07:50 AM EDT, 10/15/2024 (MT Newswires) -- A&W Revenue Royalties Income Fund (AW-UN.TO) and A&W Food Services of Canada Inc. earlier Tuesday reported a modest increase in royalty income in the third quarter versus a year earlier due to the addition of new restaurants, even as sales were modestly lower.

It said royalty income for the third quarter of 2024 was $13,742,000 based on gross sales reported by restaurants in the Royalty Pool of $458,078,000, compared to royalty income of $13,705,000 and gross sales reported by A&W restaurants in the Royalty Pool of $456,842,000 for the third quarter of 2023. It added the increase in royalty income was driven by the 10 net new restaurants added to the Royalty Pool on January 5, 2024.

According to a statement, the drop in Royalty Pool same store sales Growth of 1.0% for the third quarter and nil year to date primarily results from a decrease in guest counts partially offset by an increase in average check size due in part to industry-wide inflation on goods, services, and labour. It said the decrease in guest counts reflects A&W's proportionate share of an overall decline in traffic at burger quick service restaurants across Canada. It added: "Food Services believes the decline in traffic at A&W restaurants and burger QSR more generally is attributable to increased interest rates and inflation, along with market uncertainty, which have impacted consumer discretionary spending. In response to these economic conditions, Food Services continues to seek new and innovative ways to offer A&W's guests a delicious and affordable experience and in turn increase guest traffic."

Susan Senecal, President and CEO of A&W Food Services, noted 19 new A&W restaurants opened in the first three quarters of 2024 and 20 additional restaurants were under construction at the end of the quarter. She said" "The number of A&W restaurants opened in the first three quarters of 2024 puts Food Services on track to exceed the annual number of new restaurants opened in the years since the onset of the COVID-19 pandemic, which disrupted businesses across Canada and slowed down the pace of A&W's expansion".

The Fund and Food Services entered into a combination agreement on July 21, 2024 pursuant to which Food Services will be amalgamated with certain holding companies to form a new publicly-traded company and will acquire all of the Fund's Trust Units for consideration of cash, common shares of A&W Food Services NewCo, or a combination of both. On October 8, 2024 , the Fund's unitholders approved the transaction and then On October 11, 2024 , the Ontario Superior Court of Justice (Commercial List) issued a final order approving the transaction, which will be effective on October 17, 2024 , subject to the satisfaction or waiver of certain customary closing conditions.

A&W was up 0.17 at $36.50 on Friday, leaving it just shy of 52 week highs.