SIR units plunge after trust lowers payouts due to lower restaurant sales

TORONTO — SIR Royalty Income Fund units fell to a multi-year low Wednesday after it warned that investor payouts will drop 16.7 per cent to reflect lower food and drink sales at its restaurants, which include the Jack Astors chain.

SIR said same-store sales for its operating company’s fourth quarter, which ended Aug. 25, were down 5.9 per cent and didn’t improve during the first four weeks of its 2020 financial year.

As a result, the trust will lower the monthly cash distributions to be paid on SIR Royalty units by 1.75 cents to 8.75 cents per unit, starting in November, down from 10.5 cents per unit.

Analyst Elizabeth Johnston, who covers several of Canada’s publicly listed restaurant companies for Laurentian Bank Securities, said the distribution cut reverses increases SIR announced in 2018.

“We view this reduction as indicative not only that near term (same-store sales growth) will decline, but that the next several quarters are also likely to be under pressure,” Johnston said in a note.

“We will be looking for additional colour from management regarding the SSSG outlook post-Q3/19 results (which we expect mid-November).”

The fund said management at SIR Corp., the private company that operates the business, believes Ontario’s full-service restaurant industry is being affected by higher menu pricing as well as competition from meal delivery services.

“We continue to focus our strategic efforts on capturing a greater share of the market,” Peter Fowler, CEO of SIR Corp., said in a statement.

“We are currently concentrating our efforts on new and healthier food options, improving everyday value, promotional pricing on food and beverage offerings in non-peak periods, and increasing our share in the delivery segment.”

Most of SIR’s restaurants are in Ontario, with the larger chains operating under the Jack Astors, Scaddabush and Canyon Creek banners. It also has the Loose Moose in downtown Toronto near the Scotiabank Arena and three Toronto-area restaurants under variations of the Reds banner.

In total, there are just under 600 restaurants in the royalty pool that feeds SIR Royalty’s distributions to unit-holders. Jack Astors accounts for about 75 per cent of system sales generated by the pool’s restaurants,

The income trust’s units fell 21 per cent Wednesday, dropping $2.89 to $10.87 — their lowest close since March 2012.

Laurentian Bank Securities said it continues to rate SIR Royalty units as a hold but reduced their target price to $11.50 from $14.75.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

(Red Deer Advocate file photo)
Sentencing delayed in the stabbing death of Samantha Sharpe, of Sunchild First Nation. (Red Deer Advocate file photo)
Red Deerians woke up to snow Tuesday. This snowplow was working its way up 32nd Street. Plows and sanders were tackling hills, bridges and arterial routes first. Advocate staff photo
City of Red Deer plows moving to grey routes Friday

Residents do not need to move vehicles

Alert logo
Camrose man arrested on child porn charges

A 20-year-old from Camrose man is facing charges for allegedly distributing child… Continue reading

Public Services and Procurement Minister Anita Anand and Major General Dany Fortin look on as Prime Minister Justin Trudeau responds to a question during a news conference in Ottawa, Monday, Dec. 7, 2020. THE CANADIAN PRESS/Adrian Wyld
Pfizer-BioNTech cutting back vaccine deliveries to Canada due to production issues

OTTAWA — Procurement Minister Anita Anand says production issues in Europe will… Continue reading

A stainless steel monolith is set up along the eastern slopes of the Rocky Mountains in Alberta, in a Jan. 15, 2021 story. (Photo by THE CANADIAN PRESS)
Alberta monolith comes with message to save eastern slopes of Rocky Mountains

Installed it with the help of volunteers after getting permission from private landowners

Lesser Slave Lake UCP MLA Pat Rehn. (Facebook)
Updated: Jason Kenney kicks Lesser Slave Lake MLA out of caucus

Pat Rehn will not be permitted to run for UCP nominations

Prime Minister Justin Trudeau listens to a question during a news conference outside Rideau cottage in Ottawa, Friday, January 8, 2021. THE CANADIAN PRESS/Adrian Wyld
Trudeau says Canada’s COVID vaccine plan on track despite Pfizer cutting back deliveries

Canadian officials says it will still likely receive four million doses by the end of March

Coal mining a concern

Thank you for the Canadian Press article in the Advocate on Jan.… Continue reading

In this photo taken from a video distributed by Russian Defense Ministry Press Service, on Wednesday, Dec. 9, 2020, A Russian Tu-160 strategic bomber fires a cruise missile at test targets, during a military drills, Russia. The Russian military has conducted sweeping drills of its strategic nuclear forces that featured several practice missile launches. (Russian Defense Ministry Press Service via AP)
Russia follows US to withdraw from Open Skies Treaty

U.S. completed its withdrawal from the pact in November

FILE - In this July 26, 2019, file photo, China’s Sun Yang leaves the pool deck following the men’s 4x200m freestyle relay heats at the World Swimming Championships in Gwangju, South Korea. The World Anti-Doping Agency says a Swiss court has overturned an eight-year doping ban against Chinese swimmer Sun Yang and ordered the case back to the Court of Arbitration for Sport for a second time but with a different chairman of the judges. (AP Photo/Mark Schiefelbein, File)
Swiss supreme court details anti-China bias of Sun judge

Hostile social media posts by Court of Arbitration for Sport judge Franco Frattini

FILE - In this Saturday, March 7, 2020, file photo, Minnesota Wild defenseman Matt Dumba passes the puck during the first period of an NHL hockey game against the Los Angeles Kings in Los Angeles. Bonding between veterans and youngsters has been a time-honored tradition in hockey. But in yet another setback related to the relentless COVID-19, NHL protocols aiming to curb the virus spread and keep the schedule on track could make that vital off-ice development of camaraderie more difficult. (AP Photo/Mark J. Terrill, File)
Mentors wanted: Virus limits vet-rookie time away from rink

Bonding between veterans and youngsters has been a time-honoured tradition

FILE - In this Jan. 30, 2020 file photo, NFL Super Bowl 54 football game halftime performer Jennifer Lopez answers questions at a news conference in Miami. Lopez will give a musical performance on the West Front of the U.S. Capitol when Biden is sworn in as the nation’s 46th president next Wednesday. (AP Photo/David J. Phillip)
Stars return to inauguration, with J.Lo, Gaga set to perform

Foo Fighters, John Legend and Bruce Springsteen will offer remote performances

An example of a child’s artwork during the COVID-19 pandemic is shown in a handout. Many of the children’s drawings show people alone, haunted by shadowy spectres, or worse, their own thoughts.The researcher behind the project says the virtual gallery of illustrations by Canadian kids and teenagers showcases a wide variety of visions of the pandemic. THE CANADIAN PRESS/
‘This is too much’: Art shows children’s struggles during pandemic, says researcher

Recurring themes include confined figures, screaming faces and gory imagery

Bentley Blessing Pantry continues to faithfully serve the community

‘We just wanted to make everyone aware that we are still here to serve you throughout this coming year.’

Most Read