The royalty company then pays out most of the proceeds to investors as monthly dividends—now 7.8 cents a share, or 93 cents a year, for a yield of 5.8% at recent share prices. “It’s sort of like an income stock with a value tilt,” Goddard says.
Like many other chains, however, Goddard says Pizza Pizza was hit hard by COVID-19. Same-store sales dipped by 12.5% in 2020, and the company cut its monthly dividend to 5 cents. But sales rebounded in 2021 and have grown since then. The CEO also steers clear of questions about the possibility of ditching the royalty company structure, as A&W Canada did last year and The Keg did this past August. “I can’t comment or be speculative,” Goddard says.
But he can talk about Pizza Pizza’s expansion plans. The chain opened the first of four outlets in Guadalajara, Mexico, in 2023. At home, he figures it could reach between 1,000 and 1,200 stores. “If it’s a great location and we can make money, and our franchisee can make money,” Goddard says, “then we’ll go there.”