Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the MTY Food Group Inc. Q4 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode, and following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has difficulties hearing the conference, please press star followed by zero for operator assistance at any time. Before turning the meeting over to management, please be advised that this conference call will contain statements that are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. I'd like to remind everyone that this conference call is being recorded on Thursday, February 18th, 2021. I'd now like to turn the call over to Eric Lefebvre, Chief Executive Officer. Please go ahead. Good morning, everyone, and thank you for joining me for MTY's 2020 Fourth Quarter Conference Call. The press release in the MD&A with complete financial statements and related notes were issued earlier this morning and are available on our website as well as on SEDAR. [Foreign language] Please be aware that we will refer to certain indicators that are non-IFRS measures. You can refer to our MD&A for more details. I also remind you that all figures presented on today's call are in Canadian dollars unless otherwise stated. Before I begin, I would like to take a moment to thank all our customers who continue to support our restaurants despite the heavy restrictions and limitations imposed by some local authorities. Please continue to support our restaurants. Our industry needs every bit of support it can get. I would also like to thank our franchise partners and their staff for being there every day, facing hardship and doing everything they can to make a living despite the massive headwinds they're facing. As the impact of the pandemic persists, I remain impressed by the tremendous work, resilience, and dedication of our restaurant and head office staff. I sincerely want to thank them all for their commitment to our common success. First, allow me to start with a quick summary of our results. Looking back at the past year, 2020 was unquestionably marked by many challenges and uncertainties, which forced us to react very quickly and adapt to volatile market conditions. We're extremely proud of the resilience of our business model, which in the past year has proven robust facing unprecedented adversity. At some point during the last year, there seemed to be some panic externally about the future of MTY. This is in stark contrast with what we saw internally, which is determination, passion, and creativity. While our network was severely impacted, we still managed to generate record levels of cash flows from operations and free cash flows. As you know, in light of the unique circumstances, our board of directors determined in March that it was best for us to be prudent during such an unpredictable environment and to focus our capital allocation priorities on reducing debt, which is why we repaid an impressive CAD 109 million, of which over CAD 100 million were repaid after the beginning of the pandemic. As you know, the results of the past year reflect our quick response to changing conditions and stringent control over expenses and working capital. Our ability to adapt in the face of ambiguity was also showcased in the rapid adjustment of our marketing strategies and the shift of our sales channels towards online ordering. To this end, we invested significant time and resources in enhancing our online ordering offer to customers, removing friction, and enhancing the customer experience, and we expanded our third-party delivery partnerships with major and local players. Consequently, our digital sales increased significantly, reaching 25% of total U.S. system sales and 18% of Canadian system sales during the fourth quarter. Turning to an overview of our network, we finished the fourth quarter with 7,001 locations. We opened 39 locations and permanently closed 161 locations for a net store loss of 122. While the number of closures remains relatively stable, the number of openings is less than half of the previous year's level. This is explained in large part by the economic uncertainty created by the pandemic, which causes franchisees and banks to be more cautious until the restrictions recede and business goes back to normal. Our pipeline of franchisees remains very healthy, and we have no doubt that a normal level of restaurant openings will come back in the future. During the quarter, more than 30,000 business days were lost, and many of our restaurants are operated in a limited capacity. At the beginning of Q4, 364 restaurants were temporarily closed, while 338, or approximately 5% of the network, remained so at the end of the quarter. A new wave of restrictions in Quebec and Ontario hit our restaurants following the end of the year that led to additional temporary closures. As of today, there are 408 temporarily closed locations. System sales for the quarter reached CAD 891.4 million, down 13% compared to the fourth quarter of 2019. Following a promising month of September in Canada, which showed sequential improvement compared to June, July, and August, a new wave of restrictions was imposed on dining rooms and food courts in October that significantly impacted our business in Quebec and Ontario for the last two months of the quarter. In the U.S., our network continued its recovery with increases in sales in all three months during the quarter, fueled by the strong performances of Cold Stone Creamery and Papa Murphy's, which produced a combined CAD 49.9 million in organic growth in sales. This performance was realized despite the very heavy restrictions imposed by California that had devastating impacts on some of our brands in the area. Given the solid performance of U.S. operations, system sales for the market now represent 61% of total sales, compared to 49% in 2019. Canada and international now represent 35% and 4% of system sales respectively. For the evolution of our network, everyone now understands the impact that the pandemic had on some location types. For example, in Canada, our mall and office tower sales were down 51% and 85% respectively during the quarter. Our street locations fared better, with the exception of our casual dining restaurants, which had to operate without their dining rooms in most of the country. Similar trends affect our U.S. sales, although to a much lesser extent, since malls and office towers only represent 3% of sales for that market. As we speak today, we are seeing some restrictions being lifted in some of the markets in which we operate, and there is hope that we will see further relaxation during the second quarter of our fiscal year. We remain subject to health authorities' decisions affecting our restaurants, but we're hopeful that we will see gradual return to normal in 2021, and that our franchise partners can operate their businesses the way they had envisioned when they made the decision to invest in a restaurant. I will now turn it over to Renée, who will discuss MTY's financial results. Thank you, Eric. Good morning, everyone. Before I comment on the results, I would like to remind you that in our first quarter, we implemented the new IFRS 16 accounting standard related to leases. We opted not to restate comparative figures as permitted under the standard's specific transitional provisions. You'll find a more detailed description of the impact of the new standard in our financial statements and MD&A. I invite you to read them carefully as they have a material impact on how the business is presented. Revenues for the quarter were down 19%, from CAD 166.8 million -CAD 127.2 million, due primarily to the pandemic. The decrease mostly came from our recurring revenue streams, which are closely related to our system sales, which decreased by 13%. With just under 50% of total system sales, Papa Murphy's and Cold Stone Creamery continued to be very strong and, as Eric indicated, contributed CAD 49.9 million to organic growth in the fourth quarter. In addition, retail operations continued to benefit from higher consumer spending in grocery stores, new SKUs, and the expansion into new provinces. At the end of 2020, we had 147 branded products for sale in the Canadian markets, compared to 102 in 2019. This translates in sales growth of 11% year-over-year. The growth in our retail sector, however, was offset by a reduction in sales in our food processing and distribution centers, which were impacted by the decrease in sales of the restaurants they support. Fourth quarter adjusted EBITDA was CAD 35.2 million compared to CAD 43 million for the same period last year. The decrease in adjusted EBITDA is attributable to Canada, while the U.S. and international segments posted a 12.4% increase year-over-year. This is an exceptional performance given the current circumstances. Canada's fourth quarter EBITDA decreased by CAD 10.1 million, mostly explained by the decrease in revenues due to the pandemic. This was offset by a reduction in cost, which reflects aggressive cost curtailment measures put in place to mitigate lower revenue. To put things in perspective, we succeeded in reducing recurring controllable expenses by CAD 2.1 million, most of which was due to reductions in wages. MTY continues to also benefit from the Canada Emergency Wage and Rent Subsidy. For the quarter, this represented CAD 1.6 million. Excluding the impact of IFRS 16, adjusted EBITDA would have been CAD 32.3 million. Net income attributable to shareholders was CAD 20.1 million, or CAD 0.81 per share for the fourth quarter of 2020, compared to net income of CAD 20.7 million, or CAD 0.83 per share for the same period in previous year. Net income remained relatively stable due to reduced operating expenditures, coupled with a contribution of the U.S. and international segments, as indicated previously. As for our liquidity and capital resources, in the fourth quarter, MTY generated cash flows from operating activities of CAD 44.8 million, up 18%, compared to CAD 37.9 million for the same period last year. The increase was driven by the positive variance in income taxes paid and strict capital management to preserve liquidity. For the same period, free cash flows increased 1% to CAD 43.9 million, or CAD 1.78 per share on a fully diluted share basis, compared to CAD 1.74 per diluted share in the fourth quarter of last year. For the year, our free cash flows reached CAD 5.68 per diluted share, compared to CAD 4.64 in 2019. As mentioned by Eric, with our focus on repaying debts, we used our cash generated during the quarter to reduce our long-term debts by paying CAD 37.6 million, ending the quarter with CAD 460.5 million of long-term debt. We also continue to remain well within our credit agreement ratios. Even with these debt repayments, we continue to have a healthy financial position with CAD 44.3 million in cash at the end of the year and over CAD 260 million available in our credit facilities. We'll continue to repay debt where possible over the coming quarters, and we'll continue to evaluate our liquidity and where to best utilize them. Now, I'll turn it back to Eric for the conclusion. Thank you. As Renée just mentioned, owing to the decisions we made in 2020, we enter 2021 in a strong financial position. We will continue to be prudent for the next few months, we'll prioritize debt repayments over other capital allocation strategies until the skies clear up. Our priority is and always will be to protect MTY against shocks such as the one we are going through. As such, we choose a conservative approach. Our balance sheet is improving. As we continue to build our treasure chest, we remain on the lookout for attractive M&A opportunities that may emerge. Acquisitions are part of our DNA, we will be patient and do everything we can to make sure we choose the right businesses to successfully continue growing MTY in the future. We've always been very disciplined in the choice of our targets and in the prices we pay, and this will still be the case post-pandemic. In upcoming quarters, our road to recovery remains closely tied to the lifting of COVID-19 restrictions. We spent the last year adapting our operations, marketing strategy, and sales channels to a new and evolving business environment. I can proudly state that in many ways, MTY is stronger now than it was before to face the future. Finally, I would like to sincerely thank our employees, customers, and suppliers for their support during the past years. With that, I thank you for your time, and we will now open the lines for questions. Operator? At this time, I would like to invite everyone, in order to ask a question to please press star followed by the number one on your telephone keypad. I will pause just a moment while we compile the Q&A roster. Our first question comes from the line of John Zamparo with CIBC. Go ahead, please. Your line is open. Thanks. Good morning. Eric, what can you say about franchisee health at the moment, in particular access to government assistance programs in the U.S. and Canada? I know it's a broad subject and it's different by franchisee and by banner, but maybe the way we can frame it, how are you feeling about franchisee health versus last quarter? Well, if I compare to last quarter, we're pretty much at the same place we were. It would be better if everything was opened. I'm looking specifically at California, where the new wave of CARES Act hasn't necessarily materialized the way it should have been. This is probably where our franchisees are the most vulnerable at the moment. They need customers, and they need to be able to use their real estate the way it's intended to. They need to be able to use the assets that they invested in to serve customers. I would say in general, in the U.S., it's very good if I look at our main brands, but obviously there are pockets where it's a little bit more fragile. In Canada, the government assistance has been really good for our business, and even though it certainly doesn't make up for all of our losses, it does compensate to a large extent. We have help in terms of wages, we have help in terms of our rent. In certain provinces, we have more help in terms of our other fixed costs. It's really a blessing that we have all this help to help us weather that storm. On top of that, we have suppliers and landlords, and other stakeholders that are being patient, that are making concessions as well. I would say in general, the health hasn't necessarily changed that much versus last quarter. Obviously the longer this lasts, the more difficult it's going to become. We need to see an opening at some point. Okay. Understood. On the digital sales front, appreciate the added disclosure here. Presumably Papa Murphy's is a meaningful driver, but are there any other brands you can call out as meaningful contributors to that? What can you say about digital sales from internal apps versus third-party providers? Yeah. Well, we have many brands that are doing a great job with digital sales. Some of them, we had made investments in that channel before the pandemic hit, and it really paid off. I'm looking at Papa Murphy's is certainly one of them, where we do have a large proportion of our sales that are going through that channel. We do have a lot of sales for Cold Stone, for example, that are going from online ordering. Yuzu Sushi in Canada is doing fantastic with online ordering. Those are brands that had stabilized their platforms and finalized all the testing and done everything before the pandemic hit. Since the pandemic began, we did push quite hard on online ordering, to make sure that the takeout option was really good and remove a lot of little hurdles that our customers were facing. That part of our digital environment is growing a lot faster than the third-party environment where we do have some products that deliver really well, and we do have some really good partners to deliver and to work with Uber and DoorDash and Postmates and SkipTheDishes and there's a bunch of them. Grubhub is one. We're dealing with everyone, and they're good partners, but they don't service all of the areas where we operate, especially where we're outside of the major urban centers. Those options are not necessarily available through our network. We need to focus really on our own internal solution for takeout orders. This is also a much better profitability and economic model for the franchisees when we use that online ordering channel with our own infrastructure. We're pushing hard on that. We have more investments that are being made now. We are limited with some brands. We are still pushing really hard to maximize that. This is something that will keep increasing going forward. We need to continue to invest and make sure that we are where our customers expect us to be. Okay, that's helpful. Thanks. Just one more from me. You enacted some pretty meaningful cost cuts in 2020. As system sales recover in 2021, can you give us a sense of what percent of those cost cuts are sustainable versus what should we expect to ramp back up as system sales do increase? Thanks. Yeah. What we have in Q4 is a maturity level. It is not going to get higher than Q4. For at least the controllable part. Got it. Okay, that's helpful. I'll pass it on. Thank you. Our next question comes from the line of Nick Corcoran with Acumen. Go ahead, please. Your line is open. Morning, and thanks for taking my questions. Morning. Just on the EBITDA margins, can you maybe give a little bit of color of what the sequential decline was and how much of that was maybe cost being layered back into the business? Well, yeah, our margins are lower than in Q3, and in Q3 I had warned people that our margins were abnormally high, especially in the U.S. We did layer costs back in. We did invest a little bit, like I said, in resources and time in our online and ordering channels and in a certain number of places in the business. I would not necessarily look at Q3 as normality. I think Q4 is probably back to where we've been historically. In terms of where we're going, as revenues increase, obviously our cost base is going to stay more or less where it is. There are going to be some increases in some aspects if the sales really ramp back up, but nothing major. Our margins will increase with revenues going forward. Then maybe switching gears to M&A, what have you seen in terms of the pipeline there and the multiples? Are they at an attractive level or have they remained high? Yeah. We're competing with multiple different players for M&A, including the IPO market, which has been really hot in the last few months. There's a lot of capital out there. There are going to be opportunities. Right now the market is pretty quiet, but there are going to be opportunities down the road, and I'm not sure exactly what price is going to be, but I think, a little bit like I was saying before the pandemic, if we hunt for the bigger assets, I think that the multiples will go way up, just because there's so much capital out there for the private equities. If we stay where MTY has always been the most successful with the medium-sized acquisitions, I think there are going to be some good opportunities that will come in the next few years. Just the last question from me, any expectation on what you expect to receive in either CEWS or CERS or any other government subsidies in Q1? I'm sorry, can you repeat the question, Nick? Yeah. What do you expect in terms of government subsidies in Q1? The government subsidies are, in the U.S., we're gonna get none. In Canada, there is a little bit of rent subsidy. It's really not material. In terms of wages, it's more or less what we're seeing in Q4. As the business recovers, we're seeing less subsidies coming our way. I expect the subsidies will reduce all the way to zero by the end of the period where we're allowed. It's not going to be material amounts for Q1 and forward. Great. That's all for me. Thanks. Our next question comes from the line of Sabahat Khan from RBC Capital Markets. Go ahead, please. Your line is open. All right. Thanks, and good morning. Just a question, I guess, on some of the variation you talked about in terms of sales based on where the stores are located, street level versus mall. Some of the, I guess, franchisees you have in malls or in office towers that are seeing significant declines. Do you expect there might be a bit of a recycling of franchisees or do you think some of those folks do survive and kind of makes the transition easier? Just how are you thinking about that over the long term some of those folks that are seeing these 50%-80% declines, what does that mean for your network going forward? Yeah. Well, they're the ones that are suffering the most at the moment. There's no question. If you look at Q1, it's not much better where malls were closed for a lot of our territories. Not only did they not have tables and chairs, but they didn't have a business to operate at all. Landlords are understanding, so we're talking to our landlords, and we have a good relationship with them. We're trying to obtain concessions for our franchisees. The government is still helping where the closures are mandated by the government in Canada. We have the extra kicker that we can claim from the government. All in all, I think for the vast majority of our franchisees, they're gonna be able to cover the fixed costs. It's a tough situation for them. They fight and they want to survive. Eventually we'll need to see some reopening, and we'll need to see some form of normalcy come back. It's a year now that we're into that pandemic, and definitely the malls and office towers have suffered the most. We need to see some light at the end of the tunnel at some point. All right. Thanks. Then if we look at the pipeline of new franchisees that you're talking about, should we assume that is more focused on maybe the areas that are doing better, maybe the U.S. and street front-type banners, or is it mixed by or across your network by geography and banner? Yeah. Well, we don't have many for malls just because they're not building new malls, and we are already in most of the malls, so the pipeline of franchisees for malls and office towers is limited for that reason, not because the model is not attractive. I think malls, when we go back to normal, will still be a great place to do business. We were going to have more success in the malls going forward and we're happy with that, but the pipeline is not there, so it's mostly street. Where we see the pipeline is really healthy in general, we're seeing a little bit more action into converting the pipeline into actual stores where concepts have proven to be pandemic-proof. We're seeing Cold Stone open, we're seeing Yuzu open, we're seeing our sushi brands have been successful during the pandemic. We're seeing more of those open than maybe some of the other brands where we need to wait a little bit to go back to normal before the businesses are going full stride again. The pipeline is good for many of our brands, but the conversion into actual stores is very different from one brand to the next. Okay, just last one from me on the digital side. I guess, sounds like you're doing a lot more partnerships with some of the third-party aggregators. Do you see that as a path forward until you have some more clarity on the operating environment, or have you identified maybe opportunities for banners where maybe you didn't think a digital strategy made sense and now you may invest behind it? Yeah, I think, definitely where we saw digital being maybe a marginal addition to sales and a complication to operations in some brands, now we're seeing it as a necessary sales channel that we need to develop. Definitely, we're going to push very hard. The delivery, you mentioned the aggregators. Most of our digital sales are not coming from the aggregators, they're coming from the takeout option with our own platforms. This is where we'll keep pushing. The aggregators are great for us and they are helping us generate more sales, and I see them more as a marketing platform than as a delivery service per se, because a lot of people, they want to go on that platform and being offered a certain number of options, and it's not necessarily the delivery that's the key point for us there, it's really to be part of that list of options that people are going to consider for lunch or dinner. Yeah, so we're going to keep pushing in some brands, where a year ago we would've said, "Yeah, digital, maybe not now, maybe later. We're not prepared for it. Our operations are going to be complicated. We can't really accommodate during rush hour," or whatever reason we had not to do it. Now we are seeing it as a necessary sales channel for us to survive in the future, and we are pushing pretty hard to develop those brands. And some of them are lagging for various reasons, and some of them are pushing forward. Yeah, you should certainly expect more progress in the next 12 months over digital in general. Okay, great. Thanks very much. Our next question comes from the line of George Doumet with Scotiabank. Go ahead please, your line is open. Yeah, good morning, Eric. I just wanted to dive in a little bit on the 160 locations that were closed in the quarter. How many of those were office and mall locations? I don't have the exact number in front of me, but the proportion is not necessarily out of the ordinary. We did choose to close some locations because we did not want to renew some of the leases. MTY had to be on the lease. Now is a difficult time for us to sign for another 10 years, not knowing what the future is going to be. There are some closures that happened in that context, but I wouldn't say that the proportion is completely out of whack compared to the rest of the closures. Malls and office towers are probably a little bit heavier than the other types of restaurants, but nothing crazy. Okay. Did it cost us anything in terms of payment, to close any of these stores? Lease buyouts are always a thing for a franchisor like MTY, and it's not because of the pandemic. We've always had a few lease buyouts every quarter in every year of our existence. I wouldn't say that we're doing more of that now than we were in the past. We did have to buy out some leases, and that's part of normality for us, unfortunately. With 7,000 restaurants, even if you have a very, very small proportion of your restaurants that don't succeed, there will always be one or two every quarter that you're going to need to work on and buy out and negotiate with your landlord, and during the pandemic is no different than before the pandemic. Okay, Eric, maybe just thinking about that number, is there any seasonality there? How should we think of that cadence as we go into Q1 and Q2? Yeah. Good question. Yeah. Normally, we do have more seasonality where people go through Christmas period, because this is the hottest period of the year. January, February, March, other than maybe a few brands, is generally a little bit quieter. This year, I think the seasonality is going to be off in terms of store closures and in terms of lease buyouts. I think the pandemic has really leveled all the seasons. Okay. Maybe just kind of moving over to Papa Murphy's, specifically on the corporate locations, can you maybe share your game plan in terms of the number of stores you're looking to maybe sell or maybe franchise or close in 2021? Well, Papa Murphy's, as you know, there's a large number of corporate stores, although we did reduce it over the last 18 months. Our goal is always to have no corporate stores. We are working on these corporate stores that we have in the portfolio to improve the profitability, stabilize them in some cases, and then refranchise them. That's always the goal for all our corporate stores. Papa Murphy's, I wouldn't expect anything different. We are working on certain territories that might not be as successful as we'd hoped for, or certain territories where our stores are not optimized, where we need to better our profitability and make the stores more attractive. This is what we've been doing. We're also using our corporate stores to test the new redesign that we have. We have a few options for our franchisees that will be offered very soon to them. We are testing these options to make sure that we can iron out the kinks. Ultimately, the goal is to refranchise all these stores, and the timeline is unknown. We'll just wait for the right time to do it for each individual store and make that decision. Okay, thanks. Just one more, if I may, Eric. Just kind of reading between the lines, it seems that M&A activity will be concurrent with maybe restrictions easing. I guess that's kind of pointing to the spring. I'm just curious, would MTY be interested at all in maybe taking on a turnaround or kind of a more distressed concept if the price is right? Yeah, we're not closing the door on anything, George. Ideally, we'd like to buy successful, proven concepts that have been successful, that have had even a great ride during the pandemic and everything. In reality, we need to evaluate each option based on what it is now, what it can be in the future, and what plan it is that we have for it, and the price that we're paying to acquire those chains and those cash flows. I don't want to say we're going to go one way or another, but all I'm going to say is we're not closing the door on anything. Okay, Eric, thanks for your answers. Again, as a reminder, if you'd like to ask a question, please press star, followed by the number one on your telephone keypad. Our next question comes from the line of Derek Lessard with TD Securities. Go ahead, please. Your line is open. Yeah, thanks, Eric, and good morning. You guys did make a small call-out in the MD&A in reference to ghost kitchens. Just wondering if you can maybe talk about that initiative and how permanent they are and how, I guess, imperative they were in driving online sales or delivery. Yeah, that's an interesting question, and ghost kitchens are a little bit controversial because we want to make sure that we protect our franchisees, and we don't want to compete with our franchisees on their own turf. We need to be careful with that. It's not something that's going to be widespread in MTY, but we do have opportunities in certain areas to use our assets in the store to prepare more food or address different day parts. We are testing different models with different brands in different territories as well. We are also seeing, for example, where we have a Kitchen Unlimited that we're testing with. We're testing with a few different options where we want to see how economically viable the model is. So far what we've seen is, from our experience at least, and I'm not saying it's the same experience for everyone, the pure ghost kitchen model doesn't necessarily work for us financially. What we've seen is it's good and we do have sales, but the sales are never enough to cover the costs. This is not what we're in business for. Where we do implement a ghost kitchen concept in an existing restaurant, just to add on to the menu offering or just to add on to another day part, this has proven very successful in some cases, and it's a model that we're exploring further now. We are deploying more and more now that the testing phase is done, and we're seeing some success there. Without investing too much in new equipment, because we don't want to ask our franchisees to invest too much, we are seeing a lift in sales in certain concepts based on the ghost kitchens that we're offering. Okay. Thanks for the color there. Maybe just on the, you briefly touched on the re-imaging of Papa Murphy's. Just maybe where are you in that initiative, and what does it encompass? We're still in the testing phase, I would say. We did come up with a new logo, a new branding, new store design, and then it's how we're going to communicate it to the market, to the customers, how do we really make it our own and create a brand identity that's going to be strong enough for us to push it forward. We don't want to deploy it too aggressively in the market before we finish testing it. We are in that testing phase. We did renovate, I think, five stores now in different capacities. One of them was completely gutted. One of them was more just changing the signage and a fresh coat of paint, and some of them were in between, and we're testing the new design. We're testing how the make line is positioned, how the staff can operate in it. We're testing our signage also to see how customers respond to it. It's still in the testing phase and, PMI and Papa Murphy's being such an important brand for us, and being so successful at the moment, we don't want to do something that would jeopardize what we have. We are going to be cautiously, but we're pretty much there now where we think we've landed on what we need to do for the future. I'm really happy with it. Okay. Does any of that include, I guess, changing the overall product offering? I mean installing ovens and having more of a cooked product? No. Okay. Papa Murphy's is a take and bake. It's an oddity in the market, and we are embracing that oddity. The problem with baking, and we do bake in Canada, and we do bake also in U.A.E., but in the U.S., we've chosen not to bake. If we choose to have a few stores that bake and a few stores that don't, it's going to create confusion with the customers, and it's a discussion we have every year. If we wanted to offer the baking option, we'd have to pretty much deploy it across the market, and our stores are just not designed for it. Some of them can't because you need to have a certain number of electrical is more complicated. The exhaust facilities need to be installed in some places. We are embracing our take and bake. It is working. The stores are really good at the moment, and it's just up to us to communicate it effectively and letting people know who we are and what we are. Now, in terms of R&D, it's not tied to the rebranding, but we are pushing pretty hard on research and development to beef up the lineup of pizzas, but also beef up the lineup of other products that we can sell in our stores. We've run a few tests. Some of them were very successful, some of them less, and that's why we test. Yeah, definitely, there's more work going on for the product offering as well. All right, Eric, thanks very much. Have a great day. Our next question comes from the line of Dimitry Khmelnitsky with Veritas. Hi, good morning, Renée and Eric, and thanks for taking my call. Can you please quantify any unsustainable changes in working capital during the quarter due to deferred payables or accelerated receivables collection? Well, to quantify it would be difficult, but I can say that obviously accounts receivable are lower because our revenues are lower. As revenues go back up, I expect that accounts receivable will go back up at the same time, and that's a good problem to have. In terms of accounts payable, there's a certain amount of seasonality going on with how we spend the advertising dollars that franchisees are paying us and that we need to deploy in the markets. There's a certain seasonality in various different payments there, so there's going to be ups and downs. In terms of saying something is sustainable or not, I would say that there's nothing special on our working cap at the moment. Okay, thank you. Can you comment a little more about the pace of franchisee applications, whether you see any meaningful increases in overall number of franchisee applications and then conversion into the actual store openings? Yeah, the pace of applications is really good. It's going well both sides of the border. We do have a pretty healthy pipeline, and we keep adding to that pipeline. The additions to our pipeline and the number of interested parties is growing, and especially where the brands have been very successful in the last 12 months and franchisees feel comfortable that we can pretty much face anything. We are seeing more interest also from existing franchisees to acquire more stores, so that's a really good thing for us. In terms of the pace of conversion into new stores, that really depends on how successful the brands have been during the pandemic. If you have a brand that struggled a little bit more, typically franchisees will be a little bit more patient before they choose to build the store. Where our sales have been through the roof during the pandemic, franchisees will be more aggressive trying to capture some of that momentum. I guess some of your brands probably saw a meaningful increase in number of new applications, others didn't. Yes, that's for sure. That's always the case. Understood. Okay. Thank you. Can you talk a little more about the cost savings? If I remember correctly, it was about CAD 10 million per quarter as of Q3, right? Q3 was CAD 10 million, yeah. Q3 was abnormal, as I had mentioned on that call. In Q4, what's the level of cost savings? Yeah, in Q4, I think we're at about CAD 2 million in cost savings. It's probably a little bit lower than what we had expected. There's a few items here that we needed to invest in, as I mentioned earlier on the call, to help us grow the business in the future. Yeah, the cost savings now, I think they can't be called cost savings now. It's our normal baseline that we have, and it's not necessarily something that will come back up. Okay, let me rephrase it then maybe. On an annualized basis, where do you see this new-- I know you mentioned it, I guess not to call it cost savings, but where do you see that delta on an annual basis in terms of reduced costs versus pre-COVID period? Yeah, as I said, Q4, I think is now our baseline. Okay. About CAD 8 million per year then. Right? I'll let you do the forecast. I'm not giving any guidance. No, that's fine. Okay, fine. All right. Do you see any changes in business model for the full-service restaurants and food court stores and perhaps nontraditional stores in a post-COVID world? Yeah. For sure. Everyone needs to adapt. The pandemic has created the new normal, and we're not sure exactly what it's going to be. It might be different in some places. Yeah, definitely we need to readjust everything that we're doing, everything that we've always done. We were going through some evolution, delivery and online ordering was getting bigger, and food trends were different. I think the pandemic has just accelerated everything. We'll need to adjust how we do business in every place. The nontraditional, we need to adjust. The malls and office towers definitely will need to adjust the business model, and it needs to be adjusted both on customer acquisition and on the cost structure of these stores. Whatever is on the street also needs to adjust because even the design of our stores needs to be adjusted now that we have so much online ordering and so much takeout, that we need to have different store designs to be able to handle that without people having to line up at the cash. If people want to be in and out of our stores and skip the line, we need to have our stores' design accommodate that. There's a number of changes that need to happen, but it's really everywhere. Everything needs to be, not necessarily changed, but everything needs to be incrementally adjusted. Okay. Were there any material royalty waivers granted in Q4? Yeah, we did grant some royalty breaks for some of our franchisees. I wouldn't say they're material. We did for some of our restaurant chains that really had zero way to make a profit or really do business. We did have some concessions. Again, this is more focused now, and based on individual store realities than it is on a widespread basis. I wouldn't say it's anything material. Probably, more geared towards the food court stores and the office towers, essentially, and malls and full-service restaurants. That's where you see the royalty waivers. Not necessarily. If you look at food courts, for example, in Quebec and Ontario, the food courts, they were closed. Whether we give a royalty break or not doesn't make a difference if the sales are zero. Right. Whether we charge royalties or not, they're still zero. You would see more concessions where we have the full-service restaurants that have very high rents because of the footprint of the stores, and an impossibility to do business, really. This is where it would be concentrated. Understood. Okay. Thank you. Okay, I think that's it for me. I appreciate it. Thank you. There are no further questions at this time. I'd like to turn the call back over to Mr. Lefebvre. Thank you again for joining us on this call, and we look forward to speaking with you again on our next quarterly call. Thank you. Ladies and gentlemen, this does conclude today's conference call. We thank you for joining us. You may now disconnect.