Canada's A&W Food Services Q2 adj EBITDA falls on higher expenses

Overview

• Canada quick-service burger chain's fiscal Q2 revenue rose 3% year-over-year

• Adjusted EBITDA for fiscal Q2 fell due to higher general and administrative expenses

• Company opened 8 new A&W restaurants and first franchised Pret A Manger shop

Outlook

• A&W Food Services expects fiscal 2026 Adjusted EBITDA between C$103 mln and C$105 mln

• Company forecasts System Sales Growth of 2.5%-5.0% and Same Store Sales Growth of 0.5%-3.0% for fiscal 2026

• A&W Food Services expects to open three to four franchised Pret locations by end of fiscal 2026

Result Drivers

• MENU PROMOTION - Smash-style burger promotion drove higher guest counts and average cheque, supporting same store sales growth

• HIGHER ADMIN COSTS - General and administrative expenses rose due to the biennial A&W National Convention and higher employee compensation, impacting profitability

• CORPORATE RESTAURANT CLOSURES - Revenue from corporate restaurants declined due to temporary closures for modernization

Company press release: ID:nCNWYZpTBa

Key Details

Analyst Coverage

• The one available analyst rating on the shares is "hold"

• The average consensus recommendation for the restaurants & bars peer group is "buy."

• Wall Street's median 12-month price target for A&W Food Services of Canada Inc is C$40.00, about 10.2% above its July 22 closing price of C$36.29

• The stock recently traded at 15 times the next 12-month earnings vs. a P/E of 15 three months ago

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)