A&W Q2 2025 slides reveal accelerating growth, strategic expansion plans

Published 25/07/2025, 01:02
A&W Q2 2025 slides reveal accelerating growth, strategic expansion plans

Introduction & Market Context

A&W Food Services of Canada Inc. (TSX:AW) presented its Q2 2025 results on July 24, 2025, highlighting improved performance with system sales growth of 3.4% and same-store sales growth of 1.6%. The company, which became publicly traded on the Toronto Stock Exchange in October 2024, continues to maintain its position as Canada’s second-largest burger chain in a competitive quick-service restaurant (QSR) market.

The Canadian QSR market represents a $42.9 billion opportunity with approximately 5.8% year-over-year growth, while the burger segment specifically accounts for $13.0 billion with 2.6% year-over-year growth. A&W’s trailing four-quarter system sales reached $1.89 billion through Q2 2025, demonstrating the company’s significant market presence.

Quarterly Performance Highlights

A&W reported solid financial results for Q2 2025, showing improvements across key metrics compared to the same period last year. System sales increased to $452,291 in Q2 2025, up 3.4% from $437,309 in Q2 2024. Same-store sales growth accelerated to 1.6% in Q2 2025 compared to just 0.3% in Q2 2024.

As shown in the following quarterly financial highlights:

Total (EPA:TTEF) revenue reached $68,777 in Q2 2025, up from $64,321 in Q2 2024. Income before income taxes saw a significant jump to $17,198 in Q2 2025 from $10,553 in Q2 2024. Notably, adjusted EBITDA increased to $25,485 in Q2 2025 from $21,513 in Q2 2024, with adjusted EBITDA margin expanding to 37.1% from 33.4% in the prior year period.

For the first half of 2025, A&W’s year-to-date performance also showed positive momentum:

System sales for YTD 2025 reached $849,215, representing a 2.7% increase from $826,578 in YTD 2024. Same-store sales growth for the first half of 2025 was 1.1%, compared to 0.5% in the same period of 2024. However, free cash flow declined to $4,108 in YTD 2025 from $17,009 in YTD 2024.

Competitive Industry Position

A&W has established itself as a formidable competitor in the Canadian burger QSR market, maintaining the #2 position behind McDonald’s (NYSE:MCD). The company has demonstrated superior growth compared to its main competitors over the past decade.

The following chart illustrates A&W’s industry-leading position in the Canadian burger QSR market:

A&W added 19 new units in 2024 and 9 units in YTD Q2 2025, bringing its total to 1,082 franchised locations, 10 corporate restaurants, and one Pret A Manger location. This represents a net addition of 237 units from 2014 to 2024, reflecting an average annual net restaurant growth of 2.1% during this period.

A&W’s growth metrics outperform major competitors in the Canadian market as shown in this comparative analysis:

From 2015 to 2024, A&W achieved an average annual system sales growth of 7.8% and same-store sales growth of 5.1%, surpassing McDonald’s, Burger King, and Wendy’s (NASDAQ:WEN) in these key metrics.

Strategic Initiatives

A&W outlined several strategic initiatives aimed at driving continued growth and enhancing profitability. The company is pursuing a two-pronged approach focused on new restaurant growth and same-store sales growth.

The growth strategy is illustrated in the following slide:

For new restaurant growth, A&W is leveraging its partnership with Petro-Canada (Suncor) and expanding its Pret A Manger concept. The company also launched A&W Rewards on April 22, 2025, to enhance customer loyalty and drive same-store sales growth.

A&W’s partnership with Petro-Canada has been a significant driver of expansion:

This strategic relationship has evolved since 1997 and is expected to yield 90+ new restaurant openings between 2024-2027, with 10 new locations already opened in 2024 and 4 in YTD 2025.

The company has identified substantial growth potential across Canada, particularly in Ontario and Quebec:

Compared to McDonald’s, A&W has 416 fewer locations across Canada, with the largest gaps in Ontario (197 fewer) and Quebec (145 fewer), representing significant whitespace opportunity for expansion.

Forward-Looking Statements

A&W provided a positive outlook for 2025, projecting continued growth across key metrics:

The company expects annual same-store sales growth of 0.0% to 3.0%, with total A&W restaurant units reaching 1,085 to 1,100 by year-end. Annual system sales growth is projected at 1.5% to 4.5%, with adjusted EBITDA forecasted between $96 million and $101 million.

Beyond 2025, A&W is targeting a 30% improvement in restaurant-level profitability for franchisees from 2023 to 2028, with 5% already achieved in 2024. The company is also working to reduce the cost of new freestanding restaurants by $500,000 through redesign, with the first such location to be built in 2025.

Capital Allocation Strategy

A&W outlined a balanced approach to capital allocation, focusing on three key priorities:

The company aims to maintain balance sheet strength with a prudent capital structure, currently reporting a net debt to adjusted EBITDA ratio of 2.5x. A&W is committed to providing an attractive dividend, currently set at $1.92 per share annually, representing an implied dividend yield of 5.25%. Additionally, the company plans to invest in high-growth opportunities to maintain its market-leading position.

A&W’s 20-year track record of growth demonstrates the effectiveness of its long-term strategy:

System sales have grown from $0.56 billion in 2005 to $1.89 billion in Q2 2025, positioning A&W for continued success in the competitive Canadian QSR market.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.