A&W FOOD SERVICES OF CANADA INC. ANNOUNCES FOURTH QUARTER AND FISCAL 2025 RESULTS AND DECLARES QUARTERLY CASH DIVIDEND

A&W FOOD SERVICES OF CANADA INC. ANNOUNCES FOURTH QUARTER AND FISCAL 2025 RESULTS AND DECLARES QUARTERLY CASH DIVIDEND

VANCOUVER, BC, March 5, 2026 /CNW/ - A&W Food Services of Canada Inc. (TSX: AW) ("A&W", "Food Services", "we" or "our") today announced its financial results for the 16 and 52-week periods ended December 28, 2025 and provided an outlook for fiscal 2026.

All references to "Q4 2025" are to Food Services' 16-week period ended December 28, 2025, to "Fiscal 2025" are to Food Services' 52-week period ended December 28, 2025, to "Q4 2024" are to Food Services' 16-week period ended December 29, 2024 and to "Fiscal 2024" are to Food Services' 52-week period ended December 29, 2024.

"In Fiscal 2025 we were able to deliver positive Same Store Sales Growth in all four quarters, open 26 new A&W restaurants and meet our annual guidance" announced Susan Senecal, Chief Executive Officer. "These are significant achievements given the fiercely competitive landscape and challenging macroeconomic environment that we are operating in. We stay committed to making sure that A&W remains affordable for all Canadians, while maintaining the high-quality and great taste that our brand is known for and are pleased with how our value-based promotions and dedicated value menu contributed to our growth in 2025," added Ms. Senecal. "While the continued economic uncertainty in Canada and the severe weather events in the eastern provinces during early 2026 present headwinds for sales at A&W restaurants in 2026, we are confident in our brand's ability to deliver value to our guests. We are optimistic about our future and believe we can successfully navigate these challenging conditions". 

Q4 FINANCIAL HIGHLIGHTS

(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 FINANCIAL HIGHLIGHTS
(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

SUMMARY OF RESULTS

On October 17, 2024, A&W completed a transaction (the "Transaction") in which Food Services indirectly acquired the trademarks used in the A&W business in Canada through the acquisition of all of the units of A&W Revenue Royalties Income Fund (the "Fund") which it did not already own. Due to the Transaction, the financial results for Q4 2025 are not directly comparable to the financial results for Q4 2024.

For further information regarding the Transaction, please refer to Food Services' Management's Discussion and Analysis ("MD&A") for Fiscal 2025, which is available on Food Services' SEDAR+ profile at www.sedarplus.ca.

Q4 2025 Results Compared to Q4 2024

Total revenue of $93.0 million was consistent with Q4 2024's total revenue of $93.2 million. Higher System Sales and more A&W restaurant openings increased franchising revenue. The three additional restaurant openings in Q4 2025 contributed additional revenue from equipment sales and turnkey restaurants. Those increases to revenue were offset by advertising fund contributions which were $2.0 million lower in Q4 2025, in comparison to Q4 2024, due to a lower contribution rate for 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 on other promotional materials that are administered by the National Advertising Fund.

System Sales⁽ⁱ⁾ increased 2.5% in Q4 2025 (-0.1% in Q4 2024) 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, were up quarter over quarter.

Same Store Sales Growth⁽ⁱ⁾ for Q4 2025 was 0.9%, due to an increase in the average cheque size and growth in 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. Same Store Sales Growth is impacted by shifts in guest counts, cheque size (including party size, menu prices, and menu mix), and changes in consumer discretionary spending.

Income before income taxes increased by $2.5 million in Q4 2025 largely as a result of the cessation of the royalty expense following the completion of the Transaction and gain on the interest rate swap, partially offset by an increase in general and administration expenses, an increase in net finance expense and the cessation of both the income from associates and amortization of deferred gain following completion of the Transaction. 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 $0.7 million of the quarter over quarter increase. In Q4 2025 the advertising funds had a positive impact to net income before taxes of $0.6 million whereas in Q4 2024, the positive impact to net income before taxes attributable to the advertising funds was $2.4 million, resulting in a $1.8 million quarter over quarter variance in net income before taxes that is due to the timing of expenses incurred by the advertising funds.

Food Services reported net income per share of $0.71 ($0.71 per diluted share) in Q4 2025 versus 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. 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 a non-cash, non-recurring deferred tax expense of $16.9 million that was recognized upon completion of the Transaction.

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 that was undertaken as part of the Transaction.

Adjusted EBITDA⁽ⁱ⁾ increased by $1.4 million to $29.3 million ($27.9 million in 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.

Fiscal 2025 Results Compared to Fiscal 2024
Total revenue increased by $1.8 million to $294.1 million which was driven by the 2.8% increase in System Sales⁽ⁱ⁾ (0.8% for Fiscal 2024) which reflects an increase in the number of A&W restaurants and Fiscal 2025 Same Store Sales Growth⁽ⁱ⁾ of 1.2% that is attributable to an increase in the average cheque size. 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. 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 to revenue discussed above 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. 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.

Income before income taxes increased by $26.7 million largely as a result of the cessation of the royalty expense following the completion of the Transaction, an increase in revenue and a decrease in operating costs. These increases were partially offset by an inflationary increase in general and administration expenses, an unrealized loss on the interest rate swap, an increase in net finance expense and the cessation of both the income from associates and amortization of deferred gain following completion of the Transaction.

Food Services reported net income of $56.8 million in Fiscal 2025 compared to net income of $21.7 million in Fiscal 2024 due to the factors discussed above and an $8.4 million decrease in income tax expense. The income tax expense and effective tax rate for Fiscal 2024 were impacted by the $16.9 million in non-cash, non-recurring deferred tax expense that was recognized upon completion of the Transaction. The decrease was partially offset due to an increase in taxable income which is largely due to the cessation of the royalty expense following completion of the Transaction. The amortization of deferred gain and income from associates recognized in Fiscal 2024 were not taxable and therefore diluted the effective tax rate in Fiscal 2024.

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 that was undertaken as part of the Transaction.

Adjusted EBITDA⁽ⁱ⁾ increased by $6.6 million to $100.0 million ($93.5 million for Fiscal 2024). The increase in Adjusted EBITDA is primarily attributable to the increase in revenue and decrease in operating costs. Adjusted EBITDA Margin⁽ⁱ⁾ increased from 32.0% in Fiscal 2024 to 34.0% in Fisal 2025. See "Revenue" and "Operating costs".

Further details on A&W's Q4 2025 and Fiscal 2025 results are available in Food Services' Fiscal 2025 MD&A which can be found on Food Services' SEDAR+ profile at www.sedarplus.ca.

⁽ⁱ⁾ System Sales, Adjusted EBITDA, Adjusted EBITDA Margin and Same Store Sales Growth are non-IFRS financial measures, non-IFRS ratios and supplementary financial measures. Please see the "Non-IFRS Measures" section of this news release for further details.

2026 OUTLOOK
A summary of Food Services' outlook for Fiscal 2026, as well as how it performed against its Fiscal 2025 guidance, is provided below:

The Fiscal 2026 guidance incorporates the actual results from Fiscal 2025 and reflects challenging economic environment that Food Services is operating in. This environment is characterized by difficult economic conditions across Canada and an extremely competitive burger quick-service restaurant landscape. Specifically, the guidance accounts for the results seen to date in 2026 in Ontario, where approximately 30% of A&W restaurants are located. This region has been affected by severe weather, economic uncertainty stemming from ongoing trade friction with the United States, and a notable shift in demographic trends, including rising unemployment and near-zero population growth.

The purpose of the Fiscal 2026 guidance is to provide readers with an indication of management's expected and targeted financial results as of the date of this news release. The Fiscal 2026 guidance is being provided in light of the economic uncertainty described above, and replaces the Fiscal 2027 long-term targets prepared in connection with the Transaction. Readers are cautioned that using this information for other purposes may not be appropriate. The financial outlook is forward-looking and is based on certain assumptions and subject to a number of risks and uncertainties, including those identified under "Forward-Looking Information".

CONFERENCE CALL
A&W will hold a conference call to discuss its Q4 2025 and Fiscal 2025 results on Thursday, March 5, 2026 at 1:00 p.m. Pacific Time (4:00 p.m. Eastern Time).

The call will be webcast live and may be accessed at https://events.q4inc.com/attendee/267513559. Participants who wish to ask questions will need to register in advance of the conference call using the following link: https://events.q4inc.com/analyst/267513559?pwd=JDLZJd00.

For those unable to attend the live call, a replay will be made available for one year at https://events.q4inc.com/attendee/267513559.

DIVIDEND DECLARATION
Food Services' Board of Directors has declared a quarterly dividend of $0.480 per share. The dividend will be 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. Food Services remains committed to maintaining the current level of quarterly dividends for the foreseeable future.

NON-IFRS MEASURES
This news release makes references to certain non-IFRS measures. These measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Food Services believes that disclosing these non-IFRS measures provides readers of this news release with important information regarding Food Services' financial performance. By considering these measures in combination with IFRS measures, Food Services believes that readers are provided with additional and more useful information about Food Services than readers would have if they simply considered IFRS measures alone. We use non-IFRS financial measures including "System Sales", "EBITDA", and "Adjusted EBITDA"; the non-IFRS ratios of "System Sales Growth" and "Adjusted EBITDA Margin" and non-IFRS supplementary financial measures such as "Same Store Sales Growth".

These non-IFRS measures, ratios and supplementary financial measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We believe that securities analysts, investors and other interested parties frequently use non-IFRS measures and industry metrics in the evaluation of issuers. A&W's management also uses non-IFRS measures and industry metrics to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. The non-IFRS measures reported by Food Services do not have a standardized meaning prescribed by IFRS and Food Services' method of calculating these measures may differ from those of other issuers or companies and may not be comparable to similar measures used by other issuers or companies. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS.

Certain information, including definitions, about non-IFRS financial measures, non-IFRS ratios, and supplementary financial measures is found in Food Services' Fiscal 2025 MD&A and is incorporated by reference. This information is found in the sections entitled "How We Assess the Performance of our Business", "Non-IFRS Measures" and "Selected Financial Information" of Food Services' Fiscal 2025 MD&A which is available on Food Services' SEDAR+ profile at www.sedarplus.ca. Reconciliations for each non-IFRS financial measure can be found below.

(in thousands of Canadian Dollars)

FORWARD-LOOKING INFORMATION
Certain statements in this news release contain forward-looking information within the meaning of applicable securities laws in Canada. The words "anticipates", "believes", "budgets", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "schedule", "should", "will", "would", "outlook" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words.

The forward-looking information in this news release includes but is not limited to: the expectations that Food Services will continue to pay dividends at the current level; the timing of the dividend payable March 31, 2026; and Food Services' 2026 outlook.

The forward-looking information, including the 2026 outlook, is based on assumptions that management considered reasonable at the time it was prepared, which assumptions include, but are not limited to:

• no material impact to supply chain availability, cost of inputs or franchisee ability to operate because of actual or threatened tariffs;
• no material impact to consumer discretionary spending due to changes in economic conditions including economic recession or changes in the rate of inflation or deflation, employment rates and household debt, political uncertainty, interest rates, currency exchange rates, derivative and commodity prices or actual or threatened tariffs;
• the general risks that affect the restaurant industry will not arise;
• there are no changes in availability of experienced management and hourly employees;
• there are no material changes in government regulations concerning drive–thru restrictions, franchise legislation or sales taxes;
• no incidences of food borne illness;
• no material changes in competition;
• no material changes in the quick service restaurant burger market including as a result of changes in consumer taste or preferences or changes in economic conditions or unemployment, or a disease outbreak;
• no material increases in food and labour costs;
• the continued availability of quality ingredients;
• continued additional franchise sales and maintenance of franchise operations;
• Food Services' continued ability to grow same store sales;
• Food Services is able to maintain and grow the current system of franchises;
• Food Services is able to locate new retail sites in desirable locations;
• Food Services is able to obtain qualified operators to become A&W and Pret franchisees;
• A&W franchisees are able to successfully operate and grow their businesses, maintain profitability and consistently pay rent and other payments required under their leases and franchise agreement;
• no material number of closures of A&W restaurants;
• no material impact on sales from closures of "anchor" stores in shopping centres;
• no material declines in traffic patterns at shopping centres and other retail and urban nodes;
• no material closures to shopping centres or other retail nodes in which A&W operates;
• no supply disruptions;
• no material impact on sales from new or increased sales taxes;
• no material impact on sales from new or increased fees related to third-party delivery services;
• continued availability of key personnel;
• continued ability to preserve intellectual property;
• no material litigation from guests at A&W or Pret restaurants;
• Food Services will receive sufficient revenue in the future to maintain the payment of quarterly dividends;
• Food Services can continue to comply with its obligations under its credit arrangements;
• the projections for the A&W business provided by Food Services are accurate; and
• Food Services will be successful in executing on its business strategies and such strategies will achieve their intended results.

Inherent in forward-looking information are risks and uncertainties beyond management's or Food Services' ability to predict or control that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. The forward-looking information in this news release is subject to risks, uncertainties and other factors including, among others, the risks identified in Food Services' Fiscal 2025 MD&A and Food Services' annual information form for the period ended December 28, 2025, ("AIF") under the heading "Risk Factors". The Fiscal 2025 MD&A and AIF are both available on Food Services' SEDAR+ profile at www.sedarplus.ca. Additional risks and uncertainties not currently known to Food Services or that are currently not considered to be material also may impair Food Services' business.

All forward-looking information in this news release is qualified in its entirety by this cautionary statement and, except as required by law, Food Services undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date hereof.

INVESTOR COMMUNICATIONS
For important updates and information regarding A&W, including the timing of future earnings calls, visit A&W's investor relations website at www.awinvestors.ca. A&W uses this website as a primary channel for disclosing key information to its investors.

ABOUT FOOD SERVICES
A&W is a publicly traded company and is the second largest quick-service hamburger restaurant chain in Canada. Operating coast-to-coast, A&W restaurants feature famous trade-marked menu items such as The Burger Family®, Chubby Chicken® and A&W Root Beer®. A&W's shares are listed for trading on the Toronto Stock Exchange in Canada under the trading symbol "AW".

SOURCE A&W Food Services of Canada Inc.