GOOD FOOD MAKES GREAT RESULTS

A&W REVENUE ROYALTIES INCOME FUND

APRIL 2019

Don Leslie, Chief Financial Officer

 Forward Looking Information
• Certain statements in this presentation may be forward-looking in nature. These include (but
are not limited to): references to liquidity, earnings and anticipated earnings from growth in
same store sales and new restaurant openings. Actual results may differ from those
expressed or implied in these forward-looking statements.

• The “forward-looking” statements contained in this presentation are subject to a number of

risk factors, including the ability of A&W Food Services of Canada Inc. (Food Services) to
implement its strategies regarding the marketing of the A&W system, and the opening of new
A&W restaurants, general economic and business conditions, financial and political instability,
and other factors disclosed previously and from time to time in the Fund’s public filings. Any
forward-looking statements in this presentation should be evaluated in light of these
important factors.

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 Our Time Together

• Overview/Introduction
• Strategy
• Climate
• Results

3
 Canada’s Fifth Largest Restaurant Brand

960+ restaurants Coast to Coast

4
Signature Products

5
Over 535 Freestanding Restaurants

Cornwall, ON
6
Over 135 Convenience Locations

Exeter, ON
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#1 Burger Restaurant in Malls

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70+ Urban Locations

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#1 Root Beer

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 A&W – Strong #2 Burger Chain

$4,500 $5,000

$1,163$1,239
(Not to
Scale)
$632 $635
$373 $372 $296 $318

McDonald's A&W Wendy's Burger King Harvey's

2016 and 2017 Canadian Burger Industry Sales Results

Source: Canadian Foodservice and Hospitality magazine (June 2018)

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 A&W Strengths

• Leadership Experience
– (22+ years average experience)
• Strategy
– (A unique strength – 40+ years)
• Climate

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 2017 and 2018 Highlights

• Same Store Sales

– 2018 +9.8%
– 2017 +2.0%
• 2018 Royalty growth +14.7%
• 46 New restaurants (less 8 closures) added to the
Royalty Pool on January 5, 2019 (35 net in 2018)
 Same Store Sales Trend
9.8%
10.0%
7.4% 7.3% 7.6%
8.0%
6.3%
6.0% 5.0%
3.9% 3.7%
4.0% 3.4%
1.8% 2.2% 2.0%
2.0% 1.5%
0.0% 0.4%
0.0%
-0.7%
-2.0%
Strategy Update
 Mission

To be loved for our natural ingredients,

great taste, convenience, and for doing
what’s right, making A&W the #1 choice for
millennial burger lovers.
 Strategic Thrusts
1 Harnessing the power of natural ingredients
2 Dramatically improve operating standards
3 Capture guest visits and grow restaurant profit
4 Become more and more convenient
5 Strengthen and extend our Climate
6 Be most loved
 1 Harnessing the power of natural ingredients
Position A&W even more strongly as the leader in natural food.

• Sharpen and deepen our positioning around food with no “no-

no’s”
• Dominate on taste and grow burger share
• Be rated first for natural, “eat well”, and cares to make food right

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Continuity

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Our Ingredient Guarantees
Innovation
22
 2 Dramatically improve operating standards

• Deliver a consistently excellent guest experience on every

visit, in every restaurant, every time

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 3 Capture guest visits and grow restaurant profit

• Deliver on our guest experience promise

• Innovate to win new visits
• Build new capability at building profit through
menu, pricing, and efficient operations
• Improve our skills and results in managing labour
and cost of sales

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 4 Become more and more convenient

• Open 245 new restaurants, bringing A&W closer to more

Canadians and creating excitement and awareness
• Create a strong new pick-up and go and delivery business

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Heron, Ottawa, Ontario
John & Mercer, Toronto, Ontario
 5 Strengthen and extend our Climate

• Demonstrate doing what’s right, starting with doing what’s

right for our staff
• Build a powerful connection of trust with our guests
• Harness the energy and passion of our partners to create
success in so many new ways to achieve the targets in this
Strategy

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 6 Be most loved

• Fully engage employees in achieving the Mission:

proud to work at A&W
• “Share our soul” because it matters to our guests
• Be the most trusted QSR brand, doing what’s right
for our guests, our environment, and one another

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 Strategic Thrusts
1 Harnessing the power of natural ingredients
2 Dramatically improve operating standards
3 Capture guest visits and grow restaurant profit
4 Become more and more convenient
5 Strengthen and extend our Climate
6 Be most loved
Mission
 Top-Line Income Fund Structure

• Royalties are based on sales reported by restaurants in the

Royalty Pool
• Investors are not subject to variability of earnings or expenses
associated with an operating business

Sales of Less Fund Distributions

Royalty
Royalty Pool 3% expenses to
Income and taxes
Unitholders
Restaurants

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Fund Revenue, Expenses and Distributable Cash

$k 2017 2018

SSSG 2.0% 9.8%

Gross Sales 1,188,818 1,362,996
Royalty Income 35,665 40,890
Admin. Expense 654 713
Interest 2,583 2,568
Current tax 5,985 6,346
Distributable Cash 26,279 31,262

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Fund Taxes, Distributions, Surplus Cash

$k 2017 2018

Distributable Cash 26,279 31,262

Refundable tax 371 1,284
Dist. to Unitholders 19,968 20,933
Dividends to Food Services 5,736 7,316
Surplus 946 4,297
Surplus – beg of period 2,417 3,363
Surplus – end of period 3,363 7,660

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 Distribution Increases
• Distribution rate increased 2.3% during 2017
– Total distributions in 2017 were $1.605 which was a 3.0%
increase over 2016 distributions
• Distribution rate increased three times for a total of
5.1% during 2018
– Annual distribution rate at the end of 2018 $1.716
• Total distributions in 2018 were $1.674
– A 4.3% increase over 2017 distributions
 Annual Payout Ratio

98.8%
100.0% 97.8%

98.0% 96.6%

96.0%
94.0% 92.4%

92.0% 90.3%

90.0%
88.0%
86.0%
2014 2015 2016 2017 2018

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 Royalty Pool Sales
1,363
$1,400
1,189
$1,200 1,138
1,061
957
$1,000 856
777 794 823
$800 710 736
(millions)

599 639
$600 456 494 539
438
$400
$200
$0
 Number of Restaurants in Royalty Pool
934
950
896
900 861
838
850 814
790
800 760
737
750 700 715
676 685
700 660
638 654
650 604 620
585
600
550
500
 Average Unit Trading Price
$40.00 35.36
36.97
33.33
$35.00 32.33

$30.00 27.67
23.75
$25.00 21.4621.83
20.27
$20.00 18.07
14.7813.62
$15.00 13.24 13.1313.84
11.3810.3011.82
$10.00
$5.00
$0.00
 Comparison of Total Unitholders’ Return
$1,250 $1,217

$1,000
$750
$500
$250
$328
$0

A&W Revenue Royalties Income Fund S&P/TSX total Return Composite Index
Assumes an investment of $100 on February 15, 2002 and reinvestment of distributions through 2018